RBI Releases Draft Master Directions on ‘Electronic Trading Platforms’

Press Release No. 2024-2025/211; Dated: 29.04.2024

The RBI has released draft master directions on ‘Electronic Trading Platforms’ (ETPs). ETP refers to any electronic system, other than a recognised stock exchange, on which transactions in eligible instruments are contracted.

‘Eligible Instruments’ means securities, money market instruments, foreign exchange instruments, derivatives, or other instruments of like nature, as may be specified by the RBI from time to time under section 45 W of Chapter III-D of the RBI Act, 1934.

As per the draft master directions, an entity seeking authorisation as an ETP operator must maintain a minimum net worth of Rs.5 crore and must continue to maintain a minimum net worth as prescribed at all times. The entity must be a company incorporated in India. Shareholding by non-residents, if any, in the entity seeking authorisation as an ETP operator must conform to all applicable laws and regulations, including the FEMA, 1999.

Further, the entity seeking authorisation as an ETP operator or its key managerial personnel must have at least three years of experience in operating trading infrastructure in financial markets.

The entity seeking authorisation as an ETP operator must obtain and maintain robust technology infrastructure with a high degree of reliability, availability, scalability and security in respect of its systems, data and network, appropriate to support its operations and manage the associated risks. These directions are effective immediately.

Also, the RBI may cancel an authorisation issued to an entity to operate an ETP, after affording a reasonable opportunity to represent its version, if it is satisfied that –

(a) The ETP operator has violated a statutory provision or any rule or regulation or direction or order or instruction issued by RBI or

(b) The ETP operator has violated any of the terms or conditions stipulated by the RBI while granting authorisation or

(c) The continuance of authorisation is prejudicial to the public interest or the financial system of the country.

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