"There are flaws in the law, but it is possible to work" - EXNESS CEO Oleg Ohrimets about dealer activity in Russia in 2015

The State Duma of the Russian Federation passed in the third reading the draft federal law "On Amending Certain Legislative Acts of the Russian Federation". The Federal Law "On the Securities Market" was supplemented by Article 4.1 "Dealer Activity on the OTC Market", which defines the activities of brokers, introduces licensing requirements and specifies that the normative regulation will be carried out by a self-regulating organization of dealers (SRO). The law establishes a single SRO - "The Center for Regulation of OTC Financial Instruments and Technologies".

The nuances of this law and the changes it will introduce to the activities of brokers in Russia, specially for the magazine ForTrader.org commented CEO EXNESS Oleg Ivanovich Ohrimets.

ForTrader.org: After a long wait, Russian traders received protection from the state authorities - in 2015, an amendment to the law "On the Securities Market" called "Dealer Activity" will take effect. In your opinion, why after a 1.5 year break and at such a difficult time for the country, the State Duma decided to return to the discussion of this issue?

Oleg Okhrimets: The process of adopting the law moved in a working order. The Commission on Financial Markets worked with the participants, there were regular discussions, many changes were made in relation to the first reading. It should be taken into account that the regulation market for the Central Bank is a completely new area, so it took time to find and introduce new personnel, and create working groups for the industry.

ForTrader.org: In your opinion, will all currently operating companies be able to pass the SRO licensing process?

Oleg Okhrimets: In our opinion, licensing will be passed by several dozens of the largest companies, because it will be difficult for small and medium-sized players to meet the requirements of the regulator. We do not rule out the possibility of mergers of several companies into larger ones and takeovers of smaller companies by larger ones, so that some do not lose their business completely, and the others increase their capacity and customer base. In this case, the number of companies that will be able to meet the requirements will increase,

ForTrader.org: How much will this law affect the structure of dealers' internal work?

Oleg Ohrimets: the dealer is an independent organization that must comply with the requirements of the new law. Since divisions registered in the Russian Federation are required, the current structure of large companies will not be affected by the market law in Russia.

ForTrader.org: The most controversial point was the size limit leverage to 1:50, while in Europe it is 1:500. Why do you think this particular threshold was set? Won't Russian companies lose out in competition to their foreign counterparts?

Oleg Ohrimets: The increase of the margin requirements is, on the one hand, to limit the risks of clients and, on the other hand, the risks of the dealer, who is a counterparty on the transactions of clients. Traders with large capital adhere to risk minimization, and for them it will be acceptable. On the other hand, less leverage reduces the trader's possibilities, especially for traders with medium and small deposits.

However, traders accustomed to high leverage will be left with the choice in favor of unregulated companies in Russia.

ForTrader.org: As far as foreign brokers are concerned, the question of the possibility for a Russian citizen to open a trading account with a company that has not received a SRO license is not quite clear. Are there any restrictions on this matter?

Oleg Okhrimets: According to the adopted law, if a foreign broker is accredited in Bank of RussiaIn the absence of a license, however, there will be a number of restrictions on advertising in the territory of the Russian Federation. However, in the absence of a license there will be a number of restrictions on advertising on the territory of the Russian Federation.

ForTrader.org: Another important change is the possibility for a dealer to become a tax agent for his clients. Do you think this is more likely to discourage or attract traders?

Oleg Ohrimets: It is absolutely normal to be a tax agent for your clients. The company provides a service to accrue taxes for the client and provides a prepared tax return. In this case, the client only has to submit this document in the reporting period. Today there is a practice among our clients when they request their own income statement for their accounts.

ForTrader.org: At present, there are quite a few options for non-state regulators of currency dealers in Russia. Joining them is a voluntary thing and, as practice shows, the inspection of companies and the issuing of licenses by such "regulators" does not always correspond to the real state of affairs. How much the activity of SRO will be different from its predecessors? Does your company plan to take an active part in SRO activities?

Oleg Okhrimets: Now SROs do not issue licenses. SRO can only confirm the status of a good company. For example, our company is a member of SRO CRFINIt allows us to keep our hand on the pulse of the market, participate in discussions and influence the course of market changes. We hope that the regulator will form a specialized SRO on the basis of the FTC.

ForTrader.org: Now the real actions and possibilities of the future market regulator in Russia cause more questions and disputes. Both companies and traders have expressed their dissatisfaction on our forum. What would you like to correct, remove or add to the law? Do you consider it effective in the modern market?

Oleg Ohrimets: Meeting with colleagues at the round table, we raised a number of issues that are controversial:

• uniform prices for all clients, regardless of the deposit and transaction volume;
• Strict margin requirements that do not withstand competition from foreign brokers;
• Prohibit the withdrawal of an uncovered item to a larger supplier liquidityThis increases the risks for all participants, in fact, it is the exclusion of the tool for the dealer to regulate their own risks;
• Excluding the possibility of signing contracts with customers online. This creates a difficulty in attracting clients due to the limited branch network. It is not profitable to create such a network, especially considering that the business model of companies implies online mode.
• One of the most important wishes is to expand the number of trading instruments and include CFDs on stocks and futures.

Despite a number of shortcomings, the law can already be adopted as is, and amendments can be made to it in the course of real action, eliminating major contradictions.