Russian Regulator More Transparent Than European Ones, Or Is It?

At a time when regulatory licenses in Europe have been relatively easy to obtain for a number of clients, several industry insiders have started proclaiming in the aftermath of last year’s bankruptcies post-SNB that the criteria for issuing a license for retail brokers are flawed.

With the commonly known truth that every brokerage that applies for a license gets one as long as it pays the fee, the Bank of Russia has taken a different approach.

The mega-regulator headquartered in Moscow has decided to publicize the process of issuing licenses fully and has recently not only published the approval of two market players but also the denial of a license to another broker.

At first glance, the transparency effort is welcome, however having in mind the reputation of Russian officials the publication of brokers that have been denied is conflictual. If such publications are to be made, the logical continuation of the transparency effort would have been to identify the reason why a certain brokerage has been denied a license. No such effort has been made by the Bank of Russia.

In an announcement earlier this week the mega-regulator publicized that TeleTrade and Trustforex have been granted authorization, while the application of Profit Broker has been declined.

The Catch 22 of Russian Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term

Currently only three companies are officially authorized by the Russian central bank to operate in the country with the application of TeleTrade dating to December last year. That said, the firms do not fully comply with the legislation passed by parliament since none of them is a member of an independent self-regulatory organization.

The brokerage which got the first license, Finam 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, is in the process of creating an SRO, which is likely to be joined at least by one other Bank of Russia license holder. Meanwhile, CRFIN is expected to apply as an SRO with the central bank since it already has one of the licensed companies as a member.

Summarizing the current state of Russian regulation is easy with the infamous catch 22 expression. While some brokers are licensed by the central bank, they are not members of an SRO. On the other hand, the only institution in Russia that is close to what an SRO should look like is CRFIN, which is currently registered as an association and is not defined by the central bank as an SRO.