Forex eludes Central Bank

Forex companies, who should begin working according to the new rules in 2016, have not submitted to the Central Bank a single license application. According to market players, most will slip out from under state supervision, keeping into the murky foreign jurisdiction. There will be a few legal companies. 
18.11.2015
Fontanka
Origin source
One year after the adoption of the Forex Law no Russian company has not applied to the Central Bank for a license. Since January 2016 the activities of such firms will be banned. As found "Fontanka", the circle of legitimate market participants will consist of only a few dozen companies are now asked to give them a delay in obtaining a license before July 1, 2016. All others will continue to work under the supervision of foreign companies. This is only their customers have nowhere to complain in case of fraud.

About Forex Market Act, where clients-natural persons are invited to make money on the difference in exchange rates, was signed by President Vladimir Putin in December 2014, and in October 2015 the first entered into force requirements of the forex companies, among them - the duty to obtain a license in CB. However, as of November 11, 2015, the Central Bank do not have any bids from market participants, said "Fontanka" in the CB press service. From 1 January 2016 the work without a license is prohibited.

The desire to order

As explained by "Fontanka" Vladislav Kovalchuk, member of the board of directors of a computerSRI "Alpari" forex companies do not apply to the Central Bank for a license, as the Ministry of Justice has not yet approved the document of the Bank of Russia determines the order of submission of documents for obtaining a license - the instructions of the Central Bank № 168-I of 13 September 2015. "Alpari", according to "Interfax - Center for Economic Analysis", Russia's largest Forex Dealer size of the average monthly turnover - $ 107 billion (based on 2014).

Similarly, expressed the company "Finam" (average turnover of $ 4.9 billion). "The problem is that have not yet adopted the relevant regulations. Despite this, we have formed the required documents, it will be sent to the Central Bank in the coming days ", - said the" Finam ".

However, the Central Bank in response to this, saying that the document was published on the Central Bank website and the server legal information, so its content is known to participants of the market. In addition, a new document, still operates the old has not yet adopted - describing the procedure for the securities market participant licenses (FFMS Order № 11-5 / pz-n of 24 January 2011). "; Thus, the obstacles to applying for a license does not exist ", - reported in the CBA.

As explained Vladislav Kovalchuk from "Alpari", his company, in spite of everything, I have already prepared the documents and soon will give them all the same. "I assume that market participants are not sure whether the correct documents to file today for a forex dealer license on the new control instructions, but in accordance with the old rules. There is a high probability that the Bank of Russia in this case refuse to issue a license ... work on reception of the Bank of Russia official explanation of the absence of such a risk now underway, "- he said.

Control nobody wants

The reasons for the slowness of the forex dealer can actually be in another. The fact that the Central Bank's rules on the regulation of this market greatly limit the ability of the participants.

Firstly, they are obliged to conclude contracts with customers on behalf of Russian legal entities, and in most of them there is not expected any. It is much easier to work under the authority of a foreign offshore company, the actions of kotocerned difficult challenge, while in Russia and not being guided in foreign legislation. Second, the degree of disclosure of the central bank of its financial and other reporting to be so deep that hide any fraud with clients' money is unlikely to be now possible.

Third, the size of the "leverage", which allows you to buy currency in much larger amounts of money than a customer, reduced to 50, although it is now in many companies, it reaches 2000. This means that if, for example, $ 1 can buy the currency to be sold on the entire $ 2,000, however, a change of the course is not in favor of the client, its losses are increasing, increasing forex dealer profits. Finally, the whole motley activities of securities market participants is limited to only buying and selling currencies, while they offer to customers and other instruments - stocks, futures, and others.

As a result, the Russian legal field and will not appear wide offer in the forex market, and will prevail in the mainly foreign companies. For example, according to the head of department of operations on financial markets, MDBank Dyadenko George, who told about it in late 2014.

Who will be the legal

In this situation, many forex companies are well aware that never in my life will not receive a license, and therefore does not serve her application. Against this background, in Russia formed a kind of official Community forex dealers, which, on the contrary, intends to work according to the rules of the Central Bank. It is represented by the self-regulatory organization "Regulation Center of OTC financial instruments and technologies", established by three forex dealer of the largest in the country - "Alpari", "Teletrade" and "Forex Club" (the total average monthly turnover on the basis of 2014 - $ 224 billion, or 63 % of the market).

