Few days back I received a message from a company representative on Facebook, forcing me to offer the “INTERNATIONAL BUSINESS OPPORTUNITY” called FOREX TRADING to my client. She claimed returns ranges from 8% to 95% within a month. So let us look at this offer whether this is the legal or not.
The reason for sharing this information with you all is, in future you may be under such trap. So thought to share this information and making you aware about what actually are Indian regulations about this Forex Trading. Below is the interesting discussion. (Name of executive and Company she represents changed.)
Company Executive-Hello sir, I am Shilpa here. Working for a Multi National Company named ABC Consultant. I got to know that you are the financial planner, so I wanted to discuss with you business proposal regarding international Commodity and currency trading!!
The profits you earn is in Dollars and the returns ranges from 8% to 95% within a month. This is the only industry where you can earn huge profits in short terms.
I will be looking forward for your reply sir!
Basavaraj-oh sure…let us start now
Company Executive-Can you please send me your contact number so that I can call you up and explain the overall picture of ABC.
Basavaraj-Let us discuss first the regulatory issue…. Under which regulation this trading will be performed?
Company Executive-we are group company of the ABC International Consortium (HIC), ABC is a registered member of the Indonesia Regulatory Agency.
Further ABC is also registered with : BAPPEBTI Member of The Indonesian Derivatives Clearing House Member of Jakarta Futures Exchange Member of the Commodity Trading Board With sanctions obtained for Overseas Transactions, HIF we can now offer our clients a broader spectrum of trading and investment opportunities.
Basavaraj-I am asking you, to operate in India under which regulation you are registered? Who regulates the trade generated in India? Forget about the Indonesia or other countries, I am living in India and let us discuss who bonds these transactions?
Company Executive-Sir we have our headquarters in Jakarta, so we are directly regulated by the exchange.
Resident Indians can trade in currency through various Indian financial institutions today However, currently the resident Indians cannot trade in currency pairs not involving the Indian Rupee, (like the USD/GBP) with any scheduled bank or such other agency falling under the regulatory purview of the Reserve Bank of India Therefore to trade in such currency pairs, one will have to transact Foreign Exchange trades outside India.
Basavaraj-Jakarta is ok…but money is going to be invested from India…. and you are claiming that you have an office in India. So ultimately you will come under regulatory. So who regulate you people? Or in future my transactions?
Company Executive-RBI, through the provisions under A.P.(Dir Series)Circular No.64 dated Feb 4,2004, Circular No.24 dated Dec 20,2006, Circular No.51 dated May 8,2007, Circular No.9 dated Sept 26,2007 and Circular No.05 /2009-10 dated July 1, 2009 granted permission to Resident Individuals to freely remit up to USD 200,000 per calendar year for acquiring and hold immovable property, to invest in stocks, shares, exchange traded funds, debt instruments, stock options and index options outside India without prior approval of the Reserve Bank of India. Individuals can also open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the Scheme without prior approval of the Reserve Bank.
Basavaraj-so you are claiming to be no one will regulate and according to the law of land this is not legal right?
Company Executive-It is legal, we are doing CFD i.e., contract for difference In India forex is Not legal but not CFD We bid and ask only for the price difference
Basavaraj-From the above reply of “Resident Individuals to freely remit up to USD 200,000 per calendar year for acquiring and hold immovable property, to invest in stocks, shares, exchange traded funds, debt instruments, stock options and index options outside India without prior approval of the Reserve Bank of India” foreign currency exchange is missing…Can you please elaborate on this? So you’re agreeing that forex trading in India is not legal right?
Company Executive-yeah!! We are into CFD’s. Not forex trading.
Basavaraj-again….is this CFD legal? Under whose regulation you do this trading? Hope this link will be an eye opener for you personally
Hindu Businessline article dated August 25th 2012
Company Executive -no it is legal. We are trading under the instructions of BAPPEBTI (ITS LIKE SEBI in India) . And we have our regulated by the Jakarta Futures Exchange.
Basavaraj-I need Indian regulator not Jakarta or any other unregulated country source. If any issue with your company, default from opposite party or some other technical issue then you mean to say that I need to approach Jakarta Future Exchange or BAPPEBTI?
