A lot of people are reluctant to trade on Forex with the impression that such is prohibited in their country. This is due to the lack of knowledge as to whether Forex Trading is actually legal in their country or having a misconception of it, being synonymous to gambling.
But is Forex Trading Legal in India? to some Forex Experts, they may answer, even when it’s a no, it can be a yes.
Forex Trading allowed?
Countries where people and legal entities are allowed to have currency purchases, ban exchange offices or current accounts are mostly allowed to engage in as this is used for international investments, or import and export operations. The simplified concept of Forex Trading is making money based on currency price changes. Within the last decade, we have seen a lot of it mentioned online, moving into different regions of the world that has not been accustomed to the term ForEx.
Market Regulation
Another way to check the legality of Forex Trading in your country is to check if your Forex Brokers have acquired a special license to confirm they are part of a regulatory body as such intermediaries are subject to mandatory certifications.
For example, the United States would have the SEC or CTFC while Europe would have the ESMA and the MIFD.
Restriction in other countries
Each country will have some form of restriction present in trading. For example, You cannot open a trading account with foreign brokers in South Korea and there is a regulated maximum cap on leverage. Same restrictions apply in China as much you are allowed to engage in Forex Trading, you are not allowed to do business with foreign brokers and will be required to transact with local brokers only. Another restriction is the illegality to open an account with a foreign broker that is not regulated in Turkey.
Some countries, although legal to trade, will always have a certain amount of restrictions/protections governed by their regulatory body.
Banned in other countries
There is a ban in Forex trading? How? Why? Two main factors are considered in banning which is either safety and fixed currency system. Given that there is a high risk involved, some countries like The Philippines, Bosnia, North Korea, Belgium, Bosnia have declared Forex Trading as illegal, perceiving this as a protection for its citizens from high probability of loss or some countries perceiving this trading as more of a gamble than anything else.
Forex Trading is Legal in India
Altho there is no ban on Forex trading, Traders are limited to exchanging currencies with the Indian rupee. It is held legal when it is done through a specified foreign exchange platform and the currency base is the INR or Indian Rupees as the government had limited trading for Indian citizens to trade only with currency pairs bench-marked against INR (Indian Rupee).
Before, the tradable instruments were limited to the EURINR, GBPINR, JPYINR, and USDINRe but eventually added exchange-traded currency options in three more currency pairs: EUR-USD, GBP-USD, and USD-JPY. .