Russian Central Bank Eyes FX Regulations Highlights Leverage & Advertising
by
Adil Siddiqui
Russia’s central bank looks to regulate Forex trading, Russian media reports. The regulator is proposing new measures that sanction the way brokers advertise their products and the level of margin on open positions.
Russia’s margin FX trading environment has been one of the most established on the planet, the country has been a pioneer in technological advancements in electronic trading solutions and boasts a developed retail trading audience, however the country has been slow to adopt regulations in relation to FX trading until now.
Proposals are being made by the country’s banking regulators on the feasibility of regulating Forex trading, with emphasis on limiting leverage and governing advertising, Russian media reports.
Russian FX brokers serving domestic investors could soon been under the regulatory radar, the central bank has been discussing a framework that regulates OTC currency trading, an asset class that is currently up in the air. The authorities have put forward a second reading to the parliament in relation to the new regulations. Serguey Shvetsov, the First deputy governor of the bank of Russian has been spear-heading the campaign. Mr Shvetsov, joined the bank in 2001 and has been prominent on various scales at the bank, He was appointed deputy governor in 2011. Mr Shvetsov was speaking at the Economic Forum where the states were made.
Mr Shvetsov commented (as reported in the media translated): "By the second reading we are working together with the government to make amendments that significantly change the advertising of this activity and will be removing from this activity, elements of fraud", (quoted by "Interfax").
Spot FX, is a regulated asset class in several jurisdictions across the globe, notably the UK, it has been front running legislation that governs the product in addition to its sister products, CFDs and Financial Spread Betting. Since the rise in FX trading among retail investors several regulators have apprehended the product, including, Japan (JFSA), Australia (ASIC), the US (CFTC & NFA) Singapore (MAS), Turkey (CMB) and Cyprus (CySEC).
Most recently, Turkey joined forces with advanced regulators in the authorisation of spot FX, with the regulator, the Capital Markets Board, placing leverage and capital requirements restrictions. Leverage has been a talking point across the globe, with the US and Japan taken steps that reduced the amount of margin traders can us to open position. The UK and Australia quite flexible in this regard, with one FCA authorised firm offering upto 500 to 1 leverage to retail investors.
“Russian has been developing its financial and capital markets in line with European standards, the current move is a step in the right direction and can only benefit, users and providers,” explained the compliance officer of a UK based firm of Russian origin.
Mr Shvetsov added (translated to English): "Europeans are offering 1 to 50 as the maximum cap, and specific (currency) pairs depending on the volatility, we also propose to do something similar. Perhaps during the second reading of the law, this idea will also be discussed.”
The regulations of margin products in Europe vary from state despite the implementation of MiFID in 2007. According to Forex Magnates research there are no leverage restrictions in Europe.
Leverage restrictions were thought to be the demise of FX trading in the world’s most established marketplace, Japan. However, traders have adapted their strategies to the higher margin requirements, in 2013 Japanese broker’s witnessed record trading metrics. On the other hand, FXCM recently reported that it was lowering margin requirements for various CFD contracts.
Russia’s margin FX trading environment has been one of the most established on the planet, the country has been a pioneer in technological advancements in electronic trading solutions and boasts a developed retail trading audience, however the country has been slow to adopt regulations in relation to FX trading until now.
Proposals are being made by the country’s banking regulators on the feasibility of regulating Forex trading, with emphasis on limiting leverage and governing advertising, Russian media reports.
Russian FX brokers serving domestic investors could soon been under the regulatory radar, the central bank has been discussing a framework that regulates OTC currency trading, an asset class that is currently up in the air. The authorities have put forward a second reading to the parliament in relation to the new regulations. Serguey Shvetsov, the First deputy governor of the bank of Russian has been spear-heading the campaign. Mr Shvetsov, joined the bank in 2001 and has been prominent on various scales at the bank, He was appointed deputy governor in 2011. Mr Shvetsov was speaking at the Economic Forum where the states were made.
Mr Shvetsov commented (as reported in the media translated): "By the second reading we are working together with the government to make amendments that significantly change the advertising of this activity and will be removing from this activity, elements of fraud", (quoted by "Interfax").
Spot FX, is a regulated asset class in several jurisdictions across the globe, notably the UK, it has been front running legislation that governs the product in addition to its sister products, CFDs and Financial Spread Betting. Since the rise in FX trading among retail investors several regulators have apprehended the product, including, Japan (JFSA), Australia (ASIC), the US (CFTC & NFA) Singapore (MAS), Turkey (CMB) and Cyprus (CySEC).
Most recently, Turkey joined forces with advanced regulators in the authorisation of spot FX, with the regulator, the Capital Markets Board, placing leverage and capital requirements restrictions. Leverage has been a talking point across the globe, with the US and Japan taken steps that reduced the amount of margin traders can us to open position. The UK and Australia quite flexible in this regard, with one FCA authorised firm offering upto 500 to 1 leverage to retail investors.
“Russian has been developing its financial and capital markets in line with European standards, the current move is a step in the right direction and can only benefit, users and providers,” explained the compliance officer of a UK based firm of Russian origin.
Mr Shvetsov added (translated to English): "Europeans are offering 1 to 50 as the maximum cap, and specific (currency) pairs depending on the volatility, we also propose to do something similar. Perhaps during the second reading of the law, this idea will also be discussed.”
The regulations of margin products in Europe vary from state despite the implementation of MiFID in 2007. According to Forex Magnates research there are no leverage restrictions in Europe.
Leverage restrictions were thought to be the demise of FX trading in the world’s most established marketplace, Japan. However, traders have adapted their strategies to the higher margin requirements, in 2013 Japanese broker’s witnessed record trading metrics. On the other hand, FXCM recently reported that it was lowering margin requirements for various CFD contracts.
Interactive Brokers Expands Offerings with Daily Options on French Stocks
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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