After the official introduction of the new regulatory framework in Russia in May, local regulators are promoting action on the part of foreign brokers. JFD is the first company to officially confirm to Finance Magnates that the firm is exiting the retail forex market in the country. The action is a direct result of the actions of the Russian authorities earlier this year.
The Russian central bank became the chief regulator of the retail forex market with the establishment of a self-regulatory organisation (SRO) that officially enabled the framework. The Bank of Russia imposed strict limitations on the operations of offshore brokers.
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Commenting to Finance Magnates, a representative of JFD Brokers stated: “Due to recently imposed restrictions by Russian financial market regulators towards foreign retail OTC brokers, our exposure to the Russian retail market is limited. We are now only allowed to accept professional clients (defined by size of transactions, size of financial instrument portfolio and relevant working experience). For more details, please contact JFD’s Customer Support.”
The company appears to be taking the step proactively after assessing the new local regulatory framework.
Can Russian Authorities Stop Illicit Client Onboarding?
Brokers that are regulated in the EU but have no Bank of Russia license are officially not allowed to operate in the country. While JFD has chosen the legal way to stay out of the market, Russian authorities may have to block brokers one by one in case they refuse to follow the official line.
With tensions between the West and Russia increasing in recent years, cooperation on the part of other global regulators is so far non-existent. The Cyprus Securities and Exchange Commission (CySEC) has not issued any circulars related to offering retail trading services in Russia. The regulator however has highlighted a recent message from the Latvian financial regulator that urged companies that operate in the country to do so via a local subsidiary or an introducing broker.