RBI issues draft framework for electronic trading platforms

The Reserve Bank of India proposed a revised regulatory framework for Electronic Trading Platforms (ETPs) in the wake of increasing integration of the onshore forex market with offshore markets.

The Central Bank was asked to allow access to offshore ETPs offering Indian Rupee (INR) products by trading markers.

ETP refers to any electronic system, other than a recognized stock exchange, on which transactions in eligible instruments are contracted. Eligible instruments mean securities, money market instruments, foreign exchange instruments, derivatives, or other instruments of like nature.

Read Also : Engineers India conferred with 16th Edition of CII-SR EHS Excellence Award 2023

The 'Draft Master Direction - Reserve Bank of India (Electronic Trading Platforms) Directions, 2024' issues that an entity seeking authorization as an ETP operator should maintain a minimum net worth of Rs 5 crore and continue to maintain the minimum net worth prescribed all times.

Also, the entity should be a company incorporated in India. Further, shareholding by non-residents, if any, in the entity seeking authorization as an ETP operator should conform to all applicable laws and regulations, including the Foreign Exchange Management Act, of 1999.

The entity will also have to maintain a robust technology infrastructure with a high degree of reliability, availability, scalability, and security with respect to its systems, data, and network, appropriate to support its operations and manage the associated risks, the draft said.

Read Also : Unlocking the Future: SHRM Tech 2024 Elevates Indian Public Sector Enterprises

In October 2018, the Reserve Bank initiated a regulatory framework for ETPs to execute transactions in financial instruments regulated by it.

Under the framework, which aimed to ensure fair access through transparent, safe, and efficient trading processes, robust trading infrastructures, and prevent market abuse, 13 ETPs operated by 5 operators have since been authorized.

Concerning eligible instruments, the draft said ETP operators authorized by/registered with the RBI should ensure that transactions only in instruments approved by the central bank are contracted on their platform.

No entity, resident or non-resident, can operate an ETP without obtaining prior authorization of, or having registered with, the Reserve Bank, it added.

The RBI has invited comments on the draft directions from ETP operators, banks, market participants, and other interested parties by May 31, 2024.

Read Also : RBI buyback government securities worth Rs 2,069.99 crore