Russia’s New Forex Law to Kick In October 2015

By Lex Yaranu | Friday, August 7th, 2015

Changes to Russian Forex MarketBarring any last minute amendments, Russia new Forex law, which was signed by Russian President Vladimir Putin, will see a whole new set of rules governing the Russian Forex industry as from October 1, 2015. The law therefore places Russia on the same pedestal as the United States, the UK, Japan and Malta as countries which operate a set of national forex laws.

Under the new forex law of Russia, the following rules and regulations will now apply to the conduct of forex business in Russia by both traders and brokers.

a) The maximum leverage that can be offered to traders has now been set at 1:50. This means that the trader will need a margin of at least $2,000 to hold a Standard Lot position in the market. Only the Russian Central Bank is allowed to raise this cap to 1:100.

b) Companies wishing to operate as forex brokers in Russia must acquire a forex dealer’s license. Such companies must also join a self-regulatory organization (SRO) such as CRFIN, must have a minimum capital requirement of 100 million Roubles and make a mandatory contribution to a Compensation Fund.

c) It is now illegal for any firm or company to use the word “forex” or to promote any forex-related activity or product without having a forex dealer license.

Many grey areas still exist, such as what happens to traders who opt to use offshore brokers without a Russian license for their trading. Also unknown is whether these rules will also apply to the binary options market, which is fast gaining a foothold among the Russian trading population.

Furthermore, CRFIN which acts as a self-regulating organization for the Russian forex market, has already voiced concerns as to the leverage rules under the new law, which will effectively set new bars that traders must achieve in terms of account capital and lock out many existing traders. CRFIN has asked for a review of the leverage requirements to 1:100 for forex assets and 1:200 for certain CFD assets.

It is still too early to judge the impact of the new law on the market. Perhaps it is best to wait for the new law to kick in fully before its impact of the forex industry in Russia can be felt.

Published in News & Analysis

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