Russia’s central bank said it has spotted a notable increase in solicitations from unregulated brokers and specifically warned the public from doing business with forex platforms that promise an income stream during the Covid-19 lockdown.
The mega regulator reminds Russians to exercise caution when considering aggressive promotions as a basis for investment decisions. It said in a statement Thursday that it was alerted to forex platforms telling dummies that risks associated with online trading quite low and even those with limited experience could earn a steady income in volatile markets.
“Almost all consumers entrusting their funds to such forex dealers ultimately lose their money,” it said in a report.
The latest caution comes as Russian financial regulators said earlier this year they observed a continued downturn in complaints filed by customers regarding Forex dealers that provide licensed OTC FX services to Russian residents.
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But FX complaints drop
The Russian Central Bank did an analysis of complaints it has received throughout 2019 against financial services firms. According to the study, complaints received in general were 246,600, down 2.8 percent from a year earlier.
Claims against securities brokers totaled only 1000, which is almost 30 percent lower than the 1,439 complaints it received in 2018. Out of this figure, the regulator received a mere 40 complaints from dissatisfied customers against OTC FX brokers.
It would be quite the understatement to say Russian investors’ interest in speculative products has been unwinding as a result of stringent FX regulations and the RCB’s efforts to limit the marketing of such products. A more accurate description for this drop in complaints would be something closer to the idea that recent clampdown is pushing traders away from licensed brokers in Russia to open accounts in offshore jurisdictions.
In a window lasting just a little over two years, the Bank of Russia eliminated competition from the entire forex market in the country after it decided to strip several brokerage firms of their license to trade in forex.
Russia has sought to crack down on both crypto and FX industries in recent months, which has long flocked to other jurisdictions. Part of its crackdown, which dates back to 2018, the Russian central bank identified 140 companies it says might be illegally offering FX trading to local consumers earlier last year.