Russian Central Bank May Let FX Firms Offer More Products

Forex operators have not had as much freedom as they would have liked when it comes to operating in Russia. The tough regulations have proven to be quite a challenge for many operators. However, there seems to be good news on the horizon as the Central Bank of Russia is considering allowing local Forex dealers a chance to offer more products to their customers in the near future.

Local media report that Sergey Shvetsov, First Deputy Governor of the Central Bank of Russia has stated that the Russian regulator will be soon allowing Forex dealers to offer more products. The catch is that they will have a lower leverage.

Leverage is the amount a customer may borrow from the dealer when making deals. Normally, when it comes to forex, large leverage means that more forex funds can be bought or sold for a small amount of money. In the normal forex market, a 1:400 leverage ratio is the norm. In Russia, the max leverage is 1:50 and it will be even lower for some products if the media reports are true.

According to Shvetsov, the product expansion will involve shares and securities. Current Russian law only allows for Contracts for Difference (CFDs) only on currencies. The proposed product expansion will undoubtedly change this. The decision taken by the Central Bank of Russia was supposedly prompted by the need to protect investors. With a local option for trading, Russians would be less likely to go to offshore firms.

Added Investor Protection

Shvetsov also hinted that the planned Russian "megaregulator" is going to be restricting non-qualified investors from trading with leveraged products if they do not meet certain conditions. For example, if an investor does not have enough funds, they may not be able to trade. This is an outgrowth of the bill submitted to the Russian Duma in May. It had a simplified procedure for traders to identify their clients. This would allow for easier trading and encourage more Russian forex traders to opt for local dealers instead of going to offshore firms.

Reports show that licensed forex dealers in the country only had 3,539 clients as of May. However, offshore firms that offered their services to Russian clients had 500,000 clients. There are 200 unlicensed forex brokers targeting Russian customers and each of them deposited an average of 50 to 60,000 rubles. That's a lot of business going down the drain and this is expected to change once the restrictions are removed and local forex operators come out with more products.

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