Peculiarities of Russian trading
As the great Russian poet Fyodor Tyutchev said: "You can't understand Russia with your mind, you can't measure it with a common measure", and one can't disagree with that. Even the international currency market, coming to Russia, has acquired its own special features, which must be taken into account when trading.
So how is the Russian one different?
Russian and "Russian" brokers
First of all, you need to pay attention to one of the most important points that most traders are not aware of.
All brokers in Russia can be divided into two categories:
- Russian brokers licensed by the Central Bank of Russia;
- brokers that provide their services to Russian clients and work in Russian.
It would seem that there is no difference, but, in fact, there is a difference between them, and quite a significant one.
The thing is that last year the law on regulation in Russia began to take full effect. At the end of 2017, about 10% brokers operating in Russia received a license from the Central Bank of Russia, the rest of the companies are in no hurry to do so, because the Bank of Russia imposes quite stringent requirements on license applicants: the amount of equity capital, limitation of leverage, etc.
Anyway, Russian brokers - These are companies registered in Russia and licensed by the Central Bank of Russia to provide their services on the foreign exchange market. The second category is brokers with registration, as a rule, in offshore locations and working outside the jurisdiction of the Bank of Russia. In this case, the names of the companies, by ear, may be the same.
How to distinguish a Russian broker?
What is the difference? Russian brokers work in the legal field, they comply with all the regulations of the regulator, which we will discuss in more detail below, and their clients are protected by Russian law.
Brokers providing services in Russian do not limit themselves in terms of working conditions, and in case of any crisis situation, no protection from the SRO or the Bank of Russia, have to communicate with the regulator of the offshore country, if available.
For example, here is the site of a well-known company. The company provides its services to many clients, including residents of Russia, and the site options have a Russian interface. However, when opening a trading account with this company, the trader enters into an agreement with the company, registered in St. Vincent.
And here is the website, where you can also use the services of a broker. But doing this, the trader enters into an agreement with LLC, which is an official representative of the international brand in the territory of the Russian Federation and has all the necessary documents and capabilities for this.
Pros and cons of brokers "in Russian
All the nuances, which we will discuss below, concern brokers that work in Russian with clients from Russia, but do not have registration on the territory of the Russian Federation and do not fall under the regulation of the Bank of Russia.
Payment of taxes
One important feature is taxation. Most Russian-speaking brokers do not report their clients to the tax authorities. For the trader this creates potential problems with the payment of taxes, "kindly" shifted on his shoulders -broker. A company with a license has an obligation to help clients with their taxes. Whether this is a plus or a minus is up to you to decide.
Control of brokers
Earlier on the territory of Russia there were several organizations whose functions included protection of traders. Perhaps it was formal, but some actions still helped clients to get their funds in case of a dispute with a broker. Now all such organizations have been abolished, and if you find yourself with a company that does not have a CB license, then you can only communicate with the local offshore regulator, which is inconvenient.
Withdrawal of funds
Withdrawal of funds is, perhaps, the main advantage of trading at brokers "in Russian" before companies with a license of the Central Bank. The first ones have considerably simplified the verification process and there are always several options for funds withdrawal - bank cards and popular payment systems. For comparison, the Russian companies are supposed to work only through bank requisites.
Trust management
Trust management in Russia has become quite widespread. Practically any company "in Russian" will offer you trust management services in different variants. At the same time, there is the possibility of portfolio investments, when the deposit is managed not by one trader, but by several at once.
On the other hand, in many cases there is no competent legal support for trust management, which leads to the loss of client funds by managing traders and long and, as a rule, fruitless disputes with the broker.
Russian legislation has restricted such activity for licensed brokers. So if you see a PAMM or similar investment system, you are definitely looking at a company from a third country.
Leverage size
The requirements of the Central Bank of the Russian Federation limit the size of leverage up to 1:50. This is a normal practice accepted in the world - not many foreign companies allow trading with a leverage greater than 1:100.
Most other brokers working with Russian clients have leverage of 1:500 and even 1:1000.
The calculation is based on attracting traders with small amounts. Accordingly, a large amount of leverage often leads to an increase in trading risks.
And that's another call. Check with supportwhich company from which country you have contracted to provide services.
Conclusions
When choosing between licensed Russian brokers and Russian-speaking companies that provide brokerage services to clients from Russia, you need to understand a few things:
Russian brokers often have limited types of accounts and trading conditions, but their activity is regulated by the Central Bank of Russia and the client is under the protection of the law. Brokers "in Russian" with foreign registration have more comfortable conditions for traders, but in case of some force majeure the trader will not have any legal protection.