The Reserve Bank of India (RBI) issued the Master Direction for Electronic Trading Platforms (ETPs) on June 16, 2025. However, these directions exclude any mention of offshore ETPs or entities operating abroad by an operator incorporated outside India. This contrasts with the 2024 draft directions, which stipulated the criteria for authorisation and other responsibilities of offshore entities.
For context, ETPs comprise any electronic system besides recognised stock exchanges that facilitate transactions in securities, market instruments, and derivatives. To operate as ETPs, entities should be incorporated in India, have a minimum net worth of Rs 5 crore, and maintain technological infrastructure with a “high degree of reliability, availability, scalability, and security” concerning their systems and data.
Why this matters
The directions build on the central bank’s intent to review and update the existing 2018 framework for ETPs. In February 2024, the RBI released its ‘Statement on Developmental and Regulatory Policies’, during which it noted the recent increase in the integration of onshore forex markets with offshore markets, developments within the technological landscape and growth in product diversity.
In a different vein, in 2023, the authority expanded its ‘Alert list’ of unauthorised forex trading entities. This repository contains the names of entities not authorised to deal with forex under the Foreign Exchange Management Act (FEMA), 1999, or to conduct forex transactions prohibited under the RBI’s ETP Directions, 2018. Consequently, the omission of offshore ETPs in the final directions leaves a regulatory gap despite earlier efforts to bring such entities under oversight.
Other minor changes
The 2025 master directions include certain additions to the responsibilities of ETPs based on stakeholders’ comments and feedback on the 2024 draft.
Operating framework: The directions outline two primary aspects of the operating framework of ETPs—access and participation, and risk management. Within the risk management framework, ETP operators should now also establish pre-trade and post-trade controls to reduce erroneous transactions like off-market quotes, fat finger errors, among others by members. Additionally, ETP operators providing algorithmic trading systems should ensure that competent and skilled persons handle such systems.
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Preservation, access, and use of data: In case the operator’s authorisation is cancelled, it should share all data about activities on the platform with the RBI or any agency it specifies in a form prescribed by the central bank.
Reporting requirements: Besides other requirements, the entity should furnish any report or information sought by the RBI within a specified format and timeframe.
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