Legality of Forex Trading in India

[SwingKing]

Only professional forex traders can understand this semi legal circular of RBI.

Well there's absolutely no correlation between what you have written wrt Professional Traders and RBI circular.

Tc.

 

[findvikas]

i am planning to file a request to fema & RBI under RTI act via one of my lawer friend... but that may take some time. I will update if I get any update.

Today I have given the application to my lawer friend and she will be forwarding it to RBI on my behalf. I will update you all if I get any response.

 

[findvikas]

I spoke to Alpari's New Accounts Opening Head today and he cleared my doubts.

What he told me is that they are providing account with as low leverage as 1:1 and allowing clients to increase leverage if they like to but he had no word on legality of it. I confirmed if RBI catch you then you are on your own. They are here just for offshore client capturing. They are just marketing guys for Alpari UK and all the funds will be transferred in USD terms and remittance will be sent also in USD terms.

So whomsoever says Alpari is legal... please think again. They are legal if you are trading with 1:1 leverage and I burst out laughing.. he might have felt awkward but so was his comment.. who want 1:1 leverage in FX world ? Think again..

 

[findvikas]

My legal process with RBI & FEMA is still pending... lets see how that goes.

 

[lonelyhunk]

Hi Friends,

I am following this thread for quite some time and ithas been quite informative so far. After going through the posts, I have some specific questions related to Forex Trading in India wrt to the legalities:

1. Is it that the REMITTANCE in INR to overseas forex broker ILLEGAL (assuming margin based spot trading) OR trading forex online from India as a whole is illegal ? (IP address is tracked)

And if remittance is an issue, will it be legal if I get the funds deposited through any overseas account (lets say from a friend's account or credit card ) ? In the same line, where do I stand if I pay through my international credit card (issued in india) or Paypal ?

2. Everywhere in RBI circulars it is stressed upon Remittance. How about withdrawal ? Is it legal to withdraw money from the forex brokers through wire transfer (credited to my indian bank account) - assuming there is a legal way of depositing. Again in the same line, if i withdraw through paypal or indian credit card what is the implication ?

Friends - I am interested in FX trading but within the legal arena. Any authenticated information is highly appreciated.

 

[lonelyhunk]

Interesting Contradiction

Under the Foreign Exchange Management Act, 1999 (FEMA) [which replaced FERA], which has come into force with effect from June 1, 2000, all transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions. In terms of Section 5 of the FEMA, persons resident in India are free to buy or sell foreign exchange for any current account transaction except for those transactions for which drawal of foreign exchange has been prohibited by Central Government, vide its Notification referred to above. A copy of the Notification is available in the Official Gazette as well as an annexure to our Master Circular on Miscellaneous Remittances available at our website www.mastercirculars.rbi.org.in.

 

[Binoy]

i really appreciate all the posts over here and at the same time eagerly waiting for the response of application filed by vikas.

 

[scalperfx]

Hi Vikas,

I was planning to initiate a similar process invoking RTI- hats off to you for beating us to it...I am looking forward to hear about the RBI/Government's response.Do keep us posted..In fact I might file a similar petition too, maybe that might expediate the response...

 

[findvikas]

So far I have not heard back anything and I think I need to file another RTI application to check the status of the earlier application. I will ask my friend once again to check if she can find anything otherwise file another application, she is real busy in her engagements and so am I these days.

 

[scalperfx]

Hi Vikas,

I thanked you earlier because you managed to get me moving into filing my petition. (I am sure you are gonna hear from them before I do,but filing another petition won't hurt i guess)...lets keep each other posted...