Russian c-bank to elaborate financial advertising requirements
The Russian “megaregulator” has set out its key objectives for 2019-2021, including elaborating the requirements for ads of financial products.
The Central Bank of Russia has earlier today published its “Guidelines for the development of the financial market of the Russian Federation for 2019-2021”, with the document outlining, inter alia, the plans of the regulator concerning investor protection.
The bank says it will elaborate the requirements for the distribution of pre-contractual information and the ads of financial products. The objectives also include limiting the dissemination of information about illegal services in the financial markets.
These intentions are announced as the Russian authorities have been having hard time taking enforcement action against overseas companies that illegally target Russian residents. The difficulties that the Federal antimonopoly service (FAS) experienced when trying to prosecute Olymp Trade, a brand of Seychelles-based Smartex International Ltd, over illegal advertising , illustrate this problem.
The central bank has been looking for ways on how to tackle the activities of online trading companies that do not have the necessary licenses to operate in Russia but nevertheless continue to offer their services to Russian investors. One of the measures is an easier procedure for blocking the websites of such unregulated entities. But such a step has not yet materialized.
The bank is also considering remedies that will improve the investors’ literacy when it comes to cross-border financial services.
As of May 15, 2018, the number of clients of the licensed Forex brokers in Russia is estimated at 3,539. At the same time, there are about 200 unlicensed companies that offer Forex services to Russian clients. These companies usually operate offshore. The total number of Russian clients trading through platforms of brokers that do not have licenses issued by the Bank of Russia is around 500,000. The average deposit per client is RUB 50-60,000.
One of the reasons for the disadvantaged position of the licensed Forex companies in Russia is that the Russian laws, in their current version, lack a provision permitting simpler client identification. That is why, a bill proposing such a simplified procedure has been submitted to the Russian Duma (the lower chamber of the Russian parliament).
