Skip to main content

Draft Directions for Electronic Trading Platforms (ETPs)

Reserve Bank of India (RBI) has issued draft directions for Electronic Trading Platforms (ETPs).

What is Electronic Trading Platform (ETP)?

Electronic Trading Platform (ETP) shall mean any electronic system, other than a recognised stock exchange, on which transactions in eligible instruments are contracted.

What are Eligible Instruments?

Eligible Instruments shall mean securities, money market instruments, foreign exchange instruments, derivatives, or other instruments of like nature, as may be specified by RBI under section 45W of Chapter III-D of RBI Act, 1934.

To whom shall the directions be applicable?

  • The directions are issued to the entities operating ETPs on which transactions in eligible instruments are contracted.
  • The directions shall not apply to electronic systems operated by scheduled commercial banks and standalone primary dealers for transactions in eligible instruments wherein the bank or the primary dealer operating the electronic system is the sole quote / price provider and invariably a party to all transactions contracted on the system, subject to the conditions specified by RBI.
  • The direction shall apply to offshore ETPs only to the extent specified.

What are the conditions for operating an ETP?

  • No entity, resident or non-resident, shall operate an ETP without obtaining prior authorisation of, or having registered with, RBI.
  • In respect of eligible instruments, ETP operators authorised by / registered with RBI shall ensure that transactions only in instruments approved by RBI are contracted on their platform.
  • Existing ETPs requiring authorisation / registration under the directions shall make an application for authorisation / registration within 3 months from the date the directions. An operator of an existing ETP may continue to carry on the operations till disposal of its application by RBI granting or rejecting authorisation / registration.

What is the eligibility criteria for authorisation as ETPs?

An entity seeking authorisation as an ETP operator to commence or carry on ETP operation shall fulfil the following criteria –

  • The entity shall be a company incorporated in India.
  • The entity or its key managerial personnel shall have experience of at least 3 years in operating trading infrastructure in financial markets.
  • An entity shall maintain a minimum net-worth of ₹5 crore at all times.
  • The entity shall obtain and maintain robust technology infrastructure.
  • The entity shall ensure capability to disseminate trade information on a real-time basis or near real-time basis.

What are the directions on in-principle approval?

  • Entities desirous of obtaining authorisation to operate an ETP may apply for ‘in-principle’ approval from RBI for setting up the same before applying for authorisation.
  • The ‘in-principle’ approval shall be valid for 6 months from the date of issue.
  • Entities that obtain ‘in-principle’ approval shall fulfil the prescribed eligibility criteria within 6 months from the date of issue of the ‘in-principle’ approval and submit an application for grant of authorisation.

What are other directions?

  • The ETP operator shall undertake due diligence at the time of on-boarding of all members and identify its members uniquely using Legal Entity Identifier (LEI) and / or Permanent Account Number (PAN).
  • All data relating to activities on the ETP shall be maintained in easily retrievable media for at least 10 years. Without prejudice to the minimum requirement for storage of data, the data sought for any investigation by RBI or any other authority as required under Indian laws or regulations shall be maintained for 3 years from the date of completion of the investigation.
  • Algorithmic trading (Algo trading) shall mean any trade originated by a software programme using automated execution logic.

What are the directions for offshore ETPs?

  • Offshore ETP shall mean an ETP operated from outside India by an operator incorporated outside India.
  • Operators of offshore ETPs desirous of providing residents with access to their platform for transactions with non-residents in eligible derivative instruments involving rupee or rupee interest rate as permitted by RBI under the Foreign Exchange Management Act, 1999 (FEMA, 1999) shall apply for registration with RBI.
  • Operators of offshore ETPs that seek to register with RBI shall fulfil the following criteria –
    • The operator is incorporated in a country which is a member of the Financial Action Task Force (FATF).
    • The operator or the transactions on the offshore ETP are regulated by the financial market regulator of the country where the operator is incorporated or where the transactions are contracted.
    • The financial market regulator that regulates the operator or the transactions on the offshore ETP is a member of the Committee on Payments and Market Infrastructures or the International Organization of Securities Commissions.
    • The offshore ETP permits transactions only in eligible derivative instruments involving rupee and / or rupee interest rates between residents and non-residents that RBI has permitted under FEMA, 1999.
    • The offshore ETP does not allow transactions between residents.


