RBI tells banks to step up vigilance against illegal FX trading platforms

Reserve Bank of India (RBI) governor Shaktikanta Das has called on banks to step up vigilance against unauthorized forex trading platforms amid growing complaints of cheating and fraud.

Das was speaking at the Fixed Income Money Market and Derivatives Association of India-Primary Dealers Association of India (FIMMDA-PDAI) conference in Barcelona this week.

An ‘alert list’ of entities offering or promoting unauthorized forex trading facilities had already been issued, but “we continue to see banking channels being used by certain persons or entities to fund activities on unauthorized FX trading platforms. This warrants enhanced vigilance by the banks,” Das said.

The FIMMDA-PDAI conference serves as a platform for participants from financial markets to discuss developments, regulatory changes, market trends, and other topics.

It brings together professionals from banks, financial institutions, regulatory bodies, and other stakeholders to engage in dialogue and share insights to better understand the evolving financial landscape in India.

The RBI’s ‘alert list’ contains names of entities that are neither authorized to deal in forex under the Foreign Exchange Management Act, 1999, nor authorized to operate electronic trading platforms for forex transactions under the Electronic Trading Platforms (Reserve Bank) Directions, 2018.

The list also contains names of entities, platforms, and websites that appear to be promoting unauthorized entities, including through advertisements or claiming to be providing training or advisory services.

As on 24 November 2023, the list had 75 entities, including Binomo, QFX Markets, 2Win Trade, Guru Trade7 Limited, Bric Trade, Dream Trade, and Trust Trade.

In the speech, Das also urged money and government debt market dealers to enhance price transparency. While emphasizing the importance of effective market-making, he said that finer pricing must be ensured during smaller deals, and efforts should be made to ensure that the retail customers are included.

“Divergence in pricing in FX markets for the small and large customers are wider than what can be justified by operational considerations. Banks may need to do more to facilitate using the FX Retail platform,” Das said.