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Vice-president of Russian bank brokerage Alfa Forex reveals the keys to success in the retail business
Only a day after we covered the record rise of Russian retail forex volumes, LeapRate has spotted a detailed interview with the vice-president of one of the fastest growing retail brokerages in Russia run by a commercial bank. We are referring to Alfa Bank’s Alfa Forex division and Mr Kirill Agueev who has answered some questions to Russian website Bankir.ru.
He explains some of the reasons why he believes that Russian banks are faring much better that their western counterparts when we are talking retail forex business. He starts with some broad remarks on the state of the Russian FX business explaining that some brokers in the country have a bad reputation of scheming clients out of their money, but by no means is he implying that it is standard practice. According to him the top Russian forex companies are conducting an honest business.
However when he talks about offshore companies he explains that many of them are actively abusing the lack of regulation within the Russian market and are making everything possible to “help” their clients to lose money on the market. Such companies are operating only for a couple of years and are using corrupt advertising practices usually luring in clients with big bonus schemes.
According to his interview Mr Agueev actively supports regulation of the Russian forex market – not a big surprise considering that the biggest beneficiaries would be retail banks businesses which are already accustomed to work within a regulated environment. They also sport serious legal teams and have substantial financial resources to implement certain technological solutions faster than smaller businesses.
As of right now there are three commercial banks that are offering retail forex trading in Russia – Alfa Bank, VTB Bank and First Client Bank. According to the interview Alfa Forex has expanded their client numbers from 300 to 25 000 in two and a half years. Mr Agueev claims the main reason behind the success of their business model is that clients trust that the institution will present them with great execution prices and low spreads.
That is a possibility due to the partnerships with several big FX markets liquidity providers such as JP Morgan, UBS, Nomura, Deutsche Bank, etc. Like any proper brokerage, the company relies solely on the mark-up on prices to gain its profits and it is not dependent on clients losing money. Mr Agueev is expecting that as a regulatory framework kicks in in Russia, more retail banks will join retail FX.
Sounds like more competition is guaranteed on the Russian forex market, and the regulatory framework might give a head start to commercial banks who are willing to enter this business. So if you are considering a Russian subsidiary prepare for some action, as it is not going to be that easy with big established companies occupying top spots.
Stay tuned to LeapRate for more news on impending Russian regulation of the retail forex business.
For the full interview in Russian visit the website of Bankir.ru.