• Tue. May 28th, 2024

‘Unauthorised FX platforms: Need enhanced vigilance by banks’ | Business News

“We continue to see banking channels being used by certain persons or entities to fund activities on unauthorised FX (forex) trading platforms. This warrants enhanced vigilance by the banks,” Das said in his address at the FIMMDA (The Fixed Income Money Market and Derivatives Association of India)-PDAI (Primary Dealers Association of India) annual conference, Barcelona.

The regulator has been cautioning banks and the public against such forex trading platforms.

In 2018, the RBI announced a framework for authorisation of electronic trading platforms (ETPs) for financial market instruments regulated by it. Electronic Trading Platform (ETP) are electronic system, other than a recognised stock exchange, on which transactions in eligible instruments like securities, money market instruments, foreign exchange instruments, derivatives, etc. are contracted.

In 2022, the RBI said it noticed misleading advertisements of unauthorised ETPs offering forex trading facilities to Indian residents, including on social media platforms, search engines, Over The Top (OTT) platforms, gaming apps and others.

Festive offer

The RBI had said that there were reports of such ETPs engaging agents who personally contact gullible people to undertake forex trading/investment schemes and entice them with promises of disproportionate/ exorbitant returns. There were also reports of frauds committed by unauthorised ETPs / portals and many residents losing money through such trading / schemes, it had said.

It cautioned the public not to undertake forex transactions on unauthorised ETPs or remit/deposit money for such unauthorised transactions.

The RBI has also been issuing and updating an alert list of unauthorised forex trading platforms.

In November last year, added names of 19 entities/platforms/websites to the alert list of illegal forex trading platforms, which included Admiral Market, BlackBull, Easy Markets, Enclave FX Real Gold Capital Ltd and Gate Trade. There are in total 75 unauthorised forex trading platforms, as per the list.

In his speech on Monday, Das said transparency in pricing in the forex market remains work in progress and more can be done. The retail customer is yet to get a deal at par with large customers.

“Divergence in pricing in forex 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 the use of the FX retail platform,” the Governor said.

He said going forward, the focus should be on enhancing and widening the participation of Indian players in markets for the rupee derivatives, both domestically and offshore, while being prudent.

He said liquidity in OTC (over the counter) derivatives markets, especially interest rate derivatives, remains confined to a few products, constraining efficient hedging by the larger economy.

“The market for credit derivatives which is an important enabler for the lower rated corporate bonds is yet to take off,” he said. He said that the first credit default swap (CDS) transaction, after the issuance of the revised guidelines came into effect in May 2022, was undertaken last week.

“In many ways, all domestic market participants are yet to fully embrace the new regulatory framework and exploit the opportunities it presents, Das added. He also asked banks to put in place appropriate safeguards to address the new challenges posed by new products, participants and markets.


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