Almost a year in Russia the law about the Forex dealers, according to which from 1 January 2016 in Russia can operate only the brokers licensed by the CBR. Until that moment Russia did not have regulatory authority, and no one involved in the regulation of the Forex market. Those pathetic attempts to create a Russian type regulator kroufr, NAFD (CRFIN) and The Financial Commission, is not counted, as they are doing more counselling and education, not regulation of brokers and certainly not able to apply penalties. Now all the power in their hands took the Bank of Russia, that his decision will depend the fate of many brokers. How it responded to the brokers, and what other changes await us in the near future, this and more will learn in our article.
Five licenses for a year a lot or a little?
With the advent of the new regulator rules of the game have changed, and the Russian foreign exchange market was absolutely clean as a white sheet. Brokers have to either make new rules or to leave the Russian market. But something not seen much activity among brokers. Many of them have closed the offices and went into “shadow”. Only “Finam” the first to receive a license in December last year. For the full year was issued only five licenses. Today we have the following Forex brokers with a license of the Central Bank of the Russian Federation in 2016 – this is the previously mentioned “Finam”, the infamous “Broker Group”, “Trastforeks”, “VTB 24 Forex” and “Forex Club”, which was first denied a license, but then he joined the “elite”. Of course, this is not all the Forex brokers with a license of the Central Bank of the Russian Federation, the list of 2016 is not yet finished. It is expected that the above Forex dealers have to join “Alpari”, the application of which were previously rejected for reasons of “technical character”, but the representatives of Alpari said that waiting for an answer to a new application from the Bank of Russia in the near future. We can only guess what is hidden under the phrase “technical comments”, and why Russia’s largest Forex broker was not able to take care of this before.
But where are all the other Forex brokers? Why are they not serving its applications, but instead are closing their offices in Russia? Based on the requirements of the Bank of Russia, they didn’t seem so difficult: to increase own funds up to 100 million rubles, to enter into a SRO and contribute to the compensation Fund of 2 million rubles. For brokers, whose income is estimated in billions of dollars, it’s not such a big amount. Apparently that’s the same reason for the “technical nature”. On the other hand, why would a broker licensed reliable British regulator FCA (for example, FxPro), to bother with getting a Russian license? Perhaps the FCA will be more experienced and more authoritative than our Bank of Russia. Based on international practice, a major Forex broker opens the main office, registers it and gets a license for his activities, and then opens offices in other countries. But CBR is not only banned the activities of international brokers in Russia, but restricted the is Western Forex dealers. In Russia it is forbidden any advertising about the provision of Forex services, foreign brokers, the exception to this is consulting or training services, this loophole yet actively use it, but soon it will be covered. And then in Russia will begin the battle for place under the sun. Just what does it will have to trade on Forex?
Regulation in Russia is a step towards the transparency of the markets or fall into the abyss?
What is the purpose of financial regulators around the world? It is the creation of a transparent financial market, maintaining fair competitiontion and protection of interests of investors (traders). But it has recently said Sergey Shvetsov, Deputy Governor of the Bank of Russia. He compared Forex with the casino and added that the Central Bank is not interested in the distribution of such services in the Russian market. Moreover, for a certain category of Russians access to the Forex market soon all will be closed. The Bank of Russia planned to divide all investors into three conventional categories: professional players, skilled and unskilled investors market participants. The selection criteria are not yet entirely clear, but it is already known that the Central Bank will be guided by the availability of appropriate expertise and knowledge, as well as the financial situation of the investor. Likely created Commission assessing our financial literacy, and access to the Forex market will need to undergo training, pass exams and receive certificates. And don’t forget to take a certificate of income from your work, suddenly you are come to the category of the rich, and will not be admitted to trading on Forex.
In addition, we detail what all clients Forex brokers with a license of the Central Bank of the Russian Federation, including existing customers who trade not the first year, are required to come personally to the offices of brokerage companies to sign a framework agreement and to be identified. What will be offered in return? Those pathetic five or six brokers traders, who offer the largest spreads and terrible trading conditions. However what was never mentioned how the Bank of Russia will regulate the actions of Forex dealers, will it to keep track of brokers output transactions in the interbank market, and not a substitute for, whether they are quotes, and which will apply penalties. In our opinion it will not. Forex market the Central Bank is not interesting, and he does not hide. The volume of attracted funds of the Russian currency market is comparable to a small Bank, and the Central Bank have little interest in what happens to him. He is more concerned with the reputation of the regulator in the eyes of the Westpartners. So he chose a small number of brokerage firms (banks), on which he can rely, they have created an Association of Forex Dealers (AFD) and has already received the approval of the regulator, and now they will offer its own rules, and the Bank of Russia will step to the side, it is their job already done. Is it possible then to speak about market transparency and fair competition?
Is there a way out of this situation?
If you are an ordinary private trader, not a professional investor of a major investment company, then your best solution is to work with foreign broker companies. Yes, many of them registered offshore, but note that the same “Finam” or “Broker”, which, although received a license of a Forex dealer, continue to work with their clients through the jurisdiction of the offshore countries, as yet not worked out all the arrangements. Do not be afraid to work with foreign brokers, they would as before provide high-quality services and derive profit. Moreover, Russian law does not forbid to work with foreign companies, it is everyone’s right. And you in turn will not only be able to work with a broker that deserves your trust, but you will also save yourself from bureaucratic procedures such as the signing of contracts or the completion of training.