Russian FX dealers with annulled licenses may continue to operate as legal entities

A company whose Forex dealer license is taken away may continue its operations as a legal entity in Russia, as this is permitted by the Russian laws. The clarification was provided by Vladimir Chistyukhin, Deputy Governor of the Bank of Russia, in an interview for information agency TASS.

Mr Chistyukhin said that the Russian laws differentiate between a legal entity and a licensed professional participant in the financial market. When the license of a participant is annulled this does not mean that the legal entity has to stop its activities. This entity is not allowed to conduct certain operations but no one can order it to close its website. Furthermore, this entity may still appear in the search results given by search engines.

If a company has its Forex dealer license taken away, it may still continue to operate as a legal entity.

The comments were made less than two months after the Central Bank of Russia said it was annulling the Forex dealer licenses of five companies, including local majors like Alpari Forex, Forex Club LLC and TeleTrade. The companies were given until January 27, 2019 to return all funds to their clients and stop offering Forex services to Russian clientele.

Mr Chistyukhin said the companies in question reported no issues when meeting these obligations but the central bank has yet to check the relevant reports.

In its official announcement issued in December 2018, the Central Bank said that the licenses of five companies – Forex Club, Alpari Forex, Trustforex, Fix Trade, and TeleTrade Group, were taken away due to violations of the Russian law by the brokers.

• Regarding Forex Club, the regulator explains that the broker has violated the Russian securities law numerous times. The violations include (inter alia): noncompliance with the instructions issued by the Central Bank; violations of the requirements for internal accounting; providing false data to the Central Bank.
• Regarding TrustForex, the Central Bank explains that the broker failed to comply with the Central Bank instructions, and provided false information to the regulator. The company also gave false information on its website and had flaws in its risk management system.
• TeleTrade, inter alia, violated the requirements for calculating its own funds (capital), and provided the regulator with false data. The company also provided false information on its website.
• Alpari Forex also failed to follow the instructions of the Central Bank of Russia. The company committed violations in the way it handled its internal accounting. The company also provided false accounting data and committed violations when handling risks.
• Fix Trade did not provide information on its website as required. It also failed to follow the instructions issued by the Central Bank. The company also violated the Forex dealer license requirements and did not appropriately handle risks.

Currently, there are four licensed Forex dealers in Russia.