Legality of Forex Trading in India

[fxgood]

Forex has not been officically legalised in India. RBI has set some norms but not to the extent where is clearly mentiones that forex is lagal. Every broker has got around RBI and worked its way to mislead local Indian people. Now a days i notice a lot of scam brokers registered in cyprus and BVI offering forex services to indian clients. Let me remind you Cyprus is the Nigeria of europe.

Just type cyprus based broker scams especially prime4x scam you will know. I would advice Indian to only open account with US and UK companies. US brokers still protect the US citizens first however the FSA in UK guarantees a loss of 48K GBP incase company goes bust. I hope it helps:thumb:

I don't this NFA have such preferences as a regulator and UK - FSA protect well than NFA? certainly NO even under FSA norms broker running show under their regulation are not protected as OTC funds will be in custodial banks with their overseas partners, so it is just regulation not 100% protection

 

[ag_fx]

fxgood can you be a bit precise as i cant understand what you have written. FSA demands all client funds to be segregated in seperate bank accounts. Where retail clients are concerned there is no OTC products involved. Remeber almost 80% brokers are not fussed hedging their clients positions until the clients is classified a professional client where he has risk of losing money. With retail clients 100% guaranteed. Just contact FSA!

My 2 cents

Even though FSA requires customer funds to be segregated, for Forex markets no broker offers true segregation unless your account size is above 500k USD or there around. Even the best institutional brokers in UK(CFH,LCG) offer segregation in a different fashion for smaller accounts. The money is anyways held in the broker's name and is only marked as customer funds. In case of solvency, it would be common that the funds are used for other purposes. In nutshell, the real segregation (as offered by futures brokers in US/UK) is not offered for Forex OTC markets with small sized accounts.

Coming to qualification of being a retail client, you are correct that 100% is guaranteed by FSA. They even have a specific website for this purpose. However, as soon as you mention the reason of your trading account as Speculation, you are classified as a professional trader. So for us, as traders, the retail protection pretty much does not apply.

However, I do agree with your view that I would never park my own money outside a NFA/FSA regulated broker. While this will not guarantee me a no cheat/fraud broker, it will at least tilt the odds in my favor of being safe.

Just my personal views....people are open to differ.

 

[mercyman007]

Hello all dudes (Insects...me also )of fx...

Meri dimag ka dahi bangaya booss!

I real all posts n coments, but there is still question ( million$ question) IS FOREX TRADING LEGAL OR ILLEGAL IN INDIA/ INDIAN RESIDENT?


I have one idea to solve this question. I need support n suggestions from all u friends. I want to ask for information about its legacy to RBI under Right To Information Act. If they give positive answer i will celebrate this day like my B'day every year :clap:.

Do u think guys this can solve our curiosity???

Dr. Dev

 

[Dr praveen]

:thumb::clap:

I wanted to know whether Forex Trading is legal in India. There has been lot of discussion about this but there is no definitive answer. Can anyone shed some light on this.

Question


If someone open's up an account with Onada, Fxpro or forex4you, is it legally allowed ?

findvikas (Vikas) Gave an Excellent Answer to this Question:

Source: http://www.alpari.co.in/en/about_alpari/index.html


Alpari Forex (India) Pvt. Ltd. was formed to promote Forex-trading capability to Indian retail and institutional customers. Individual Indian traders, fund managers and institutional customers will benefit from innovative and proprietary currency-trading technology combined with quality execution, competitive spreads, margins and expert and responsive customer support from our highly professional teams.

Alpari Forex (India) Pvt. Ltd. is a company formed under the Indian Companies Act, 1956. Alpari Forex (India) Pvt. Ltd will be conducting and offering marketing, sales, client services and compliance services in India on behalf of Alpari (UK). All accounts are opened directly with Alpari (UK), which is authorised and regulated by the Financial Services Authority in the UK.

Alpari Forex (India) Pvt. Ltd is responsible for new-client acquisition in India. Alpari Forex (India) Pvt. Ltd. will also be registering for membership of Indian currency exchanges including the National Stock Exchange (NSE) and the Multi Commodity Exchange (MCX) in order to offer Indian Forex products to its Indian clients.


They have never said that they will be offering SPOT trading if you open account with them. They will give you a UK based account and you have to do Bank Transfer. This again confuse the overall scenario


...but then I went through this document
http://www.finmin.nic.in/the_ministry/dept_eco_affairs/america_canada/fema_acts/index.htm

Look for Section 3 - Capital Account Transactions are "allowed"




Ok... that is fine.. now lets learn about Capital Account Transactions

Source: http://www.rbi.org.in/SCRIPTS/BS_FemaNotifications.aspx?Id=155

Look for Section 3 -Permissible Capital Account Transactions

we are interested in only this part.. transactions, specified in Schedule I, of a person resident In India;

so lets go to schedule I




Ok.. fine so I can invest but what is the mode of payment



that means direct debit to your account via SWIFT transfer or Wire Transfer which is regulated by RBI and big money (if coming) will be sniffed by the RBI watch dogs...


but then there was an amendment to this rule, here

http://www.rbi.org.in/SCRIPTs/BS_FemaNotifications.aspx?Id=1717

Under prohibitions, following items were added...



So as long as you are under the limit of 25K USD per calendar year... which is over INR 12 lakhs ... you should be fine unless a RBI watchdog sniff into your account and want to investigate what is going on..


Hope that makes it clear but still I will file a request to RBI & FEMA and ask for clarifications... does this make this thread a 'sticky' ???


DISCLAIMER : Please go through all the links before making any assumptions and consult with your legal advisory and do not take me as your legal advisor

 

[aryabhatta]

Doctor Praveen I think your information is outdated, this was before the RBI press release last year, I have an account with alpari India since last many years, since the RBI press release all that has changed infact alpari india themselves say FX is illegal and offer some sort of account to trade currency futres on indian exchanges

 

[Dr praveen]

Re: Legality of comodity option Trading in India with a foreign tradder

hai i want to know legal aspect of option trading in enrgy and metal in india with a foreign tradder
thank you