Forex Brokers in India: Basics You Should Know
India has three major stock exchanges: the Bombay Stock Exchange, the Ahmedabad Stock Exchange and the National Stock Exchange (3rd largest in the world by the number of transactions). At the same time, the country ranks 7th in the world in terms of GDP. All this provides a favourable environment for the development of brokers, whose websites are designed for an English-speaking audience from all over the world.
Is Forex legal in India?
In addition to restrictions on forex trading, platforms offering CFD trading also fell under the ban in India. Leverage is prohibited in any case, writes the local news magazine “Newsd”.
India is not the only country restricting currency speculation in its territory. Similar policies are present in more than twenty countries.
One of the main arguments is an attempt to protect citizens from the risks and losses associated with forex trading. In India, forex trading through an online broker is a crime that does not allow one to bail out. One can not only face heavy fines but also go to jail.
The Reserve Bank of India has warned citizens many times not to mess with online brokers. In a report published in 2011, the RBI claims that several forex brokers continue to lure Indian clients with fabulous profits. The report also states that these companies fail to inform clients that forex trading is illegal in India. In a circular published by Indian times, the RBI warned brokers that they would have to face the consequences of their actions.
However, unregulated national and international brokers continue to set up regional companies. Nevertheless, most brokers live anywhere from a few months to a couple of years. Once they get in trouble with the law, they pack their bags and go out of business. The Indian government has already cracked down on many illegal brokers in India.
The Indian Express magazine published a report on the legality of forex trading in India. It stated that Indian law enforcement agencies conducted raids on five public and private sector banks and financial intermediaries involved in illegal forex trading.
The RBI continues to warn citizens. The regulator's report says brokers ask customers to deposit small amounts in their accounts. After receiving the funds in their bank accounts, these scammers disappear. Therefore, the RBI asks banks to check such accounts and immediately report them to the authorities. RBI has clarified that all violators will be punished under the FEMA Act of 1999.
In India, only corporate clients can trade currencies under a number of conditions. In particular, they need to have free foreign exchange reserves. Companies can trade with a leverage of 1:10.
Legal Regulation of Forex in India
- Foreign Exchange Management Act, 1999.
- Securities and Exchange Board of India Act, 1992
- Companies Act, 1956
- Prevention of Money Laundering Act, 2002
Currencies traded with Forex in India are conducted only through national currency - USD/INR, JPY/INR, GBP/INR, EUR/INR.
Best Forex Brokers in India
Many restrictions and legal difficulties come up when trading forex in India. Make sure to select a broker that is governed by a reputable financial regulator, such as the Financial Conduct Authority (FCA) in the UK or the Securities and Exchange Commission (CySEC) in Cyprus, both of which typically adhere to the strict Markets in Financial Instruments Directive (MiFID) regulations established by the European Union. Before investing any money, make sure the forex broker you choose can sufficiently meet your demands as a trader because not all forex brokerages are made equal.
Forex Brokers that accept Indian clients
The list below includes some great possibilities that are located outside of India but are governed by recognized financial authorities if you´re an Indian looking for a dependable online forex broker.
Despite not having a physical presence in India, some brokers welcome Indian clients who deposit money through payment systems and electronic wallets.
The ideal forex broker for Indian traders would mostly depend on your personal circumstances and needs as a trader.
- IFC Markets
How to verify SEBI Authorisation?
What is SEBI?
A statutory regulatory organization known as SEBI was founded on April 12th, 1992. By creating rules and regulations, it keeps an eye on and controls the Indian capital and securities market while making sure to protect investors´ interests. SEBI´s headquarters are located at Mumbai's Bandra Kurla Complex.
Functions of SEBI
The main goal of SEBI´s establishment was to safeguard the interests of investors in the securities industry.
It controls the industry and encourages the growth of the securities market.
Stockbrokers, sub-brokers, portfolio managers, investment advisers, share transfer agents, bankers, merchant bankers, trustees of trust deeds, registrars, underwriters, and other related individuals can register their business through SEBI, which also provides a platform for them to do so.
- It controls how depositories, participants, security custodians, foreign portfolio investors, and credit rating companies conduct business.
- It outlaws insider trading as well as dishonest and unfair business activities in the securities industry.
- It makes sure that investors are informed about the securities market middlemen.
- It keeps track of significant share purchases and corporate takeovers.
How do you check if a company is registered with SEBI?
Following SEBI approval, companies are listed on stock exchanges. To validate your company, go to the NSE or BSE websites.
How to trade forex in India?
Follow these steps to start trading currencies in India. The Indian currency market is expanding, therefore now can be the ideal time to claim your proper place in this industry.
With a reputable broker, you may start a forex trading account without paying any account opening fees. Follow Customer KYC guidelines.
Make the necessary margin deposit.
Get the necessary access information from your broker to get started.