Individuals cannot trade in forex market: RBI

[McNish]

Hello guys,
Seems a lot of finger pointing is going on. Rather we should be looking to working around the situation with the RBI norms and others. There are some god suggestions also but please, if you do not like a point put up by a member, please speak with a kind tone atleast and critise positively. Moderators, please put in a word here with respect to positive critisism. I know I haven't been clean my self at times but then the thread was such.
Anyway back to the original issue. So here we are the FX traders who know what this market is capable of and we aspire for the same but are stuck with the mentioned issues.
As for myself, I may be in a unique situation. My father holds NRI status and a close cousin in Singapore who already does FX trading - though he makes losses often and he was the one to introduce me to this thrilling game. Please advise how I can get around to putting money in FX markets and getting my profits back in my pocket after paying tax of course given these possibilities.
And Please keep a kind tone for one another. "We may recover from a slip of the foot but a slip of tounge leaves a deep imprint." Thank You.
BTW a great great forum. Kudos to the team.

 

[fxcrazy]

Residents are, however, permitted to trade in currency futures and options contracts, traded on the stock exchanges recognised by the Securities and Exchange Board of India (SEBI) in India, subject to the conditions specified by the Reserve Bank from time to time.

Can somebody elaborate on this? What are those stock exchanges recognised by SEBI? How does one go about trading in such exchanges?

 

[fxmaniac]

Can somebody elaborate on this? What are those stock exchanges recognised by SEBI? How does one go about trading in such exchanges?

It is NSE ,where retail investors , will also be allowed to trade forex derivatives (only USD/INR pair will be traded) futures and options .The trading and settlement will be monthly contracts similar to stocks futures,leverage will be lower than stock futures and lots will be micro($1000).IcicI and other players offer brokerage services and only resident Indians will be allowed to trade futures.
To put it in nut shell,it is simply a waste of time as USD/INR is a low volatile and illiquid pair.

 

[fxcrazy]

It is NSE ,where retail investors , will also be allowed to trade forex derivatives (only USD/INR pair will be traded) futures and options .The trading and settlement will be monthly contracts similar to stocks futures,leverage will be lower than stock futures and lots will be micro($1000).IcicI and other players offer brokerage services and only resident Indians will be allowed to trade futures.
To put it in nut shell,it is simply a waste of time as USD/INR is a low volatile and illiquid pair.

Thanks. So, practically there is no way to do forex trading in India even if there is no outward remittance involved (lets say, using funds that I have in a foreign bank account)?

 

[madhusudhan]

I wonder what would be the best way an individual could trade without violating or circumventing laws.

Thanks,
Sanjoy

See here, RBI says Resident individuals can not trade..as per FEMA 1999

A 'person resident in India' is defined in Section 2(v) of FEMA, 1999 as :

A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include
(A) a person who has gone out of India or who stays outside India, in either case -
for or on taking up employment outside India, or
for carrying on outside India a business or vocation outside India, or
for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B) a person who has come to or stays in India, in either case, otherwise than
for or on taking up employment in India, or
for carrying on in India a business or vocation in India, or
for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period
any person or body corporate registered or incorporated in India,
an office, branch or agency in India owned or controlled by a person resident outside India,
an office, branch or agency outside India owned or controlled by a person resident in India;


You can use this loop hole.

 

[fxmaniac]

Thanks. So, practically there is no way to do forex trading in India even if there is no outward remittance involved (lets say, using funds that I have in a foreign bank account)?

nope.Unless you are an NRI or a registered corporate NBFC.By foreign bank a/c you mean an offshore a/c or simply an a/c with a multinational bank who have set up in India like HSBC.In the former case yes and latter obviously no.

 

[jcravindra]

You should check your facts before opening your big mouth publicly.

And FYI, the said link was from economic times e paper.

GREAT. It is a candid opinion. We have been receiving luring calls from many operators. it's is truly eye opener. In addition I have seen many using FOREX system working with Elliott etc, why are they doing so??

 

[fxcrazy]

Yes, I meant an account opened in a foreign country while I was there and having some funds I earned in that country only. Does it help in that case?

nope.Unless you are an NRI or a registered corporate NBFC.By foreign bank a/c you mean an offshore a/c or simply an a/c with a multinational bank who have set up in India like HSBC.In the former case yes and latter obviously no.

 

[ag_fx]

Yes, I meant an account opened in a foreign country while I was there and having some funds I earned in that country only. Does it help in that case?

Yup..that will work...There will be no remittance involved from India..thus no conversion of INR to USD/EUR and thus no violation of FEMA/FERRA laws.

RBI in effect does not want you to convert your INR to trade Forex overseas.

 

[fxcrazy]

Hi Ankit, thanks for that but the following statement worries me in that rbi link:

The Reserve Bank has also clarified that the existing regulations under FEMA, 1999 do not permit residents to trade in foreign exchange in domestic / overseas markets.

I understand that RBI does not want money to flow out of the country but I interpret that statement as Indian residents are not allowed to trade forex irrespective of whether money is flowing out of India or not. Is that correct understanding?

Yup..that will work...There will be no remittance involved from India..thus no conversion of INR to USD/EUR and thus no violation of FEMA/FERRA laws.

RBI in effect does not want you to convert your INR to trade Forex overseas.