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RBI Governor Shaktikanta Das on Monday emphasised the need to give retail customers a fair deal in foreign exchange markets that is at par with large customers.

“There is a need for effective market-making and finer pricing for smaller deals on NDS-OM. Divergence in pricing in Foreign Exchange (FX) markets for the small and large customers are wider than what can be justified by operational considerations,” the RBI Governor said in his address at an international financial conference in Barcelona.

“Banks may need to do more to facilitate the use of the FX Retail platform. We continue to see banking channels being used by certain persons or entities to fund activities on unauthorised FX trading platforms. This warrants enhanced vigilance by the banks,” he pointed out.

He said that efforts were being made to leverage technology to achieve greater efficiency while also meeting the objectives of market reforms.

“For example, we are exploring the use of technological platforms to expand the reach of financial markets, in particular the reach of the RBI Retail Direct and FX Retail. In the derivative markets, efforts are underway to introduce electronic trading platforms for a larger number of derivative products and to expand the central clearing of products,” he explained.

Das also said that to foster greater efficiency, Application Programming Interfaces (APIs) for reporting trades to NDS-OM and accessing the RFQ dealing mode are being contemplated.

The introduction of bond forwards is being considered to enable long-term investors to manage their interest rate risks efficiently – draft guidelines in this regard were issued in December 2023.

The Reserve Bank also remains engaged with stakeholders to assess the need for the introduction of new products and infrastructure based on evolving market developments, he added.