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Informist, Monday, Jun. 16, 2025

 

--RBI notifies master direction on electronic trading platforms

 

NEW DELHI – The Reserve Bank of India on Monday issued the master direction on electronic trading platforms through a notification. "These directions shall be applicable with immediate effect," the regulator said.

 

Entities satisfying the eligibility criteria prescribed under the directions will need to submit an application through the PRAVAAH portal of the RBI for authorisation to operate an electronic trading platform.

 

"These Directions shall not apply to an electronic system operated by a scheduled commercial bank (including a branch of a foreign bank operating in India) or a standalone primary dealer for transactions in eligible instruments wherein the bank or the standalone primary dealer operating the electronic system is the sole quote/price provider and a party to all transactions contracted on the system," the notification said.

 

The RBI also stipulated that an entity seeking authorisation as an electronic trading platform operator under these directions must have a minimum net-worth of INR 50 million and shall continue to maintain this minimum net worth at all times.

 

Moreover, the entity seeking authorisation as an electronic trading platform operator should obtain and maintain robust technology infrastructure with a high degree of reliability, availability, scalability and security with respect to its systems, data and network, and manage the associated risks. It should also ensure capability to disseminate trade information on a real-time basis or near-real-time basis, the RBI said.

 

The central bank said that an electronic trading platform operator is required to do due diligence at the time of on-boarding of all members and maintain all relevant information about its members. The operator must also have well-documented rules and regulations regarding, but not limited to, on-boarding, suspension and cessation of membership, roles and responsibilities of the members and the operator, liability framework for the electronic trading platform and its users.

 

The operator is required to make available pre-trade information such as bid or offer prices, related quantities, depth of trading interest, or such other information, to its members in a fair and non-discriminatory basis consistent with the rules governing transactions, it said. The entity also has to make available post-trade information such as the price, volume and time of transactions or such other information, to its members, in a fair and non-discriminatory basis. 

 

The electronic trading platform operator should also set up a comprehensive risk management framework, including a robust internal control framework, covering all aspects of its operations, according to the master direction. The operator should also make an arrangement to address any dispute that may arise or is likely to arise between its members. 

 

The RBI also put in place certain norms for an electronic trading platform operator, which outsources its operations, technology and activities. Under this, the operator is required to have an effective governance and risk management mechanism for managing all risks inherent in such outsourcing relationships, among other norms. 

 

An electronic trading platform operator is required to set up a suitable business continuity plan, including contingency and disaster recovery arrangements to ensure continuity and availability of its operations, along with robust cyber security controls and processes and data security infrastructure, the central bank said.

 

Under the reporting requirements to the central bank, an electronic trading platform operator is needed to furnish a quarterly report on the functioning of the platform to the RBI on or before the 15th day of the month following the quarter. Among other norms, the operator will also have to furnish a report, in respect of each financial year, to the central bank, on the status of their compliance with directions prescribed to them at the time of grant of authorisation or subsequently on or before Apr. 30 of the succeeding financial year, the RBI said. 

 

The RBI, however, said that on being satisfied that it is necessary to do so, it may exempt any electronic trading platform operator, either generally or for a certain period, from any or all of the provisions of proposed directions in the interest of public or financial system of the country. 

 

However, it also noted that in order to ensure robustness of the market infrastructure, development of financial markets and the risks that unproven technology could pose or in public interest or to regulate the financial system of the country to its advantage, the RBI will be selective in granting authorisation for operating electronic trading platforms.  End

 

Reported by Sagar Sen and Pratiksha

Edited by Deepshikha Bhardwaj

 

 

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