The Russian “megaregulator” granted only one Forex dealer license, refused to issue one FX dealer license and took away five such licenses in 2018.
The Russian central bank has earlier today published its licensing statistics for 2018, with the numbers including data concerning Forex dealers – the official designation for companies providing OTC FX services in Russia.
The data show that the Central Bank granted only one FX dealer license last year – the company that managed to secure the license is Alfa Forex. The company got the permission in December 2018.
The regulator also says it refused to grant Forex dealer license to one entity, but that entity is not named in the statistical bulletin.
The Central Bank, as one might expect, confirms the annulment of five FX dealer licenses in 2018. This happened in the end of the year and affected five FX companies – Forex Club, Alpari Forex, Trustforex, Fix Trade, and TeleTrade Group. The licenses were taken away due to violations of the Russian law by the brokers.
Russian information agency TASS reported back then that the activities of the five companies that were slammed by the Central Bank of Russia were focused on aggressive advertising and withdrawing Russian clients to foreign jurisdictions. This explanation has been provided by Larisa Selyutina, Head of the Securities Market and Commodity Market Department.
“All companies whose licenses have been revoked are ‘subsidiaries’ of large foreign forex dealers with recognizable brands, operating mainly in foreign forex markets. The decision to revoke is connected with the regulator’s deep concern for enormous risks for Russian citizens from the companies’ activities,” Selyutina was quoted as saying.
At present, there are four licensed FX dealers in Russia. They are facing a raft of new requirements that got into effect in April this year. The requirements govern the provision of information by Forex dealers to their clients.
A Forex dealer will have to publish on its website information about its name (full name and abbreviations, if any), membership in a self-regulatory organization, who its agents are, as well as its policy for paying compensations in case of bankruptcy. Forex dealers will also have to provide information about how a client may complain.
The new standards stress the importance of informing customers about the risks associated with entering into a contract, including the risks of losses or expenses related to meeting contract obligations. All the information has to be made clear for all types of clients, even for ones without any special knowledge of financial markets.
Forex dealers will not have to use any illicit practices, such as unfounded widening of spreads when the market situation does not necessitate such a change.