Executive Summary:
This circular announces the rollout of the FX Retail platform on August 5, 2019, an electronic trading platform for retail customers to buy/sell foreign exchange. The platform aims to provide transparent and fair pricing for retail users, including individuals and Micro, Small, and Medium Enterprises. Customer registration begins on July 1, 2019. Banks must facilitate onboarding of retail customers and submit quarterly reports on customer transactions.
Key Points / Main Content:
* **FX Retail Platform Details:**
* Platform for retail customers to buy/sell USD against INR.
* Available for cash (same day), tom (next day), or spot (two days after transaction date) delivery.
* Accessible through the website https:www.fxretail.co.in.
* **Transaction Limits and Charges:**
* No limit on the number of transactions per customer per day, but subject to bank-assigned limits.
* Single transaction size cannot exceed USD 5 million.
* No CCIL transaction charges for transactions up to USD 50,000 per day.
* CCIL charges 0.0004% for transactions exceeding USD 50,000 per day.
* **Bank Responsibilities:**
* Banks may charge a pre-agreed flat fee for administrative expenses, which must be publicly declared.
* Fees charged by banks must be indicated on the FXRetail platform.
* Banks may recover CCIL transaction and settlement charges from customers.
* Banks must facilitate the onboarding of retail customers to the platform.
* Banks must submit quarterly reports on customer transaction distribution and fees charged.
* **Clearing Corporation of India Ltd (CCIL) Responsibilities:**
* CCIL will issue detailed guidelines on platform operation, including customer registration.
* Customers can find platform details on the CCIL website https:www.ccilindia.com.
Impact Analysis:
Banks:
Impact: Banks need to integrate the FX Retail platform into their systems and facilitate customer onboarding. They will also need to adapt their pricing strategies and administrative procedures to align with the platform's functionalities and fee structure. Also, banks need to submit quarterly reports on customer transaction distribution and fees charged.
Action Required: Banks must integrate the FX Retail platform, onboard retail customers, declare administrative fees, and submit quarterly reports.
Retail Customers (Individuals and MSMEs):
Impact: Retail customers gain direct access to the foreign exchange market with increased transparency and potentially better pricing.
Action Required: Customers can register on the platform starting July 1, 2019, and begin using it for transactions from August 5, 2019.
Key Entities Referenced
FX Retail: The foreign exchange trading platform for retail participants introduced by the Reserve Bank of India (RBI).
Clearing Corporation of India Limited (CCIL): The organization responsible for rolling out and operating the FX Retail platform.
US Dollar: The foreign currency that can be traded against the Rupee on the FXRetail platform.
Rupee: The Indian currency that can be traded against the US Dollar on the FXRetail platform.
Reserve Bank of India Act, 1934: The act under which the directions in the circular have been issued.
Micro, Small and Medium Enterprises: One of the types of retail users that will benefit from transparent pricing on the FX Retail platform.
Statement on Developmental and Regulatory Policies dated June 06, 2019: RBI document that announced the introduction of an electronic trading platform for buyingselling foreign exchange by retail customers of banks.
T. Rabi Sankar: Chief General Manager at Reserve Bank of India.
RBI/2018-19/217
FMRD.FMD.16/02.03.225/2018-19 June 20, 2019
All Eligible Market Participants
Dear Sir/Madam,
Rollout of the foreign exchange trading platform for retail participants – FX-
Retail
Please refer to the Statement on Developmental and Regulatory Policies dated June
06, 2019, announcing the introduction of an electronic trading platform for
buying/selling foreign exchange by retail customers of banks. The platform, FX-
Retail, is ready for rollout by the Clearing Corporation of India Limited (CCIL) on
August 05, 2019.
2. The issue of transparent and fair pricing for retail users (individuals and Micro,
Small and Medium Enterprises) in the foreign exchange market has been raised in
various fora and in public interactions. Such a mechanism will provide transparency
while enhancing competition and lead to better pricing for retail customers. Banks
may charge their retail customers a pre-agreed flat fee towards administrative
expenses, which should be publicly declared. Overall, this would bring down the total
cost faced by the retail customer in the foreign exchange market. Facilitating direct
access of retail customers to the market, rather than through price-setting by their
banks, would also bring down the risk that banks face in warehousing transactions.
3.The FX-Retail platform can be accessed by any customer of a bank (through the
website https://www.fxretail.co.in) who has a need to purchase or sell US Dollar
against the Rupee for delivery on cash basis (same day), tom basis (next day) or
spot basis (two days after date of transaction), subject to the following:
i. There is no cap on the number of transactions per customer during a day.
The total amount of transactions of a customer shall be subject to the limit
assigned by its bank.
ii. The size of a single transaction is not allowed to exceed $5 million.iii. As a further facility for retail clients, no transaction charges shall be levied by
the CCIL on transactions of customers if such transactions do not exceed
USD 50,000 per day.
iv. A transaction charge of 0.0004% shall be charged by the CCIL for
transactions in excess of USD 50,000 per day.
4. Fees charged by banks, if any, shall be indicated on the FX-Retail platform. Banks
may recover from customers transaction and settlement charges levied by the CCIL.
5. In view of the advantages of transparency and pricing to retail customers, as well
as the systemic advantage of improved price discovery, banks shall facilitate on-
boarding of retail customers to the platform expeditiously. A quarterly return shall be
submitted by all banks on the distribution of customer transactions (across FX-Retail,
other electronic trading platforms and other channels) and the fees charged by them
as per the format given in the annexure.
6. Detailed guidelines regarding the operation of the platform, including the process
of customer registration, shall be issued by the CCIL. Customers can obtain further
details about the platform on the CCIL website (https://www.ccilindia.com)
7. The customer registration process on the platform shall commence on July 01,
2019 and the platform shall be available for transactions from August 05, 2019.
8. The directions contained in this circular have been issued under section 45W of
the Reserve Bank of India Act, 1934 and are without prejudice to permissions/
approvals, if any, required under any other law.
Yours faithfully
(T. Rabi Sankar)
Chief General ManagerANNEXURE
REPORT ON FX TRANSACTIONS WITH CLIENTS ACROSS VARIOUS CHANNELS
(Amount in USD Millions)
ON FX RETAIL THROUGH OTHER ELECTRONIC THROUGH OTHER CHANNELS
TRADING PLATFORMS
(include all other transactions)
CASH TOM SPOT CASH TOM SPOT CASH TOM SPOT
No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt.
REPORT ON CHARGES LEVIED FOR FX TRANSACTIONS
(in ` Crore)
ON OTHER
ON FX RETAIL
PLATFORMS
Processing charges
Charges for market risk
Other charges