Forex trading from India is a topic of discussion for a long time and so many arguments have been made on it. Peoples are talking about legal issues related to Forex Trading in India due to Forex Trading is highly regulated in India. That is the reason a small number of Forex Brokers in India are available.
Trading forex in India involves quite a few limitations and legal issues currently. Be sure to choose a Forex Broker regulated by a major financial regulator, such as the Security & Exchange Board of India (SEBI), U.K.’s Financial Conduct Authority (FCA) or Cyprus’ Securities and Exchange Commission (CySEC), which generally complies with Indian regulations and the European Union’s rigorous Markets in Financial Instruments Directive (MiFID) rules.
Be aware that not all forex brokerages are created equal, so while choosing Forex Broker in India, make sure your needs as a trader are adequately met.
Before going to choose a Forex Broker, you must know about Forex and Forex Trading in India.
Trading Forex in India
The national currency of India is the Indian Rupee (₹) with an ISO 4217 symbol code of Indian Rupee and denoted by INR. The rupee is divided into 100 smaller denominations known as the Paisa (p). According to the Bank for International Settlements’ 2016 Triennial Central Bank Survey, the Indian currency was ranked 18th among world currencies and making up 1.1 percent of daily forex turnover.
Forex Trading Act in India – FEMA 1999
Indian financial sector regulatory is the Reserve Bank of India (RBI) and foreign exchange transactions are regulated by RBI under the Foreign Exchange Management Act (FEMA) of 1999. The RBI regulates and monitors foreign exchange transactions in India and the Securities and Exchange Board (SEBI) is the principal regulator of the Indian stock market and all forex brokers based in India are licensed under FEMA.
Forex Trading in India Legal or Illegal
The SEBI-regulated & registered forex brokers, which include the three major stock exchanges in India, are only allowed to offer INR-based currency pairs for USD, EUR, GBP, and JPY for Forex Trading in India. All other currency pairs are strictly banned from trading in India unless a specific transaction is authorized by the Indian government.
Due to a surge in financial scams posing as forex brokers, the Indian government was forced to severely restrict the way Indian citizens can operate in the forex market. If you live & trade in India, you are not legally allowed to trade forex currency pairs that do not have the Indian rupee as the base currency or counter-currency on any Foreign Exchange.
You can still open an account with a foreign-based broker as long as you send your deposit through an electronic wallet service such as Neteller, Skrill or other similar online payments service & Wallets. Avoid using a wire transfer from a bank or other financial institution based in India or a credit & debit card issued by an Indian entity to fund a forex trading account for regulatory reasons.
How to Choose A Forex Broker in India
Anyone in India can trade Forex via Stock exchanges in India, additionally one can still trade forex through foreign-based online brokers. Generally, a quality brokerage must have the below-mentioned elements:
- Regulated by a reputable financial regulator
- Outstanding reputation among forex traders
- Allows you to trade in the type of account you prefer
- Requires an affordable minimum deposit
- Gives you trading access to all major and minor forex currency pairs and other assets
- Has a maximum leverage ratio appropriate for your trading strategy and risk tolerance
- Offers competitive dealing spreads
- Provides clients with insurance against negative balances
- Keeps re-quotes and slippage on orders to a minimum
- Maintains client funds in segregated accounts
- Withdrawal and deposit options fit your needs
Another important factor to consider when choosing a forex broker in India is the platform and trading software. In addition to their own proprietary trading platform, many brokers offer integration with cTrader, NinjaTrader, and the very popular MetaTrader 4 and 5 platforms from MetaQuotes that both support automated trading.
The Best Forex Brokers in India
If you’re looking for a reliable online forex broker in India, the list below offers some excellent options located outside of India but regulated by reputable financial authorities.
Though these brokers don’t have a physical presence in India, they accept traders from India and deposits can be made using payment services and electronic wallets. The best forex broker that accepts clients from India depends upon your particular requirements as a trader.
FOREX.com ranks as the number one U.S. forex broker by client assets & operates efficiently in India. It is regulated by the U.S. National Futures Association (NFA) and the Commodities Futures Trading Commission (CFTC). FOREX.com is also registered and has oversight from regulators in the U.K., Australia, Japan, Canada, Hong Kong, Singapore, and the Cayman Islands.
FXCM, established in 1999, has physical offices in the U.K., South Africa and Australia. This forex broker has oversight from the U.K.’s FCA, the Australian Securities and Investment Commission (ASIC) and the South African Financial Sector Conduct Authority (FSCA).
eToro’s social forex trading platform has provided forex products and more to their retail clients for over the last 11 years. They boast over 10 million account holders worldwide; eToro creates a trading community for their users to be a part of.
easyMarkets gives traders the power of trading with MetaTrader 4 to invest in forex. Their unique features of Freeze Rate, Insider Viewer, Deal Cancellation, and easyTrade allow them to stand out among the competition.
Hot Forex is Based in Cyprus and has offices in the U.K., the UAE and South Africa. HotForex is regulated and has oversight by the FCA in the U.K., CySEC in Cyprus, the FSCA in South Africa and the Dubai Financial Services Authority (DFSA) in the UAE.
6. FXTM (formerly ForexTime)
Cyprus based forex broker FXTM has a presence in the EU, U.K. and South Africa.
The online forex broker allows traders from India and is regulated by Cyprus’ CySEC, South Africa’s FSCA and the U.K.’s FCA. Forex trading account at FXTM can be opened with as little as $5 USD for a micro account, and the broker offers a very high leverage ratio of 1,000:1 on forex currency pair trades with a notional amount of up to $200,000.
XM has a physical presence in Cyprus, the U.K. and Australia. The online forex broker is regulated by CySEC in Cyprus, the FSA in the U.K. and ASIC in Australia. In addition, XM offers negative balance protection and segregated accounts for its traders.
Bottom Line – Top Forex Brokers in India
Trading forex anywhere can be risky, but that seems especially true in India for those unfamiliar with the country’s legal restrictions by SEBI & RBI on currency transactions.
If you live in India and want to trade the Indian rupee exclusively against USD, GBP, JPY or EUR, then you can legally trade through one of the three SEBI-regulated Indian stock exchanges that act as forex brokers under FEMA.
It’s against the law to use an account from a bank or other India-based financial institution to fund a forex trading account and make forex market transactions in currency pairs that do not include the Indian Rupee (INR).
If you still want to trade non-INR currency pairs on Forex Market, then you must make a margin deposit to a foreign broker by transferring funds from an electronic payment service such as PayPal, Neteller or Skrill.
Disclaimer: This content is published for informational and educational purposes only and should not be considered as legal advice, investment advice or an investment recommendation. AmitBarala.com & its author/s are not responsible for any type of loss.