Electronic Trading Platforms (ETPs)

Published: 3rd May, 2024

Context

The Reserve Bank of India (RBI) released a draft Master Direction for Electronic Trading Platforms (ETPs) in the wake of increased integration of the onshore forex market with offshore markets.

Key Highlights of the Draft Master Direction - RBI (Electronic Trading Platform Directions, 2024)

Need for Regulation: The RBI's move comes in response to concerns raised about unauthorized entities offering forex trading facilities with promises of high returns.

Minimum Net-Worth Requirement: Entities applying for authorization as Electronic Trading Platform (ETP) operators must maintain a minimum net worth of Rs 5 crore. This requirement is to be upheld continuously to ensure financial stability and resilience.
Incorporation in India: The entity seeking authorization as an ETP operator must be a company incorporated in India.
Shareholding Compliance: Any shareholding by non-residents in the entity must comply with all relevant laws and regulations, including the Foreign Exchange Management Act, 1999.
Technology Infrastructure: ETP operators are required to maintain robust technology infrastructure characterized by high reliability, availability, scalability, and security.

Fact Box: About ETPs

In 2018, the RBI had introduced a framework for the authorisation of Electronic Trading Platforms to facilitate transactions in financial market instruments under its regulation.
ETPs, distinct from recognised stock exchanges, are electronic systems enabling the trading of eligible instruments such as securities, money market instruments, foreign exchange instruments, derivatives, etc.

CURRENT AFFAIRS FOR UPSC IAS

Electronic Trading Platforms (ETPs)

Still Have Questions?

CURRENT AFFAIRS FOR UPSC IAS

Electronic Trading Platforms (ETPs)

Still Have Questions?

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