Forex Market News
When we speak of Forex Trading in India, the RBI regulations limit the trader’s options. Currently, the currency pairs available for Forex trading across the world, are marked against the INR in India. Hence, for a majority of traders, who deal in international transactions, it is a major disadvantage. When the global Forex trading is dominated by the USD, occupying more than 87% of the net trade practices, Forex trading is not much profitable for Indian investors. RBI, the body which regulates the financial implications and proceeds of the nation, has a different definition where Forex Trading in India is done primarily in the form of trading in currency derivatives convertible into INR. According to RBI, “ a person resident in India may enter into currency futures or currency options on a stock exchange recognized under section 4 of the Securities Contract (Regulation) Act, 1956, to hedge an exposure to risk or otherwise, subject to such terms and conditions as may be set forth in the directions issued by the RBI from time to time”.
Rules applicable to Forex trading in India. Since 2008, RBI and SEBI have permitted trading in currency derivatives.
Who Regulates Forex Market In India 2017
The currency pairs available for trading are USD-INR, EUR-INR, JPY-INR and GBP-INR. Currency options can be availed by investors only for USD-INR pair. As of now, trading is permitted in BSE as well as NSE.
Contracts will be cleared only in cash where the currency would be INR. The lot size is fixed for futures where it is 1000 units, apart from the JPY/INR pair which has an extended lot size of 100000 units. Steps to start Forex Trading in Currency Futures Forex trading can be quite profitable if you possess the right attributes. Here is a list of steps which can be followed prior to the trading.
Open a trading account with a broker which offers trading in Currency Derivatives. As the accounts are essentially online, and Forex trading is an online service, you can access your account through login id and a password. This is similar like trading in equity and futures. Research the operational guidelines of the platform you are using.
Keep a check on the brokerage rates, the exchanges the bank holds the tie-ups with, and the products offered. Below is an excellent trading system for USD-INR pair: The most important advantage behind Forex Trading in India is the. Hence, one can easily trade for a bigger profit at a smaller deposit.
The margin required to trade 1 lot (1000 Quantities) of USD-INR pair in NSE is around 1500 INR which accounts to only 2.5% of the actual investment. The currency market is quite volatile and hence effective analysis needs to be done prior to making an investment decision. Several reputable firms and institutions offer great insights to their users through various channels.
Hence, one can observe them while making fruitful investments and earn greater returns on the investment made.
Consult: What is Forex Trading? Forex Trade takes place in the global market known as the Foreign Exchange market for currency trading, where an exchange of one currency happens for another.
For instance, if the forex trader resides in India and wants to trade Rupee with Dollar, the base currency would be Indian National Rupee (INR) and quote currency would be Dollar. Base currency is usually the domestic currency of the country where the forex trader resides. The other currency is the quote currency, which is usually the currency of another country. Legality of Forex Trading in India “Is forex trading legal in India and how to trade forex in India legally?” are the questions which have been the point of pressure for people dealing in foreign exchange. To inform you better, forex trading is legal in India, only if it is done through registered Indian forex brokers.
In India, forex trading is legal if the base currency is INR. A forex trade between two foreign currencies is illegal in India. This means if a forex trader does overseas forex trading from India, then it is illegal for Indian citizens. As Indian citizens are not allowed to send funds to overseas foreign exchange brokers both directly and indirectly. Suggested Read: How to do Forex Trading in India? The central authorities that regulate forex trading in India are the Reserve Bank of India (RBI) and Securities Exchange Board of India (SEBI).
The National Stock Exchange (NSE) and Metropolitan Stock Exchange of India (MSE) are the commonly used stock exchanges in India. The first step in forex trading is to open a forex trading account in India with a SEBI registered forex broker. Once the account is set up, a person i.e. A forex trader can trade in future and options currency derivatives. In India, currency pair like US Dollar and INR, Euro and INR, Great Britain Pound and INR, JPY and INR, etc. There are two types of accounts - the personal account and business or corporate account. What is Online Forex Trading and is it legal in India?
Well, the Answer to this question is No! No Indian citizen can undertake forex trading in India through any electronic or online trading platform. The Reserve Bank of India had issued a circular in 2013 prohibiting overseas forex trading through electronic or internet trading portals.
Forex trading is legal only when done through forex trading platform. A forex trader who is found to be indulged in electronic or online overseas forex trading would be held guilty of violating the foreign exchange laws in India. Under the, FEMA act forex trading has the provision of sending such jail or fined. An important thing to note here is that NRIs are not prohibited from trading in foreign currencies.
Forex trading is legal in India as far as it includes Indian Rupee as the base currency, but is a risky trade and must be done after consultation with a lawyer. Top Read: Who can help you here? A well-versed lawyer who knows about foreign exchange laws, how to trade forex and eligibility to forex trading can help you in doing forex trade legally in India. For which you can find great legal experts at MyAdvo! All you have to do is send in your legal queries through email at or simply give a missed call at +573, and MyAdvo will reach out to you quickly!
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