RBI pro­poses forex plat­form for re­tail cus­tomers KEY TAKE­AWAYS

Business Standard - - ECONOMY & FINANCE - ANUP ROY

The Re­serve Bank of In­dia (RBI) on Thurs­day pro­posed re­tail cus­tomers’ ac­cess to the cur­rency trad­ing plat­form, and that prices should be in line with the in­ter-bank mar­ket through an in­built mech­a­nism on the plat­form.

In a dis­cus­sion pa­per on its web­site, the cen­tral bank said the ex­ist­ing FX-CLEAR plat­form should be ex­tended to the re­tail cus­tomers through an in­ter­net­based ap­pli­ca­tion.

How­ever, the re­tail mar­ket will be sep­a­rate from the in­ter-bank mar­ket. While banks can ac­cess both the in­sti­tu­tional and re­tail mar­kets, re­tail cus­tomers would be lim­ited to the re­tail mar­ket seg­ment of the plat­form.

Both the mar­kets will have the same tim­ings, 9 am to 5 pm, where or­ders can be placed anony­mously.

The min­i­mum or­der size would $1,000 and there­after in mul­ti­ples of $500. The max­i­mum or­der size would be $500,000 for re­tail cus­tomers.

“The sys­tem will have a func­tion­al­ity to ag­gre­gate cus­tomer or­ders at the same rate up to the min­i­mum lot size of the in­ter-bank mar­ket $0.5 mil­lion and match it with the or­ders in the in­ter-bank mar­ket. This will en­sure that prices in both the mar­kets are in line,” the dis­cus­sion pa­per said.

Since di­rect ex­e­cu­tion by the cus­tomer is likely to bring down the cost of trans­ac­tions as there is no mar­ket risk to the bank, the lenders should charge their cus­tomers a fee to­wards pro­cess­ing ex­penses only. In a sep­a­rate no­ti­fi­ca­tion, the cen­tral bank said an elec­tronic trad­ing plat­form (ETP) op­er­a­tor for forex, | | | | | Ex­ist­ing in­ter-bank trad­ing plat­form should have a re­tail trad­ing seg­ment Re­tail traders won’t have ac­cess to in­ter-bank mar­ket Prices in re­tail mar­ket should be in line with in­ter-bank mar­ket Min­i­mum or­der size should be $1,000, max­i­mum $500,000 Banks can charge pro­cess­ing fee as no other cost is in­volved bonds etc for re­tail cus­tomers should have a min­i­mum paid up eq­uity cap­i­tal of ~25 crore, and should hold liq­uid as­sets such as cash, govern­ment se­cu­ri­ties and bank de­posits equal to at least six months of cur­rent op­er­at­ing ex­penses at all times. All data re­lated to trades gen­er­ated in the trad­ing plat­form should be main­tained in In­dia for at least 20 years.

“No data shall be ex­ported out­side In­dia with­out the prior per­mis­sion of the Re­serve Bank,” the cen­tral bank said.

For­eign share­hold­ing will be al­lowed ac­cord­ing to norms and the op­er­a­tor should prefer­ably have ex­pe­ri­ence, of at least three years, in op­er­at­ing in­fra­struc­ture re­lated to trad­ing of fi­nan­cial in­stru­ments.

The op­er­a­tor would be in con­stant scru­tiny of the cen­tral bank.

“An ETP op­er­a­tor will or­di­nar­ily not be el­i­gi­ble for au­tho­ri­sa­tion, if within the last 5 years, it or any of its di­rec­tors or pro­mot­ers or se­nior of­fi­cers have been sub­jected to ad­verse ac­tion that the Re­serve Bank con­sid­ers ma­te­rial, by any reg­u­la­tor or any other pub­lic author­ity,” the cen­tral bank said.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.