Russian c-bank rules out proportional regulation of Forex brokers

Maria Nikolova

Only two licensed Forex brokers are de facto operating in Russia at the present moment, the regulator explains.

The Central Bank of Russia has earlier today published a document about the proportional regulation of the non-credit firms it regulates.

The regulation of many such firms already has a proportional nature, the regulator explains. Put simply, the requirements for a company vary depending on its size (measured by number of clients, for instance) and the type of operations a company performs (as this is directly related to the risks). The proportional approach to regulation has many benefits, including helping foster competition.

Russian Forex dealers (the official designation of Forex brokers in Russia) do not face such a regulatory approach. The central bank explains that the Forex dealers’ activities have just started to develop in Russia and that only eight companies have secured Forex dealer licenses. De facto, only two companies are currently conducting any operations as Forex dealers in Russia.

The proportional regulation is not seen as fit for Forex dealers, the central bank says. It adds, however, that the matter may be revisited.

The Russian Forex law, which was signed by Vladimir Putin at the end of 2014, imposes a heavy set of requirements to companies willing to obtain Forex dealer licenses. These requirements have put off many of those considering to obtain the necessary licenses. For instance, companies willing to offer Forex services in Russia have to secure a minimum capital of RUB 100 million. The required sum may be increased by 5% of the volume of client assets in nominal accounts above RUB 150 million.

Those who have been monitoring the situation in Russia are well aware that there are only 8 companies with Forex dealer licenses in Russia, including local giants like Alpari.

The activity of the Russian “megaregulator” with regard to Forex licensing in 2017 can be summarized as follows:

  • 2 license applications granted;
  • 2 license applications rejected (no names mentioned);
  • 1 Forex dealer license modified.

Recent data shows that as of May 15, 2018, the number of clients of the licensed Forex brokers in Russia is 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 smaller number of customers of Russia-based FX brokers when compared to offshore ones is partially prompted by the lack of a legal provision permitting simpler client identification at Russian Forex dealers. An account at an offshore Forex broker, however, may be opened online, without a visit to the company’s office.

In May this year, a new bill was submitted with the Russian State Duma (the lower chamber of the Russian parliament). The bill proposes changes to Russia’s anti-money laundering law. It presents a simpler procedure for client identification when signing a contract with a Forex dealer. The new rules will apply to companies that have Forex dealer licenses issued by the Bank of Russia.

Read this next

Digital Assets

El Salvador’s Bitcoin wallet hacked by CiberInteligenciaSV

El Salvador’s official Bitcoin wallet, Chivo, has faced another security setback as the hacker group CiberInteligenciaSV released parts of the wallet’s source code on the black hat hacking forum BreachForums.

blockdag

BlockDAG’s $19.8M Presale & Moon Keynote Teaser Place It Above KANG, SOL, & ARB as the Top Crypto Investment in 2024

Uncover the success behind BlockDAG’s $19.8M presale and learn what’s making it a more compelling investment than KangaMoon, Solana, and Arbitrum.

Fintech

Revolut taps TikTok exec to drive £300 million ad revenue

Fintech giant Revolut is exploring new revenue streams by planning to share customer data with advertising partners.

Chainwire

Zircuit Staking Soars Past $2B TVL In Only 2 Months

Zircuit, a ZK rollup with parallelized circuits and AI-enabled security, today announced that its staking program has soared past $2B in TVL in only 2 months. 

Retail FX

PrimeXBT joins Financial Commission’s membership roster

The Financial Commission, an independent external dispute resolution (EDR) body, today announced the addition of cryptocurrency trading firm PrimeXBT as its latest member effective March 6, 2024.

Digital Assets

Ripple wants to reduce SEC’s $2 billion penalty to $10 million

Ripple Labs has responded to the U.S. Securities and Exchange Commission’s (SEC) recent demand for $2 billion in penalties, arguing that the amount should be substantially reduced to $10 million. The legal stance was disclosed in a court document filed late Monday.

blockdag

Analysts Go Bullish On BlockDAG After Its Surge to $0.005 And Unique Developer Platform That Goes Beyond Ethereum & BONK

Discover how BlockDAG’s unique low-code and no-code platforms offer more adaptability than Ethereum’s bull run and BONK’s fluctuating prices.

Tech and Fundamental, Technical Analysis

WTI crude oil Technical Analysis Report 23 April, 2024

WTI crude oil can be expected to rise further toward the next major resistance level 86.00, which has been reversing the price from October.

Digital Assets

Binance Debuts Spot Copy Trading Feature in Its Expanding Automated Trading Portfolio

Explore Binance’s latest innovation in trading technology with the rollout of Spot Copy Trading, now available within their comprehensive automated trading toolkit.

<