DEFINITION of Foreign Exchange Dealers Association of India (FEDAI)
The Foreign Exchange Dealers Association of India (FEDAI) is an association of banks that specializes in the foreign exchange markets in India. (These institutions are also called Authorised Dealers or ADs.) Created in 1958, the body regulates the rules that determine commissions and charges that are attached to the interbank foreign exchange business.
BREAKING DOWN Foreign Exchange Dealers Association of India (FEDAI)
FEDAI determines many of the rules that overlook the day-to-day forex transactions in India. In addition to rule setting, FEDAI assists member banks by acting as an advisor and assists with the training of personnel and accrediting foreign exchange brokers.
Additional core functions include:
Advising and supporting member banks with issues that arise in their dealings
Representing member banks on the Reserve Bank of India (or RBI)
Announcement of daily and periodical rates to member banks
As of December 2017, FEDAI member banks spanned the public sector, private sector, foreign banks, and co-operative banks and financial institutions, among others. The total count was 102.
Foreign Exchange Dealers Association Of India (FEDAI) and Self-Regulating Organizations (SROs)
The FEDAI is a self-regulating organization or SRO. SROs exist independently of national governments (such as FINRA in the United States) yet still have power to create and enforce industry regulations and standards. SROs place enormous emphasis on ethics and equality. SROs are non-governmental agencies, which can be helpful in industries, such as finance, that are international.
Additional examples of SROs include the Investment Dealers Association of Canada, and the National Association of Securities Dealers (NASD) in the United States.
FEDAI has grown in its role as a SRO in India and now plays a key role in stabilizing markets through its cooperation with the Reserve Bank of India and the Fixed Income Money Market and Derivatives Association of India (FIMMDA). FEDAI continues to work with its partners to develop customized products and adhere to international accounting and risk management standards.
Recent Updates from the Foreign Exchange Dealers Association of India (FEDAI)
In March 2018, FEDAI joined forces with Financial Benchmark India (a company formed to administer money market benchmarks rates), FIMMDA, and the Indian Banks’ Association (IBA) to set benchmarks for Indian rupee interest rates and foreign exchange. FBIL began publishing these rates in April 2018. Rates were displayed daily starting March 19, 2018. The Clearing Corporation of India (CCIL) is set to act as the calculating agent.