Forex IB in India: the rules

The short version

• Forex trading by Indian residents is governed by the Foreign Exchange Management Act, 1999 (FEMA) and rules issued by the Reserve Bank of India (RBI).
• Residents may trade forex only through authorised persons and on recognised exchanges (such as NSE, BSE and MSE) or RBI-authorised electronic trading platforms, in permitted currency pairs.
• The RBI has said that remittances under the Liberalised Remittance Scheme can't be used to fund margin for forex trading on overseas or online platforms.
• The RBI publishes an Alert List of unauthorised forex trading platforms, and has warned that residents dealing on them may face action under FEMA.

What Indian residents can legally trade

On recognised Indian exchanges, residents can trade exchange-traded currency derivatives in pairs involving the rupee, such as USD-INR, EUR-INR, GBP-INR and JPY-INR, and a small number of permitted cross-currency pairs such as EUR-USD, GBP-USD and USD-JPY. These are traded through SEBI-registered stock brokers, with exchange rules on contract sizes and limits.

Leveraged trading in other currency pairs, or CFDs, through overseas online brokers is not a permitted route for residents.

The RBI Alert List

Since 2022, the RBI has published and updated a list of entities that are not authorised to deal in forex or operate forex trading platforms in India. It has also pointed out that such platforms are widely promoted on social media, search engines and apps. Being missing from the list does not mean a platform is authorised: the RBI publishes separately which entities are authorised.

What this means for IBs

• Don't refer Indian residents to overseas forex or CFD brokers. Promoting unauthorised platforms to Indian residents carries serious legal risk for you and for them.
• The legal "IB" route in India for exchange-traded currency derivatives is to work with a SEBI-registered stock broker, for example as an authorised person registered through the exchanges. Authorised persons are subject to SEBI and exchange rules.
• Finfluencer rules: SEBI has restricted SEBI-registered entities from associating with unregistered persons who give advice or make return claims. If you create trading content in India, understand these rules first.
• Serving clients outside India: if you live in India but your audience is elsewhere, the rules on earning commission from foreign brokers are complex. Take advice from an Indian lawyer and chartered accountant before starting.

For traders: protecting yourself

1. Check the RBI Alert List and the list of authorised entities before using any forex platform.
2. Trade currency derivatives only through SEBI-registered brokers on recognised exchanges.
3. Be wary of social media promotions, "guaranteed returns" and requests to deposit through personal UPI or bank accounts.
4. If something goes wrong, report it to the authorities. The government's cybercrime portal and helpline handle online fraud complaints.

How IB2broker approaches this

IB2broker connects Introducing Brokers with licence-checked brokers. It is not a broker and does not help anyone get around local law. IBs are responsible for following the rules where they and their clients live; see forex IB marketing rules and the forex regulators list.

Frequently asked questions

Is forex trading legal in India?

Yes, but only in permitted currency pairs, through authorised persons, on recognised exchanges or RBI-authorised platforms. Trading other pairs or CFDs through overseas online platforms is not permitted for residents.

Can I be a forex IB in India?

Referring Indian residents to overseas forex or CFD brokers is high risk legally. The regulated route is to work with a SEBI-registered broker, for example as an authorised person for exchange-traded currency derivatives.

Where is the RBI Alert List?

On the Reserve Bank of India's website, in its press releases and notifications on unauthorised forex trading platforms.