Russian Central Bank to clamp down on retail forex trading with Serguey Shvetsov at the helm

Russian Forex regultor trying to get leverage limit of 50:1 and advertising scrutiny put into law.

First deputy governor of the Russian Central Bank, Serguey Shvetsov is on the newswires with an announcement that the second vote on the forex regulation bill in Russian Parliament is now imminent. The bill will introduce caps on leverage and advertising limits, since as we have already reported the main man behind Russian regulation has frequently referred to retail forex trading as to gambling.

Mr Shvetsov reiterated that in the second version of the bill, the Government and himself, are preparing substantial restrictions to advertising practices that aim to introduce some scrutiny for companies who falsely advertise that easy profits can be gained from trading on the forex market. He didn’t spare sharp rhetoric, referring to companies that claim “easy-money” and “high returns” as “charlatans”.

The terms of a leverage cap apparently remain a controversial issue with the regulator refraining from mentioning a specific figure for now. Shvetsov has mentioned that European regulators are looking into a 50:1 cap, however in his opinion, some pairs will deserve stricter rules tied to market volatility. In our opinion he is openly addressing the Russian ruble crosses, as recent spike in volatility due to escalating geopolitical tensions has driven substantial amounts of funds away from the Russian ruble.

In a recent interview with the Russian “Vedomosti” newspaper he has already shared that a methodology that introduces flexible leverage caps dependent on volatility is in the works. According to the interview he is looking for close cooperation with the already existing self-regulatory body CRFIN.

The aim is pretty clear here – domestic companies are likely to have quite a substantial regulatory edge – both in terms of advertising and leverage caps. Once CRFIN members introduce a specific technology that allows this flexible leverage cap to be implemented, foreign companies will need to start developing their own solutions if they want to comply with regulations and maintain operations in Russia.

For the full press release by CRFIN visit their website.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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