Bank of Russia Wipes Out Local Retail FX Industry

The central bank of Russia has stormed into the local regulated market earlier on Thursday. After several years of controversial decisions, the official end of competition on the regulated Russian market is a fact.

The mega-regulator’s move was to strip several broking companies of their licenses and therefore corner the market into the hands of major local banks. Alpari, TeleTrade, TrustForex, InstaForex, and Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Club have all been suspended.

The move comes only a couple of days after the central bank granted a new license to Alfa Forex. In what seems to be a coordinated attack against private businesses, the Russian authorities are behaving in a traditionally authoritarian way.

One Month Notice

The decision, which was published on Thursday on the website of the Bank of Russia, carries a one month notice. The companies will have until January 27 to cease all operations and return deposits to clients.

The official justification for the decision taken by the Russian central bank is related to systemic violations of the guidance of the authority, Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term deficiencies, and others.

The wrath of the regulator goes one step further as the Russian central bank also added the names of individuals managing the firms into its announcement. Senior management figures from Alpari, TeleTrade, TrustForex, InstaForex, and Forex Club were singled out.

Retail Broking Cartel

The approach of the central Russian authority is uncompromising. In traditional fashion for the country, the forex broking business was served on a platter to large mega-corporations controlled by individuals close to the Russian government.

Every foreign company that explored the acquisition of an official license to operate in Russia has been discouraged by its findings. After CRFIN, an existing self-regulatory organization, was effectively dismantled by the regulator, it crafted its own industry body, the AFD.

Offshore Push to Continue

With competition lacking on the local marketplace Russian citizens are focusing their attention offshore. A number of brokers have been pursuing opportunities outside of the country.

While the official regulatory framework was taking shape, the market quickly reoriented. A number of locally operating companies opened offices in offshore jurisdictions.

The action taken by some local brokers could be one of the main reasons for the central bank's move. Instead of closing regulatory loopholes, the financial mega-regulator chose to use a more traditional approach for reigning in an industry in Russia.