Simply to say….you knocked the wrong door…sorry
Company Executive-Sir in India whatever traded you take, when you punch the order it goes to Bombay stock exchange and you need not to go to Bombay to trade. So same here we are directly member of Jakarta.
Basavaraj-Agree….I am asking if I need to sue your company or default to my trade then whom I need to approach? Jakarta regulator?
Company Executive-As of now such things have not happened. We are registered in India, we have physical offices in Bangalore, whatever queries you have can consult here only.
Basavaraj-You might have registered as a company but are you registered as a broker with SEBI? Also what guarantee you provide that nothing will happen in future if not happened in the past
Company Executive-We are nothing to do with the Indian market, we are in International market, so we need not to report to SEBI. In fact RBI and SEBI have to report to BAPPEBTI. So we are directly member of that. Tomorrow even if the Harvest is not there BAPPEBTI will give you 2 options like to continue the trading with other broker or you can withdraw the whole amount.
Basavaraj-Oh is it? I don’t know this that RBI and SEBI will come under BAPPEBTI? Can you provide the proof of this claim?
Company Executive-You will get two copies of documentation from Jakarta so everything will be in the documentation.
Basavaraj-I am not asking the documentation…. Please first clear my doubt about the regulator. You said RBI and SEBI will come under BAPPEBTI…..so provide me proof then I will be your first customer
Company Executive-RBI and SEBI related to India, but BAPPEBTI is Asian regulatory body. RBI has given permission that Resident Individuals to freely remit up to USD 200,000 per(now it is revised to75,000$) calendar year for acquiring and hold immovable property, to invest in stocks, shares, exchange traded funds, debt instruments, stock options and index options outside India. Anything above that we have to ask the permission from RBI.
Basavaraj-But in above lines where they included forex trading? Is BAPPEBTI is regulating the whole Asia? Are so can you provide the proof?
FINALLY…NO ANSWER FROM OPPOSITE SIDE 🙂
Below are a few links which make sure that the forex trading in India not involving Indian Rupee is illegal.
RBI Letter Dated September 17th 2013.
RBI Notification Dated November 17th 2011.
A complete list of FAQs Forex Facilities for Residents (Individuals) by RBI (last updated on September 30th 2013).
Hope above links will be providing us a clear indication that such trading using online platform is illegal. But I have doubt about the above-said company, from whose representative I got a call is from Bangalore and how they are so openly offering without fear of regulations. Get up regulators !!! Don’t act lately like what you did with Sahara, Harshad Mehta, Stock Guru India or Saradha Chit Fund.
View Comments (300)
Sir i don't understand what's problem to trade with FTMO? In FEMA it's written we can do anything with funds available outside India.Funds which someone gifted us, inherited.So why trading from prop firm funds would be illegal?
Dear Shubham,
Whom do you complain to if something went wrong? Are those platforms registered in India?
Sir well said but how octafx is officiall partner of DC ( IPL team) even more than 10 companies offers local deposit and withdrawal if I doing INR deposit and withdrawal which offered by broker ( conversation to USD done by brokers not by me) how I breaks rules. And if brokers doing exchange to USD at there end why RBI OR SEBI allowed that local deposits
Dear Prashant,
Just by being an official sponsor it must not be proved that we have to blindly believe them.
I know this is not legal but it's also not ilegal. . According to fema act no one liable to send or exchange money international. . But some forex broker offer local bank deposit and withdraw. . So how could this impact fema act.
2ndly is any problem with prop forex trading platform?
Dear Suresh,
The simple question to ask yourself is - If something happens with my money then whom to approach (legal authroity). Based on the answer you can take your own call.
As a beginner in forex trading your information helped me a lot and your content is very useful. as well.
Thank you for sharing useful information. It is really helpful for us & learned many new things from this content. Keep sharing informative content.
Dear Mithun,
My pleasure :)
Sir, I'm interested in Indian share market trading and need some lessons.
Can u pls guide on fee basis! Pls email me with your contacts.
Thanks.
Dear Sourav,
I am not an expert in direct stocks.
