Exchange or dealer: the Indian answer

Somebody has to sell

You press Buy. Somewhere, something has to sell — a trade needs two sides. Who takes the other one is the single most useful fact about any trading venue.

Two different machines

An EXCHANGE is a meeting place. Buyers and sellers post orders, the exchange matches them, and a clearing corporation steps in as buyer to every seller and seller to every buyer, so nobody depends on the other party paying. A DEALER is a shop. You do not meet another customer — you trade with the shop, at prices it sets. Your gain can be its loss, unless it passes the risk on.

The Indian answer for currencies

Worldwide, most retail currency trading happens with dealers, because spot forex has no central exchange. India took a different route. For residents, trading in currencies is permitted through exchange-traded currency derivatives on NSE, BSE and MSE, cleared by the exchanges’ clearing corporations and regulated by SEBI, with RBI setting who may take positions and why. Online forex and CFD dealers offering trading to residents are not authorised (as of 3 November 2026).

What you actually hold

A USD/INR future on NSE is a standardised contract recorded by the clearing corporation in your name, through your broker. If the broker fails, the position and margin are traceable at the exchange level. A position with an offshore dealer is a private contract with that dealer, under a foreign law, in a jurisdiction where an Indian resident has no lawful standing to have opened it in the first place.

You’ve mastered: exchange or dealer

An exchange matches orders and clears them centrally; a dealer is your counterparty

Central clearing removes counterparty risk, not market risk

For residents of India, currency trading is permitted only through currency derivatives on NSE, BSE or MSE

An offshore dealer’s foreign licence does not authorise it to deal with residents