Bank of Russia works on project to protect clients of Forex brokers

The Central Bank of Russia (CBR), the regulator that will soon be responsible for the oversight of Forex brokers in the country, is making strides towards tighter rules for investor protection.

The regulator announced today that it has been working on a special project that seeks to secure extra safeguards for the clients of Forex dealers. (Let’s note that “Forex dealers” is the official designation for companies offering Forex trading services in Russia).

The project is entitled “Creating a system for the regulation and control of the activity of Forex dealers” and its main aim is to develop controls and mechanisms for protecting the rights of the customers of Forex dealer services.

russiabnkThe project, which should be completed by April 2016, is currently at what the CBR dubbed as “a phase of realization”.

The Bank of Russia says that at this point it is analyzing comments and suggestions by financial industry participants regarding the Russian Forex law and its possible amendment.

Industry participants seem to be generally displeased with some of the legal provisions, including the limitation of Forex leverage at 1:50. This limit was set as lawmakers sought to protect investors from risky trades and big losses.

In addition, Russian Forex traders have suffered a great deal because of fraudulent Forex brokers like Forex MMCIS. In Russia only, this company managed to defraud some 50,000 clients. As there was no Forex law in place at the time when the broker halted its operations, the Bank of Russia had to admit it was powerless to take enforcement action or protect investors in any way.

To view the official announcement about the Bank of Russia’s new Forex project, click here.

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