Hi ! Is this legal ? Company name: FTMO, proprietary Firm based in Europe. Can a Indian resident trade commodities/Forex for this company living in India ? FTMO will give its own money and account to trade. Indian resident will work as service provider/Contractor for the company/firm. No money is going out of India, only coming in. Please clarify. Thanks !
Dear Simranjit,
Think of a situation if middlemen CLOSE their shop today, then to whom you have to complain?
Well ! Thank you for getting back to me. I am currently trading with them while in Canada and also I am not concerned if they close the shop or not cos it's not my money anyway. My concern is the legal aspects of trading with them living in India cos I will be treated as an employee/ServiceProvider/Contractor. Tbh, I have been in touch with couple of CAs in India nobody know anything about this. My high expectation is from someone who is in this business and that is you. Please clarify. Thanks !
Dear Samranjit,
If your employer not registered as a legal entity with any regulator, then you may also be considered as part of the conspiracy (directly or indirectly). Hence, it may impact you or not secondary. But be careful.
Mr Basavaraj, you are really good at making diplomatic statements. lol. Anyway, let's get this straight. Is there is any legal binding/statement/law/order that states something like this "Indian citizens living in India are forbidden or are not allowed to work for a proprietary Firm/Company based overseas that involves in Foreign Exchange Trading" ?
Mr Basavaraj ! Let me be very honest here, I am planning to move to India from Canada and unless I have the solid confirmation, I cannot make the move.
Thank you.
Dear Simranjit,
There is no such legal statement. But why to join the hands of a firm which is not legally acceptable in India?
bro ftmo is a legit , they provite cap from 10k to 200k usd only if you complete their test in a demo account , which is to give 10% return in a month after you complete that challenge only then they will give you real account with their money . now they will deduct 30% of your profits and give you 70% of profit to you . so what i think is this income should be considered as a commission income and by trading with ftmo you can avoid fema act and etc is your are not sending money for trading. you only pay around 155 euros which you will get back if you pass challenge.
now the main question is is this income legal or not (because we can use skrill also for withdraw but many time skrill block payments thats why bank transfer is best and for that you need proper reason and source of payment and if not they will block your account and can report to authority
Namaskaram sir,
I know this is an old post so maybe you won't respond but nonetheless, I wanted to ask these questions.
First of all, why is the RBI not letting us Indians trade this free market?
Secondly, if it is illegal then why are these brokers allowed to do business in India. The government knows how to control people online which can be seen as they banned porn in India and has been quite successful, but no actions against these companies.. Why??
And finally, there are already thousands of people in India who are already trading forex through these brokers, and to date, I haven't heard anyone getting punished for trading forex in these brokers who are not regulated in India.
(P.S Here I am talking about the forex brokers who are very reputable internationally. For ex- TD Ameritrade, blueberry markets, IC markets, etc )
Dear Aryan,
I am not questioning the RBI's move. However, I obviously question those entities who try to land through other means in India and lure innocent investors. If they are not loyal to their customers and law of the land, then how can we trust them?
hello sir ,
sir I have a question , Is forex.com that we indians can trust .
for a beginner who want to get into forex maket can you suggest a broker that we can trust .
thank you
Dear Satyajeet,
Why you need Forex Trading?
Hello,
Can we trade on CFD platforms like IQoption?
I understand that it is illegal to trade forex directly, but in CFD you don't own the asset, you merely get the difference in prices. Websites say that CFDs aren't regulated in India because SEBI has not said anything about it. So, would CFDs be a grey area (not in terms of the risk involved, but in terms of legality).
Dear Sattva,
As long as they are not registered or comes under any regulators of India, I feel it is illegal.
Hi. As of today (11/Sep/2019), is fx trading with an FCA Regulated FX Broker still illegal for resident Indians? I was thinking about having the trading account in the name of my mom who is a residing in India. I live in the Middle East and the broker said that they cannot accept clients from the country I live in but can accept clients from India. If it is not legal in India, then this broker would not have accepted clients as per their AML / KYC process. Pls throw some light on this.
Dear CD,
Check whether the broker registered with SEBI or not.