With all the major markets (US, Europe, Australia, Hong Kong, Singapore, Korea, Turkey, etc) already having some sort of Forex regulation other countries are too picking up the regulatory pace. While Latin America is too fragmented, Africa still ages away from proper financial environment and China/India still cracking down on forex; Israel and Russia remain the two main forex hubs still lacking forex regulation.
While Israel is a tiny market in terms of traders it is one of the largest in the number operating out of the country. Russia is both big in number of active traders (over 116,000 according to our latest report) and in number of brokers (over 35 active ones). With population over 140 million Russian forex market is suffering from a bad image caused by many brokers either committing fraud or going bust leaving thousands of traders empty handed and buzzing about in the local forums. Royal Max Brokers and Broco are just the tip of the iceberg.
Possible forex regulation in Russia has been discussed extensively on Forex Magnates and elsewhere and just like with the Israeli forex regulation - little has moved beyond sporadic announcement by various SROs and even some government officials here and there in the past few years.
KROUFR was the first active Self Regulatory Organization (SRO) established by major forex brokers in Russia trying to lobby the government into passing forex legislation. This didn't happen. KROUFR is now being succeeded (some say ousted) by CRFIN - a similar SRO with slightly different structure. In parallel Russian stock brokers are trying to push their own version of forex regulation which may shift the balance in their own favour, again with not much results so far.
However this may soon change - as several signs indicate that the regulatory framework has finally been drafted. Russian newspaper Vedomosti reports that according to its sources regulation has been drafted and will soon be submitted to the government and may even be approved as early as January 2013. This quick legislation became possible due to taking a shortcut: there won't be a special license for forex brokers but rather the usual 'dealing' license will be expanded to include other instruments. Many Russian forex brokers already have a dealing license issued by the ФСФР (FFMS).
In terms of requirements a standard dealing license requires a minimal capital of 35 million Rubles (~$1.1 million) and same will probably be required from forex companies. While FFMS didn't comment on the ongoing legislation apparently it issued a tender for development of recommendations for forex market regulation at a cost of 3.1 million Rubles.
Commenting on the subject CRFIN's CEO Sergey Krivoborodov mentioned that if passed "The framework would require members to adhere to strict standards. For instance they will not be able to guarantee returns". Marketing of 'stable' and 'huge' returns in the forex market is one of the major plagues of the Russian forex industry. According to Mr. Krivoborodov leverage too may be capped as it is responsible for Forex Trading being so risky. Furthermore, members will also report all trades to a centralized organization, such as a repository, similar to what is required by the NFA.
It remains to be seen whether Russia will indeed pass sensible forex regulation however if one thing is certain is that the first to benefit from it would be Russian traders who will finally be able to start feeling (relatively) safe regarding their brokers and this will surely contribute to the growth in the number of forex traders in Russia. In turn, many foreign brokers who are constantly eyeing the Russian market but aren't very eager to enter it until the regulatory framework is outlined, will definitely enter the local market contributing to competitiveness and raising the bar for local players.
