On June 16, 2025, the Reserve Bank of India (RBI) issued the Master Direction – Electronic Trading Platforms (ETP), 2025, replacing the earlier regulatory framework introduced in 2018. As India’s financial markets continue to evolve with increasing digitization and the adoption of advanced trading technologies, this revised Direction aims to provide a more robust regulatory framework for platforms facilitating electronic trading in securities, money market instruments, foreign exchange, and derivatives.

Background for the 2025 ETP Directions

The original ETP Directions were introduced in 2018 to regulate platforms that allow electronic trading in eligible financial instruments. However, with the emergence of advanced technologies like algorithmic trading, real-time data analytics, AI-based pricing, and cross-border fintech integrations, the 2018 framework had become outdated.

The RBI recognised the need to:

• Safeguard market integrity in the face of complex digital operations,
• Enhance transparency and fairness in access to trading platforms,
• Introduce stronger cybersecurity, data governance, and compliance reporting measures,
• Ensure that only technically competent, financially sound and experienced entities operate these platforms.

Applicability of Master Direction – Electronic Trading Platforms (ETP), 2025

The Directions apply to any entity operating an Electronic Trading Platform (ETP) that enables the trading of eligible instruments such as:

• Securities
• Money market instruments
• Foreign exchange
• Derivatives

Exemptions under the ETP Directions, 2025 – The following entities are exempted from the requirement of obtaining RBI authorisation under the ETP framework, subject to certain conditions:

1. Platforms such as NSE, BSE, etc, are explicitly excluded from the scope of these Directions.
2. Scheduled Commercial Banks & Standalone Primary Dealers if operated internal electronic systems where they are the sole quote/price providers or counterparty to all transactions on the system are exempt from seeking ETP authorization.

Guidelines for ETP Operators under 2025 Directions

• Meaning of ETP operator – “An ETP operator refers to a company authorised by the Reserve Bank of India to run an Electronic Trading Platform, a digital system (excluding stock exchanges) where eligible instruments like bonds, forex, or derivatives are traded.”
• Eligibility Criteria of ETP operator – To operate an ETP under the 2025 Directions, an entity must:

1. Be a company incorporated in India, with foreign shareholding (if any) conforming to applicable laws (FEMA, 1999).
2. Maintain a minimum net worth of ₹5 crore at all times.
3. Have at least two key managerial personnel (KMPs) with a minimum of three years’ experience in operating trading infrastructure.
4. Possess robust technology infrastructure capable of real-time trade dissemination, with high levels of security, reliability, and scalability.

• The authorisation process is to be conducted through RBI’s online PRAVAAH portal.
• Reporting Obligations of ETP operator – ETP operators must submit to RBI as:

1. Quarterly reports on trading volume, disruptions, algo-trade share, and market abuse instances by the 15th of the following month.
2. An Annual Compliance Report by April 30 of the following year.
3. Real-time notifications in case of disruptions or suspicious trading to RBI.
4. Data to any trade repository or government authority as required under Indian laws.

• Compliance and Risk Controls Required for ETP Operators – Once authorised, an ETP operator must comply with an extensive list of operational norms:

1. Non-discriminatory access and fee structure for all users.
2. Pre-trade and post-trade transparency, including live and historical trading data.
3. Implementation of strong internal controls, cybersecurity protocols, and business continuity plans.
4. Specific controls for algo-trading platforms, including testing, risk monitoring, and skilled personnel.
5. Regular IT/IS audits by certified auditors (CISA or CERT-In empanelled).
6. Secure retention of trading data for at least 10 years, and longer in case of regulatory investigations.
7. Transparent onboarding of trading members with identity checks (via PAN/LEI).

• ETP operators must take RBI’s prior approval to exit. RBI may cancel authorisation for non-compliance, violation of terms, or public interest reasons.

Conclusion

The RBI’s ETP Direction, 2025 marks a significant move towards strengthening the safety and integrity of India’s digital trading landscape. By defining clear eligibility, operational, and compliance standards, it ensures that only well-governed and technologically sound platforms can operate. Entities intending to run ETPs must align their systems, personnel, and processes with these regulatory expectations.

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