RBI to create foreign exchange trading platform for retail participants

On June 6, 2019, the Reserve Bank of India (RBI) announced to set up a foreign exchange trading platform for retail participants. This is to create a market infrastructure that ensures fair and transparent pricing for users of foreign exchange like Small and Medium Enterprises (SME) exporters & importers and individuals.

Key Points:

• The trading platforms are developed by the Clearing Corporation of India Limited (CCIL) and are tested by the users. The platform is an extension of CCIL’s FX(Forex)-Clear which is used for large-volume interbank trading.
• It will be available to the users for transactions from early August 2019 and the circular on operational guidelines for the platform will be issued by the end of June 2019.
• In October 2017, RBI had issued a discussion paper to set up a foreign exchange trading platform for retail participants which would provide access to the customers to an electronic trading platform through an internet-based application on which they can purchase/sell foreign currency at market clearing prices.
• The foreign exchange trading platform will show the customer rates of all banks in one place. The customer can choose the most competitive rate and buy forex. The customer’s bank will debit the money from his or her account and settle with the forex providing bank.
• The minimum tradeable amount is $1000 and they are issued in the multiples of $500 thereof.
• At present, the facility will be available only for dollars, but later more currencies will be introduced.
• Once the trade is done, the ticket generated will reflect the interbank rate, mark-up, and the net rate. Trades can be done for same-day delivery (cash), next-day delivery, or spot delivery (T+2), and interbank rates will reflect accordingly.
• RBI also decided to widen the gambit of Small Finance Banks (SFBs) to get more customers in order to extend the banking facilities for all.

About RBI:
♦ Headquarters: Mumbai
♦ Governor: Shaktikanta Das
♦ Deputy Governors: BP Kanungo, N S Vishwanathan, Viral Acharya and Mahesh Kumar Jain