As of November 11, the SRO consists of 30 companies, 10 of which are in Moscow and St. Petersburg 5. As can be seen in companies from St. Petersburg, they are registered mainly on local entrepreneurs, although often work under the supervision of their unknown foreign owners. At the same time work on the new rules, they seem also not in a hurry. So, from all five forex companies of St. Petersburg, only one offers smallagaet its customers to adopt electronic agreements and other legal documents drawn up on behalf of the Russian legal entity - LLC "Admiral Markets".

The remaining firms still offer users sign contracts with foreign companies. For example, "Larson Holz East End" and LLC "Eksness" companies offer customers the documents Larson and Holz IT Ltd and Exness Limited, registered in the State of Saint Vincent and the Grenadines Caribbean. The company "FBC Trade" offers paper companies FBS Markets Ltd, registered in Belize. The company "Grandkapital" - company documents Grand Capital Ltd, the country of registration which are not even listed.

"Readiness" to the new regulations of the Central Bank of St. Petersburg and the company disclose the size of the leverage available to clients. Although the limit of 50, three of them still offer leverage up to 2000, and "Admiral Markets" and "End Larson Holz East" - to 500. With the explanation of these contradictions wishes to make the owner and CEO of LLC "Trade PBS" Denis Slinkin but , reading the questions by e-mail, etc.I fell.

Who will escape from the Central Bank

It is safe to assume that in January 2016 under the new rules will work a narrow range of forex dealers, and all others will continue to live by the old rules, that is, without any rules. The fact that the law does not prohibit Russian citizens to use the services of foreign forex companies, even even if they have a Russian-speaking support team, the site in Russian, and an office somewhere in Moscow. Although by law they are not allowed to advertise itself in Russia, no one will forbid them from some foreign numbers (as often happens), phoning potential customers and to impose their services. Another thing is that the activities of these firms will remain outside the purview of the Central Bank and the Russian courts, so that in the event of fraud will have nowhere to seek.

"As for working with foreign forex companies after the end of the transitional period, it is possible, but in this case, traders would be out of the mechanism of the Russian judicial protection, that is, in case of conflict, they can not complain about the forex companies in the Central Bank or by contacting in RussianUdy. Clients Foreign forex companies also will not be able to receive compensation on the occasion of the bankruptcy of the dealer ", - says Director of Legal Regulation of the Centre of OTC financial instruments and technologies Alexey EVSIKOV. Note that the compensation fund SRO size is the sum of contributions from each member in the amount of 2 million rubles.

Legislative issues

According to Alexei Evsikova, there are a number of reasons why the forex dealers do not apply for a license in the Central Bank. Many companies in the short term it is difficult to fulfill all the requirements, in particular to form the required amount of own funds (from 100 million), purchase the necessary computer equipment and so on. Only on the issuance of a certificate of no criminal record at the company's employees took months, he says.

In addition, there is a legal contradiction in the legislation, which does not allow on January 1 (the date of the end of the transitional period) to begin work on the new rules. The fact is, he says, that the law, which determines the procedure for accreditation of the Central Bank of the self-regulatory organization shall only take effect January 11, 2016And without such accreditation companies - members of the SRO will not work, even if they receive a license.

"In our opinion, the best solution to this problem with the timing of the entry of two inconsistencies related laws would be an extension of the transitional period according to the law 460-FZ (about Forex -. Note" Fontanka ".) Before 1 July 2016", - said EVSIKOV.

Banks are silent

Forex division has some of the largest banks - is the investment department of VTB 24 and "Alfa-Forex", which positions itself as a division of Alfa-Bank. In fact, it is a separate company that is registered in the British Virgin Islands. Query "Fontanka" Alfa-Bank still remains unanswered. Investment Department VTB24 employees passed through the press service, they are not ready to comment on the absence of its application to the Central Bank.

Note that the law prohibits banks Forex combine its activities with the forex market. This will be possible only through the establishment of a separate company, even if it is owned by the bank. "I'm not sure that the business banksneeds, - said in late 2014 the deputy chairman of the Central Bank Sergey Shvetsov at the stage of preparation of the law. - It's a little casino, rather than the financial sector, there is no actual transactions of purchase and sale of foreign currency. " Perhaps silence VTB24 just connected with that decision.