Russian legislation leads to business suicide
Today, Vladimir Kondrashov, one of the founders of the ICE GROUP, a group of companies operating on financial markets, is a guest of the editorial board of the magazine.
Fortrader: Hello, Vladimir, how did it happen that you got acquainted with trading in financial markets?
- Good afternoon. I must say that I am not and have never tried myself as a trader. I prefer to deal with investments, asset management and portfolio management, as well as conduct my own research in these areas. I understand and actively implement them in the services of our company.
I started out as a customer one of the -brokersBut while I was a client, I was doing research in the field of portfolio management and studying the performance of currency market companies. But while I was a client, I conducted research in the field of portfolio management and studied the work of foreign exchange market companies. The more I studied, the more I saw how few companies provide good service and how difficult it was for a novice client to start working on the market properly.
For clients of traders, the main problem is the well-known "conflict of interest" between the company and the client, the almost complete absence of quality asset managers, as well as the slow development of the market. And, of course, the issue of company transparency is always relevant.
Understanding this led me to think about the possibility of creating a company or companies that operate on the principles of transparency, openness and no conflict of interest with clients.
- Trading is becoming more and more a part of our lives - many people know about the foreign exchange market, binary options, cryptocurrencies, or are holders of certain securities. In your opinion, why has the popularity of speculation in Russia and the CIS countries developed so actively in recent years?
- As such, trading in the CIS is in its infancy, so the growth of its popularity is not anything special, it is an absolutely normal and natural process.
Nevertheless, at least two factors are important for sustainable growth of trade turnover in financial markets:
- Adequate legislation, both protecting the interests of clients and not interfering with the work of the financial companies themselves.
- The growth of the wealth of ordinary citizens, who make up the basis of the retail segment, because trading is not a "matter of necessity" and people will rarely use funds for speculation in case of lack of them.
Unfortunately, there are chronic problems in the CIS on both counts.
- Do you think anyone can become a trader?
- No, definitely a minority of people can become successful traders. Especially if we are talking about traders who trade manual trading strategies. To be successful, a trader must at least have a technical mindset and a scouting psychology. Besides you have to stop believing that earning on the market is easy and not to chase easy profits.
- Many people consider trading to be either a frivolous business or a scam. What do you have to say about it?
- As for not being serious, I would say that this activity is on the contrary too serious, in the sense that trading forgives mistakes much less often than many other activities, and earning a speculator is definitely not an easy task. If by not serious you mean unreliable, then trading is definitely not the most reliable kind of earning, and I wouldn't recommend anyone to be confident in earning from the market.
As for cheating, you have to distinguish between the market as such, and the near-market industry. The first is not any kind of deception or fraud. The second, in many cases, is.
- How do you feel about the introduction of regulation in Russia? Does your company plan to obtain the necessary license from the Central Bank of Russia?
- I have a rather negative attitude toward Russian regulation. It looks like the creation of a law for certain big players. Just look at the following (in order of importance):
- Запрещен вывод средств за пределы РФ. Все поставщики ликвидности находятся за пределами РФ, и запрет вывода средств означает запрет перекрытия сделок клиентов. Конфликт интересов между компанией и клиентом (когда компания выступает контрагентом по сделке или играет роль «кухни», говоря проще) — основная проблема внебиржевых рынков и валютного в особенности. Вместо борьбы с этим мы видим наоборот, полный запрет брокерам не быть «кухней». Комментарии излишни, на мой взгляд.
- The Central Bank actually resigned most of the authority to control the broker-dealers, everything is supervised by SROs, consisting of the largest players in the domestic industry. To put it mildly, I have no confidence in such "regulators" and I cannot imagine any transparent company working under the supervision of these structures.
- A huge authorized capital (100 million rubles), absolutely incomparable to the prospects of the CIS-market, if you work transparently and honestly.
- The possibility of entering funds into the company only by direct bank transfer. On average for CIS brokers, direct bank transfers account for about 10-15% of client funds entered. This is inconvenient for most people.
We do not plan to obtain a license from the Central Bank of the Russian Federation until the provisions governing the work of -brokers, as described in paragraphs 1 and 2, are changed. Point 1 goes against our work policy (we confirm to clients the withdrawal of any transaction to an external counterparty), and point 2 leads us to business suicide.
- Why should traders and investors work with your company?
- The main problem of OTC markets is the lack of a unified price, and as a consequence, the possibility for companies to manipulate quotes. This is where the main conflict of interest comes from, which is the possibility for any company to act as a counterparty to clients' transactions. This scheme is called "b-book" (in contrast to the "a-book" scheme, in which a company hedges all client transactions with an external counterparty) and results in the client's losses becoming the company's profits and vice versa. The absence of a unified price provides companies with an enormous scope for "playing against the client" by manipulating quotations.
We are the only company in the world at the moment that confirms (rather than just says so) to any client the output of their transactions to an external counterparty. As a result, we have no conflict of interest with our clients as described above.
The problems of investment services, in most cases, are related to the falsification or distortion of the performance of investment products (silent here about the lack of interest of "investment" companies in earning clients, this is a broader issue). We show investors maximum transparency in this regard.
Дополнительно, мы являемся единственной в мире компанией, демонстрирующей клиентам наличие средств на торговых и платежных контрагентов. Проблема нецелевого использования клиентских средств — вторая после проблемы «игры против клиента» (описанной выше).
- What would you advise for newcomers to the ?
- The first goal is to set oneself "not to lose," and the second goal is to make money. Those who swap these goals, in most cases, achieve neither the second nor the first.