References

Reserve Bank of India. (2024, April 29). 'Master Direction – Reserve Bank of India (Electronic Trading Platforms) Directions, 2024 - Draft'. Retrieved from https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=4425

Reserve Bank of India. (2024, April 29). 'RBI releases Draft Master Direction – Reserve Bank of India (Electronic Trading Platforms) Directions, 2024'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=57809


Follow at - Telegram   Instagram   LinkedIn   X   Facebook

Labels:

Comments

Post a Comment

Popular Posts

Highlights of RBI Annual Report 2023-24 – Chapter 7 to 12

Reserve Bank of India (RBI) has published its annual report for the financial year 2023-24. In a series of articles, we will go through the highlights of the report. This is the fifth and last article in the series.  Chapter 7 – Public Debt Management Ways And Means Advances (WMA) limit for the Government of India (GoI) for H1:2023-24 (April to September 2023) was fixed at ₹1,50,000 crore and for H2:2023-24 (October 2023 to March 2024) was fixed at ₹50,000 crore. RBI issued an ultra-long security of 50-year tenor aggregating ₹30,000 crore to cater to the growing needs of long-term institutional players. Issuance of Sovereign Green Bonds (SGrBs) for an aggregate amount of ₹20,000 crore included maiden issuance of 30-year (₹10,000 crore) SGrB in addition to 5-year (₹5,000 crore) and 10-year (₹5,000 crore) SGrBs. A new 3-year benchmark security was introduced as part of government market borrowing programme during H1:2023-24.  The basket of products offered through the ‘Retail ...
Post a Comment
Read more

RBI’s Monetary Policy (August 06, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on August 06, 2025. Here are some of the highlights of the monetary policy announcement. Rates   Change Rate Policy repo rate Unchanged 5.50% Standing deposit facility (SDF) rate 5.25% Marginal standing facility (MSF) rate 5.75% Bank rate 5.75% Monetary policy stance Monetary policy stance unchanged as ‘neutral’. Domestic Economy  Real GDP growth for 2025-26 is projected at 6.5%. CPI headline inflation declined for the eighth consecutive month to a 77-month low (since January 2019) of 2.1% in June, driven primarily by a sharp decline in food inflation. Food inflation recorded its first negative print since February 2019 at (-) 0.2% in June. CPI inflation for 2025-26 is projected at 3.1%. India’s current account deficit (CAD) moderated to 0.6% of GDP in 2024-25 from 0.7% of GDP in 2023-24 due to robust services exports and strong remittances receipts despite higher merchandise trade deficit. As on Augus...
Post a Comment
Read more

What is Financial Inclusion (FI) Index?

Achieving complete financial inclusion is one of the important goals of the nations and central banks across the world. But how do we measure the extent to which the population of the country is financially included? Well, there is an index in India for this. What is Financial Inclusion (FI) Index? The composite Financial Inclusion (FI) Index was constructed by Reserve Bank of India (RBI) in August 2021, to capture the extent of financial inclusion across the country. FI-Index has been conceptualised as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with Government and respective sectoral regulators.   What are the parameters of FI-index? The FI-index comprises of three broad parameters (comprising of 97 indicators) with different weights assigned to each parameter. Ease of Access (35%) Availability and usage of services (45%) Quality of services (20%) The 'Quality' parameters captures the qua...
Post a Comment
Read more

Co-Lending Arrangements (CLAs)

Reserve Bank of India (RBI) has issued directions on co-lending arrangements which will replace the existing guidelines on co-lending by banks and Non-Banking Financial Companies (NBFCs) to priority sector. What is Co-Lending Arrangement (CLA)? Co-Lending Arrangement (CLA) refers to an arrangement, formalised through an ex-ante agreement, between a regulated entity (RE) which is originating the loans (‘originating RE’) and another RE which is co-lending (‘partner RE’), to jointly fund a portfolio of loans, comprising of either secured or unsecured loans, in a pre-agreed proportion, involving revenue and risk sharing. To whom shall the directions be applicable? The directions shall be applicable to CLAs entered into by the following REs – Commercial Banks (excluding Small Finance Banks, Local Area Banks and Regional Rural Banks) All-India Financial Institutions Non-Banking Financial Companies (including Housing Finance Companies) Which lending arrangements are exempt from the applicabil...
Post a Comment
Read more

Pre-payment Charges on Loans

Reserve Bank of India (RBI) has issued directions on pre-payment charges on loans. What issues were observed by RBI during supervisory reviews? Divergent practices were observed amongst Regulated Entities (REs) with regard to levy of pre-payment charges in case of loans sanctioned to Micro and Small Enterprises (MSEs) which lead to customer grievances and disputes.  Certain REs were found to include restrictive clauses in loan contracts / agreements to deter borrowers from switching over to another lender, either for availing lower rates of interest or better terms of service. To whom shall the directions be applicable? The directions shall apply to all commercial banks (excluding payments banks), co-operative banks, Non-Banking Financial Companies (NBFCs) and All India Financial Institutions (AIFIs). To which loans shall the direction be applicable? The directions shall be applicable to all floating rate loans and advances sanctioned or renewed on or after January 01, 2026. Which ...
Post a Comment
Read more