With the increasing globalization of financial markets and ongoing deregulation, the role of self-regulatory organizations like FEDAI has evolved significantly. Today, FEDAI plays a catalytic role in ensuring the smooth functioning of India’s foreign exchange markets by fostering collaboration among key stakeholders, including:
- Reserve Bank of India (RBI)
- Fixed Income Money Market and Derivatives Association of India (FIMMDA)
- Forex Association of India
- Member banks and market participants
Here is a structured comparison of FEDAI with other key financial market institutions in India, focusing on FIMMDA, RBI, and the Forex Association of India—all of which play complementary roles in the foreign exchange and debt markets:
Comparison of FEDAI with Other Institutions
| Aspect | FEDAI (Foreign Exchange Dealers’ Association of India) | FIMMDA (Fixed Income Money Market and Derivatives Association of India) | RBI (Reserve Bank of India) | Forex Association of India (FAI) |
| Established | 1958 | 1998 | 1935 (as central bank) | 1985 |
| Type | Self-regulatory body (Section 25 Company) | Industry association | Statutory central bank | Trade association |
| Main Focus | Foreign exchange (FX) market regulation, operations, and training for AD banks | Fixed income securities, money markets, and derivatives | Monetary policy, currency issuance, foreign exchange management | Promoting interaction among forex dealers and fostering public awareness |
| Primary Constituents | Authorised Dealer (AD) banks in forex markets | Banks, primary dealers, financial institutions in fixed income/derivatives markets | Entire Indian financial system | Individual dealers and market participants |
| Regulatory Power | Issues operational guidelines; not a statutory regulator | Sets market conventions and guidelines; not a statutory regulator | Statutory regulator under FEMA and RBI Act | No regulatory power; works more as a networking body |
| Key Functions | – Guidelines for interbank forex dealings – Rate publication – Training and accreditation – Dispute resolution among member banks | – Develops benchmarks for fixed income instruments – Market conventions for bonds, MIBOR/MIFOR – Valuation methodology and guidelines | – Monetary policy – FX reserves management – Regulatory oversight of banks and NBFCs – FEMA administration | – Organizes conferences and training – Promotes professional development in forex trading |
| Liaison Role | Works closely with RBI and member banks to standardize forex operations | Coordinates with RBI, SEBI, and market participants to standardize practices in debt and derivative markets | Coordinates with Government of India and other regulatory bodies | Liaises with FEDAI, banks, and international associations |
| Market Segment Focus | Foreign exchange (spot, forward, remittances) | Fixed income, money markets, and interest rate derivatives | Entire monetary, financial, and forex system | Foreign exchange traders and dealers |
Summary of Key Differences
- FEDAI is focused specifically on foreign exchange business conducted by banks and plays a quasi-regulatory and operational support role.
- FIMMDA focuses on interest rate markets, including government securities, corporate bonds, and derivatives.
- RBI is the statutory regulator with formal powers under FEMA and other laws—it oversees the entire financial system.
- Forex Association of India (FAI) acts more as a professional network and knowledge-sharing platform for forex dealers, without regulatory authority.
Related Posts:
