Bank of Russia, the state regulatory authority overseeing all financial markets in the country, today issued a special announcement, warning that it is not responsible for the regulation of Forex brokers.
The central bank notes that presently there is no law for the regulation of the OTC Forex segment and that there are no licenses issued for Forex brokers in Russia. That is why the Bank of Russia does not monitor nor control such businesses and Forex self-regulatory organizations such as CRFIN.
The statement by the Bank of Russia is provoked by a rise in the number of Forex companies that solicit Russian investors while claiming to have the necessary regulatory permission from the national state regulator. The warning also mentions that there are many fraudulent FX companies active in Russia and that investors should be particularly careful when making use of the services of companies active in the Forex market.
The message is issued less than 10 days after FOREX MMCIS, one of the FX companies particularly active in the Russian market, officially halted its operations and left 50,000 clients in the country without access to their investments. As a myriad of FX brokers offering their services to Russian clients, MMCIS had an offshore registration. In Russia, it boasted a certificate issued by CROFR, a Forex SRO that still has not generated a full list of registered companies.
The need of an effective Forex law in Russia is obviously acute. The Forex bill, however, still awaits its second reading with the vote already having been postponed nine times. A new version of the legislative text is now considered by Russia’s lawmakers, with FX brokers to be regulated as FX dealers and to have (eventually) the Bank of Russia as their state regulator. However, for the time being the OTC FX industry is left in the grey in one of the biggest jurisdictions in the world. The second reading of the FX bill is poised to take place on December 9, 2014. Unless it gets postponed again…
The official announcement by the Bank of Russia can be read here