The Bank of Russia will toughen oversight of offshore Forex brokers

The regulator intends to introduce requirements for disclosure of offshore Forex dealers offering their services in Russia. Now they may not comply with the law “About Forex trading” that leads to violations of citizens ‘ rights

The Bank also plans to introduce requirements for activities of foreign Forex companies providing services to Russians. To do this, the regulator may impose obligations to disclose information about the company and offer financial products to individuals, said the Chairman of the Central Bank Vladimir chistyukhin at the forum on information security in Magnitogorsk.

According to him, the problem is that registered in foreign jurisdictions Forex dealers do not fall under the scope of the Russian law “On the Forex market”, which entered into force on 1 January 2016. According to the law, to work on the Russian Forex market-dealer must obtain a license from the Central Bank, to engage in self-regulatory organization (SRO) and to contribute to the special guarantee Fund. Foreign Forex brokers actually go to all these rules.

“The Central Bank is faced with the problem of how to regulate foreign participants, if they violated the requirements of our law. We are on the verge of some legal revolutions, because we are talking about regulation of people in other jurisdictions,” said Chistyukhin (quoted by TASS). He recognized that now the maximum that can make the regulator — to block a website unscrupulous party. According to the Chestwhen, to sites for foreign Forex dealers should be imposed requirements for disclosure and consumer protection. Perhaps this work should not be carried out by the national regulator, and at the international level, he added.

The right to lock

This is not the first attempt of the regulator to tighten rules for market participants operating in foreign jurisdictions. In the middle of 2016 at the initiative of the Central Bank to the state Duma amendments were made to the legislation on the securities market, which gave the Bank the right to block sites foreign participants of the Forex market. The Central Bank could to be able to close the Russian-language sites of Forex dealers who are not licensed in Russia. However, the amendment was rejected because the proposal has caused panic among foreign investment companies serving Russian-speaking clients in Russia and CIS countries.

In December 2016, the Central Bank had the opportunity to influence the Internet resources with malicious content, relating to the financial markets, having signed the agreement with Coordination center of national domain of network the Internet administrator of the national top-level domains.Russia IGI. “This allows the regulator to influence the Forex brokers, but given the fact that many sites do not work in the area of the Russian Internet, to protect citizens from unscrupulous players can not” — said a top Manager of a large investment company. According to him, the usual blocking of IP addresses also will not work, because scammers can use the so-called dynamic (variable) IP addresses.

According to the official representative of Alpari Andrey Loboda, the lock now exposed fraudulent pages and sites that are used by intruders in collecting personal data for access to the personal accounts of financial organizations registered in Russia.

Forex from offshore

According to “Interfax-CEA”, in 2015 (more recent data unavailable) clients Forex dealers were 460 thousand citizens, the number compared to 2014 increased by 15%. The average size of the client’s Deposit — about $1 thousand of the Turnover of the Russian Forex market was about $330 billion per month. However, according to market participants, the bulk of transactions in the market are the foreign participants. As previously wrote RBC, after the entry into force of the law “About Forex trading” a number of participants suspended the activities of Russian troops and transferred the service of Russian customers in their foreign structure. For example, Alfa-Bank opens Forex accounts to clients through the Cyprus Alfa Capital Holdings, which operates under the brand of Alfa Forex, the market leader in Alpari serves clients through Alpari Limited (Saint Vincent and the Grenadines).

“In fact, the situation for the year has not changed in the market many companies operating from foreign jurisdictions, which give almost no information about yourself. Sometimes you come to another FX project, and it turns out that the company has no license at all,” says the head of the Association of Forex dealers (AFD) Eugene Masharov. Therefore, according to him, the initiative of the Central Bank to introduce requirements for market participants to disclose information correct as it will help to protect the rights of clients. “On the other hand, to clear the market of unfair participants would help early adoption of basic standards for the professional activities of the Forex companies. This would allow finally to create in Russia a regulated and transparent market Forex,” — said Makarov.

RBC previously reported on cases where the fault of a foreign Forex dealer customers lost their money. In particular, in October 2014 in the market there was a scandal around the Ukrainian broker MMCIS Group. The company’s first limited, and then stopped issuing of funds to its customers. According to the Association for the PARTNERSHIP (which was later renamed the National Association of Forex dealers (NATD), clients were about 50 thousand Russians.

How to clear the market

The proposal of the Central Bank to close the foreign sites Forex brokers truereality, the Chairman of the independent Fiscal Commission (FinaCom PLC) Peter Tatarnikov. First of all, because the regulator will have to give a clear definition of what is work in the Russian market. “If the site is in Russian, it does not mean that the company is working on the Russian market. Only Israel is home to 1.5 million Russian-speaking people. If I can go to Amazon and buy something there, it does not mean that the company operates in Russia. It would not be the regulator to block everyone who has a website in Russian language,” he says.

Therefore, according to Tatarnikov, to clear the market of unfair foreign Forex dealers, the Central Bank can, only interacting with regulators of other countries. “For example, so the problem was solved with the Cyprus registered Forex dealers who actively offering binary options trading to citizens of Australia, Canada and several European countries. Financial authorities of these countries have accumulated a lot of complaints from citizens who have lost their money, and then they turned to the regulator of Cyprus”, — he said. As a result, according to experts, the Cypriot regulator tightened supervision over registered in their jurisdiction to professional players.

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