The Indian central bank on Wednesday released an 'alert list' of brokers that are not authorized by it to deal in forex or operate an electronic trading platform (ETP) for forex transactions, thus making them illegal in the country.
The list added a total of 34 names, including some of the big industry names like Alpari, eToro, Exness, Forex.com, FXCM, FXCM, IC Markets, IG Markets, OctaFX, TD Ameritrade, XM and XTB.
The alert list came months after another warning by the Indian central bank against unregulated forex trading platforms.
“The Alert List is not exhaustive and is based on what was known to RBI… An entity not appearing in the Alert List should not be assumed to be authorized by the RBI,” the central bank stated.
Interestingly, the list includes FXStreet, which is a market news and analysis platform that does not offer any brokerage services. "This list states that we are not authorised to deal with trading transactions, which we don't do and have never done... We do not manage money for third parties, execute operations or are involved in any trading activity in India. Therefore, being added by the RBI is not a concern for us," said an FXStreet spokesperson.
Finance Magnates reached out to both the Reserve Bank of India (RBI) but did not receive any response, as of press time.
XTB, a Poland-listed broker, confirmed that it "is not operating in India and does not offer services to residents of India." An eToro spokesperson also told Finance Magnates that the broker "does not onboard clients from India."
Exness, which is a big name in the retail CFDs brokerage industry said: "Being a world-leading multi-regulated broker, we believe in offering people the ability to trade in the financial markets in a fair and transparent way. We nurture an open relationship with our regulators and keep our clients' safety and security our top priority."
Local Law Violations
India does not regulate or directly ban retail over-the-counter (OTC) trading markets. This allows many forex and contracts for differences (CFDs) brokers to target Indian nationals. However, the clients are violating the local forex law, FEMA while taking deposits on those locally unauthorized platforms.
While it is not clear if all the named brokerages are onboarding clients from India, at least a few of them are definitely running aggressive marketing campaigns targeting potential Indian clients. They are onboarding Indian clients under European or offshore licensed entities.
“The RBI reiterates that resident persons can undertake forex transactions only with authorized persons and for permitted purposes, in terms of the FEMA,” the regulator stated. “While permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorized for the purpose by the RBI or on recognized stock exchanges.”
Furthermore, the central bank clarified that “resident persons undertaking forex transactions for purposes other than those permitted under the FEMA or on ETPs not authorized by the RBI shall render themselves liable for legal action under the FEMA.”
