Russia’s Forex sector mulls how to implement c-bank instructions
A special committee at the Russian regulator considers how to implement a requirement that says currency rates offered by FX firms should not differ from best rates by more than 0.5%.
Russia’s Forex market had waited a long time for its law – many had had hopes that the legislation would improve the image of the FX industry in the country and would propel the business further. Alas, since Russia’s president Vladimir Putin signed the FX law in December 2014, the FX industry in Russia has stalled while the bureaucratic burden on Forex companies has been piling up.
The last bureaucratic hurdle to clear seems to be the common standards for Forex-dealers (the official designation for FX firms in Russia). The Bank of Russia has issued detailed instructions on what these standards should include and what areas they should cover. Now, a special committee at Russia’s “Megaregulator” is holding meetings regarding these standards.
The last available report from such a meeting, held on January 16, 2017, includes the breath-taking statement that the project for the standards should be amended again. A special point mentioned in the report is the requirement by the central bank that the Forex-dealers are allowed to offer currency rates (prices, quotes of currency pairs) with analogues in the Russian market or overseas that do not differ from the current best rates by more than 0.5%.
The challenge for the working group that works on establishing and implementing the basic standards is to make this requirement regarding currency quotes work.
The red tape adds to overall discontent in the FX industry concerning the requirements in the law: the Forex-dealer license in Russia seems like an unattainable objective to many. For instance, a minimum capital requirement of RUB 100 million (USD 1.66m/EUR 1.55m) puts off many market participants. The leverage restrictions – it should not be higher than 1:50, have also been subject to criticism. Then, of course, the requirements for countless reports and regulatory filings have added weight to industry concerns.
Talking of which, Russia’s Federal Financial Monitoring Service (Rosfinmonitoring) recently raised eyebrows by sanctioning a firm that “filed its reports too often”. Russian AML laws oblige all companies that conduct financial or commodities transactions (operations) in Russia to report at least once a quarter on whether they have clients whose names are featured in the lists of entities and individuals suspected of being involved in terrorism and extremism. The company in question filed the report twice for the past quarter and was reprimanded for that.
In the meantime, the FX companies that appear to be resilient to the bureaucratic burden are six: Alpari Forex, VTB 24 Forex, Teletrade Group, TrustForex, Finam Forex, Forex Club.
