The Reserve Bank of India (RBI) has added popular forex and CFD broker ThinkMarkets, along with two proprietary trading firms, FundedNext and Smart Prop Trader, to its growing warning list. This marks the first time prop trading companies have appeared on the RBI’s radar, which previously focused primarily on well-known brokers such as eToro, IC Markets, and XTB.
RBI Expands Warning List to Include Prop Firms and FX/CFD Broker
The RBI updated its warning list on Tuesday, flagging several new entities. Among them, ThinkMarkets, a well-known broker in the FX/CFD space, and two prop firms, FundedNext and Smart Prop Trader, were added. These firms, according to the RBI, are not authorized to provide forex trading services in India.
The central bank’s warning list identifies entities that are not compliant with the Foreign Exchange Management Act, 1999 (FEMA) or the Electronic Trading Platforms (Reserve Bank) Directions, 2018. This includes companies that are not permitted to conduct forex transactions or operate electronic trading platforms in India.
Why Are Companies Added to the Warning List?
The RBI includes companies that either promote unauthorized forex market access or claim to offer advisory services for trading without the necessary regulatory approval. Interestingly, some of the companies on the list, such as eToro and XTB, have stated they do not even provide services in India.
In response to being listed, eToro confirmed that it “does not onboard clients from India,” while XTB clarified that it “is not operating in India and does not offer services to Indian residents.”
India’s FX/CFD Market: A Gray Area
While India does not regulate or outright ban retail over the counter (OTC) forex trading, citizens who engage with unauthorized platforms may violate local forex laws under FEMA. This loophole has enabled many forex and CFD brokers to target Indian customers despite the legal risks involved.
In one notable case, OctaFX faced legal action from the Indian central bank, which seized nearly $10 million of its local earnings from a total of $120 million.
Despite regulatory challenges, the Indian FX/CFD market continues to grow. Last month, Australia-based broker Axi expanded its operations in India, opening a new office in Bangalore. The company plans to further expand its local team, which currently employs about 30 staff.
