Offshore ETPs offering INR transactions can access Indian Market

Offshore ETPs offering INR transactions can access Indian Market; T&Cs Apply!
Brief Overview:

ETPs operating from outside India will get access to the Indian markets without having to set up an Indian subsidiary (“Offshore ETPs”). This emerges from new draft direction on electronic trading platforms (“ETPs”) issued by Reserve Bank of India (“RBI”) (“2024 Draft Directions”).

The 2024 Draft Directions while largely dealing with domestically set up ETPs, separately sets out norms proposed for Offshore ETPs.

Technical Details:

1) Prepared norms are applicable only as regards derivative transaction involving INR or INR interest rates, as permitted by RBI.

2) Offshore ETP is to be from a FATF members’ country.

3) Transactions on Offshore ETP are regulated by a financial sector regulator which is a member of CPMI (Committee of Payments and Market Infrastructure) or the IOSCO (International Organization of Securities Commissions).

4) Other T&Cs apply.

JC takeaway:

The 2024 Draft Direction are a good beginning. It is hoped that some of the ambiguities and gaps would get covered by the final directions when issued.

For further details, please see:

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