Regulation in Russia

Currency market regulation in Russia is still a source of heated debate in the financial sector - its mechanism has both supporters and opponents.

Formerly known as the CRDUFM, the CRFIN and similar organizations have fallen into oblivion. Today we are going to find out who and how regulates the market in Russia today.

The legal framework for Russian regulation

As of 2012, the monthly monetary turnover of the Russian segment of the currency market exceeded $300 billion, forcing the government to pay close attention to it.

As a result, on December 29, 2014, the president of the Russian Federation signed Federal Law N 460-FZ "On Amendments to Certain Legislative Acts of the Russian Federation".The law came into force on January 1, 2016 and has become a defining document for participants in the foreign exchange market in Russia.

According to the law, the function of regulating the currency market in Russia is entrusted to the Central Bank of Russia, together with self-regulatory organizations SRO, which are members of this industry.

In order to obtain the -dealer status, the company must obtain the relevant license from the Bank of Russia. The right to provide its services to a -dealer is given by membership in the relevant SRO.

In 2016, the Bank of Russia's registry of SROs included Association of Dealerswhich is currently the only organization associated with the foreign exchange market in the country.

In accordance with the requirements of the law, it is the responsibility of the SRO to create a compensation fund, which is designed to pay customers -dealers who declared bankrupt.

Requirements for -dealers in Russia

• -The dealer is obliged to have own funds, the amount of which is directly proportional to the amount of accepted risks, but not less than 100 million rubles.
• When obtaining SRO membership, a dealer is obliged to make a contribution of 2 million rubles to the compensation fund. In case of insufficiency of the fund for repayment of liabilities to the clients of the bankrupt company, all - dealers - SRO members, are obliged to contribute additional funds, the amount of which is determined by their turnover, up to the full satisfaction of client claims.
• Advertising of dealers must necessarily contain a warning about the high risks.
• -Dealer has no right to take clients' transactions to the interbank market. All transactions are executed within the company.
• Trading services are provided by the dealer only on currency pairs.
• The leverage of a dealer cannot exceed 1:50. In some cases, the Bank of Russia may give permission to increase it to 1:100.
• -the dealer has no right to make changes to the quotes to buy without the corresponding correction of the quotation for sale. The quotes are controlled by the Central Bank of the Russian Federation.
• The bank accounts of the company as well as its customers must be in Russian banks.
• The law imposes on -dealers the functions of a tax agent. When paying profit to a client, the company is obliged to withhold income tax.
• Technical means of the dealer must be his property and located on the territory of Russia. All data must have backup copies, and the technical means and software must meet the requirements of the SRO.

Peculiarities of the currency market in Russia

The lack of a license from the Bank of Russia is not an obstacle for the provision of services in the foreign exchange market, but it imposes a number of restrictions on the activities of such companies, such as a ban on advertising.

However, in this case it should be understood that the licensed -dealer is in the area of Russian jurisdiction. A foreign -broker, on the other hand, is in the legal field of the state where he is registered. As a rule, they are offshore. This means that if the client has problems with a foreign broker, this is his personal problem. If a dispute arises with a licensed -dealer, the client's interests are protected by the laws of the Russian Federation.

For example, the same "Law on " clearly defines that the client's loss cannot exceed the amount of funds he has invested. If a licensed company declares bankruptcy, the funds invested by the client will be compensated from the SRO compensation fund. In the case of a foreign broker one should hardly count on compensation.

Nevertheless, clients of foreign companies have the opportunity to contact the foreign financial regulator, in whose jurisdiction the broker is located, to address the demand that has arisen.

Peculiarities of Russian trading

Conclusion

It is quite difficult to unambiguously assess the mechanism of regulation in Russia:

• On the one hand, the client of the Russian dealer is protected by the law to the maximum extent possible;
• On the other hand, foreign brokers working in the Russian market provide a wider range of assets for trading, the choice leverage etc.

It is likely that the requirements of the law to obtain a license from the Bank of Russia for some brokers are unacceptable or unrealizable, which explains such a small number of licensed Russian-dealers.

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