Forex legalisation issues in India

General
1

Below are my questions:

  1. Is forex legal in India?

  2. Can we open a forex trading account with a foreign broker?

2

No, in india forex is not legal mean you can’t trade in currency pairs other than pairs trading in NSE/USE/MCX-SX.

I think you can open forex trading account with a foreign broker once you get approval from the RBI & any other entity which has to approve.

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3

Forex trading is illegal as per FEMA [Foreign Exchange Maintenance Act], 1999.

Reasons would be that one has to transfer money to benami bank accounts outside India. Also, Forex trading is very risky[very high volatility] and i am not aware of even a single broker who actually refunds the Trading Capital/ profit earned, back to the client.

I think it is a good step from RBI in protecting investors’ interests.

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4

Forex: The market in which currencies are traded.

Is it legal?

Yes it is legal in India for retail to participate, as long as the currency traded is a Rupee Pair (USDINR, EURINR, JPYINR and more) and on regulated/approved Indian stock exchanges (NSE, MCX-SX, USE)

What is illegal?

Trading on any currency pair which is not a rupee pair (EURUSD, USDJPY, and more), and trading anywhere outside the regulated stock exchanges.

Can we open a forex trading account with a foreign broker?

Yes you can open an account, but you cannot trade on it as per RBI regulations . Also if you look at the link, it clearly states that you are not allowed to trade in anything that requires margin or might have margin calls (basically all leveraged products). 

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5

Does that mean there are no trustworthy FOREX brokers in India ??

6

Not about trustworthy, as per the regulations in india we have only 4 currency pairs which you see in NSE. If i’m not wrong because of settlement constrains its not allowed. Other reason may be because forex market is 24 hours market, one market is closed the other opens.

7

Yes, settlement would be a major issue. Is there any exchange looking after Forex settlements across the globe ?

8

All you mean it’s a prey !!

9

Definitely a yes from me. As somebody told me, it;s just another video game. LOL!
But it is helpful in learning trading. You can open a demo account with any of the 1000’s of Forex brokers and place demo trades… One can do TA analysis easily using their trading platforms.