Russia’s antimonopoly watchdog plans Forex regulation intervention
Any entities without Forex dealer licenses from the Bank of Russia will be prohibited from targeting clients, including via educational centers.
Since the signing of the Russian Forex bill into a law in the end of 2014, the Forex industry has been aware that it is the Bank of Russia that will exercise the regulatory powers over this market. However, other institutions have the right to co-operate with the central bank and to address it with regards to issues related to the FX market and its regulation.
Today, Russia’s Federal Antimonopoly Service (FAS) published a “Roadmap for the development of competition in the financial services market”, with the document concerning Russia’s Forex industry too.
FAS plans to draft proposals on changes to normative acts, which aim to prohibit the soliciting of clients in the Forex market by entities that do not have Russian Forex dealer licenses. The prohibition will apply to educational centers of unlicensed Forex entities too.
The document, which should be ready by the third quarter of 2017, will be addressed to the Bank of Russia and/or the Russian government.
The aim of the document is to spur growth and development of the market for the services of Forex dealers, as well as to create conditions for competition in the industry.
To some the measures proposed by FAS may seem weird as the law already formally prohibits companies without Forex dealer licenses to operate in the Russian Forex market. However, companies based overseas have successfully continued to service the Russian clientele. Most of these companies have representative centers that offer educational services or basic customer support. The FAS proposals are likely to address this way of operation.
Another interesting moment will be to see whether FAS will be able to tackle websites of overseas Forex brokers that do not have the necessary licenses to operate in Russia but nevertheless target Russian clients. The Bank of Russia has been seeking ways of handling this issue and has been mulling measures such as introducing requirements for these websites.
In the meantime, only eight companies have thus far secured Russian Forex dealer licenses. Competition is barely an issue among them. It is apparently a problem when it comes to competing with overseas-based brokers that offer high leverage and other attractive trading conditions.
Scams, of course, remain a problem in Russia. Recently, the Bank of Russia reported a drop in the overall investor losses due to the activities of financial pyramids in 2016, but noted that new type of fraudulent schemes have emerged, such as ones involving crypto-currencies.
