In Russia, forex regulation is becoming a matter of ‘when’ and ‘if’. The latest example was an announcement from the CRFIN that Russia’s State Duma approved a legislative draft in regards to forex regulation in a first reading yesterday. CRFIN is a non-profit self-regulated organization (SRO) that was founded by forex broker executives with the aim of having retail OTC forex included within Russia’s financial regulation. The group includes participants from Russia’s largest brokers such as Alpari, Teletrade, Exness, and Forex Club. The SRO is the successor to KROUFR which is one of the oldest industry groups, but has recently become less relevant as members have left the organization.
According to the announcement, the approved draft (249583-6) was created with support from CRFIN with the aim of regulating OTC forex. Highlights of the proposed rules are;
Introducing NextV - The Full Scope Solution To Building Your Next Virtual EventGo to article >>
- Forex Dealers are classified as licensed entities in the Russian Federation which hold customer assets and will be required to become licensed members of the DSRO and fulfill ongoing compliance of the regulator
- Forex dealer will have a capital requirement of 35 million rubles ($1.08 million)
- Rules governing information disclosure, internal controls, personnel certification, risk management and dispute resolution. Provisions also specifying stability and disaster recovery plan.
- Legislative draft also sets the requirement to have publicly open terms and conditions that clearly specifies dealer’s pricing policy, orders execution and other major business terms.
- The proposed draft also included the ability for investors to have the right to assert claims against forex dealers in court, as well as state rulings in regards to taxes.
The passing of a first reading is the latest in the quest of forex regulation in Russia. The desire to have the product regulated has been primarily driven by brokers looking to add credibility to forex trading following multiple cases of customer fraud. Attempts of regulating forex began over four years ago.