The Reserve Bank of India's warning list has just added another popular FX/CFD broker, ThinkMarkets, and two prop firms, FundedNext and Smart Prop Trader. While these are the first prop trading entities the institution has focused on, the list already includes many well-known brokers, including eToro, IC Markets, and XTB.
Reserve Bank of India Updates Alert List: Adds Prop Firms and FX/CFD Broker
India's central bank updated its warning list yesterday (Tuesday), adding several new entities. Among FX/CFD brokers, the popular brand ThinkMarkets was added, along with prop firms, for the first time since the registry's creation. These are the sector's popular names FundedNext and Smart Prop Trader.
How can a company end up on the Indian central bank's warning list? As the institution explains, it contains names of entities “which are neither authorized to deal in forex under the Foreign Exchange Management Act, 1999 (FEMA) nor authorized to operate electronic trading platform (ETP) for forex transactions under the Electronic Trading Platforms (Reserve Bank) Directions, 2018.”
The list may also include companies that promote unauthorized access to the FX market or claim to provide advisory and training services for individual investors in trading.
Interestingly, companies on the Indian regulator's warning list often don't even offer their services in this country. In 2022, many popular names were added to the very same warning website. Finance Magnates spoke with representatives of several different brokers who stated they don't even operate in that market. Among them were XTB and eToro.
eToro confirmed that it “does not onboard clients from India,” and XTB stated that it “is not operating in India and does not offer services to residents of India.”
Indian FX/CFD Market
India neither regulates nor directly prohibits retail over-the-counter (OTC) markets. This allows many forex and CFD brokers to target Indian citizens. However, clients violate local forex law, FEMA, by accepting deposits on these locally unauthorized platforms.
Broker OctaFX also had problems with the Indian central bank, which seized nearly $10 million from almost $120 million allegedly earned in local operations.
Nevertheless, the industry continues to attract new entities. Last month, Axi, an Australia-based forex and CFD broker, expanded its physical presence by opening a new office in Bangalore, India. It is led by Axi's head of engineering in the region and employs about 30 staff with plans for further expansion in the “coming months.”
