The global FX market is one of the most heavily traded and busiest financial markets in the world, allowing the opportunity for big as well as small players to participate. In recent years, owing to the proliferation of internet technology in general and online FX brokers, citizens of India are now looking for ways to tap into this market. But this is easier said than done, as certain limitations on FX trading in India are present. There are certain factors that all India-based FX traders need to look at before they choose a particular broker.
Currencies available in the Indian FX market
Currency trading in India is speculative in nature. Technically it is not allowed for any citizen to trade with brokers not regulated by the SEBI. You can, however, technically access online brokers because of how the rules are imposed by the regulatory body.
So if you are an Indian citizen willing to trade FX, you have to consider the following factors:
- The main regulatory authority for any FX activity in the country including FX trading is the Securities and Exchange Board of India(SEBI). The Reserve Bank of India(RBI) can also impose certain restrictions on Fx trading in India.
- There are many currencies that an Indian citizen cannot trade within the country as per rules imposed by the RBI. This has been done to protect the INR from currency devaluation.
- According to rules set by the SEBI, there are 4 currencies allowed in India for forex trading: The Japanese Yen, Great Britan Pound, the United States Dollar and the Euro. Traders can only trade them in pairs featuring the INR.
- There have been some recent relaxations by the regulatory authorities which has allowed trading in three major currency pairs: the EUR/USD, GBP/USD and USD/JPY.
A list of some of the best FX brokers for Indian citizens to trade
The general awareness among the Indian populace regarding FX trading in India is very limited. Reasons for these include the myriad of limitations that the regulatory bodies impose on FX trading activity in the country. Additionally, FX trading is only legal if one is trading with brokers regulated by the SEBI.
With that being said, the rules state that no Indian entity can send money outside of the country to take part in trading. However, there aren’t any restrictions on trading with an international broker without sending money outside India. Here are some of the online international brokers that Indian citizens can access and use to trade FX.
Alpari
Alpari is an FX broker with origins in Russia. It is the only international broker which is regulated by the SEBI and thus easily accessible to Indian traders. With spreads starting from 0 pips, the broker also offers ECN accounts.
Features:
- Indian traders can access 3 retail accounts: Standard, ECN and micro.
- No INR pairs available
- Minimum deposits start from $5 for micro, $100 for standard and $500 for ECN accounts.
- Founded and online since 1998
- Payment options: CashU, Check, ClickandBuy, Moneybookers, Ukash, WebMoney and Wire transfer.
HotForex
Hotforex is a reputed online broker which has received the award for the best broker 2012 by Global Finance. Registered and located in Mauritius, it serves as an excellent choice for Indian citizens. Its spreads remain competitive, starting from just 0 pips.
Features:
- Traders have an option of 6 account types, with the minimum deposit starting from $5 for their micro-accounts.
- Indian citizens can deposit using wire transfers, credit cards and e-wallets which have no associated fees.
- Indian traders can also access a PAMM trading account or copy trading on the platform.
- Online since 2010
- Offices in: Mauritius
AvaTrade
AvaTrade is another reputed broker which is compliant with several regulatory authorities around the world. With low spreads starting from 0 pips and a range of diverse deposit options, Indian traders will find AvaTrade easy to master and trade.
Features:
- Indian traders can choose one of 4 account types at AvaTrade: retail, options, spread betting and standard accounts. The minimum deposit for all these account types is $100.
- Although deposits in INR are not available, Indian citizens can still choose USD, EUR, AUD or GBP
- Founded and online since 2006
- Payment options: Credit/debit cards, Moneybookers, Neteller, PayPal, WebMoney and Wire transfer.
FXTM
FXTM is a leading forex as well as a CFD broker which provides MetaTrader as one of its trading platforms. They provide a lot of educational material as well such as ebooks, trading webinars, glossaries and seminars.
Features:
- FXTM provides 6 different types of accounts, with three of them being ECN style accounts.
- The minimum deposit for the cent account $10 and that for the ECN account is $200.
- Founded in: 1993
- Online since 2003
- Payment options: Check Credit/debit cards, Wire transfer and Neteller
Admiral Markets
Admiral Markets is one of the most regulated brokers operating in the market. It is regulated by international regulatory bodies such as the Australian Financial Services Licence (AFSL), Cyprus Securities and Exchange Commission (CYSEC) and Estonian Financial Supervision Authority.
Features:
- Admiral Markets provides over 50 currency pairs for trading.
- The broker provides 4 different trading account types: Trade.MT4, Zero. MT4, Zero. MT5 and Trade.MT5.
- The minimum deposit is $100.
- Payment options: Credit/debit cards, Moneybookers and Wire transfer
eToro
Founded in 2007, eToro is a well-known forex trading broker, which also offers social trading. It offers a total of 47 FX pairs. It also offers a huge selection of educational content, including videos, educational articles and other integrated educational content.
Features:
- There is only one type of account at eToro.
- The minimum deposit for Indian FX traders is $200.
- It provides a separate forex mobile app.
- Founded: 2007
- Online since 2008
- Offices in: British Virgin Islands, Cyprus, United States
- Payment options: Credit/debit cards, Moneybookers, Neteller, PayPal, WebMoney, Western Union and Wire transfer.
Limitations in FX trading in India
There are several limitations that Indian traders should keep in mind while trading FX in India. Normally, the Indian FX market is formed by different participants with varying needs and interests that trade directly with each other. These participants can be divided into two groups: the interbank market and the retail market. Indian traders should take note of the following limitations while trading in India.
- Foreign exchange is legal in India if one does it through a SEBI regulated foreign exchange portal with a base currency of INR.
- The SEBI is not responsible for enforcing any leverage limitations on brokers it regulates.
- The SEBI furthermore does not provide any kind of negative balance protection to traders under these brokers.
- You cannot deposit INR through the traditional deposit methods regulated by RBI or SEBI for FX trading.
- Indian clients can thus use local deposit options provided by the brokers mentioned above.
- Only brokers under the regulation of SEBI are allowed to offer INR based currency options.
- It is extremely important to be aware of central bank intervention, as it is highly relevant to know how it affects exchange rates.
You can check out other details related to forex trading from the SEBI official website.
Final Thoughts
The FX market in India is still fledgeling compared to other countries, having been in existence only since 1978. As it exists today, the FX market is heavily regulated and intervened by the RBI. As several grey areas exist, Indian traders should always try to educate themselves on the various rules and regulations involved before joining a broker. Lastly, they should always be on the lookout for brokers who offer false promises and stay away from them at every instance.