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Russia's FX Bill: Questions from Traders, Answers from CRFIN

We've already informed you of the fact that the Russian Forex bill successfully passed its first reading in the State Duma (the lower chamber of the Russian parliament) last month – it is now undergoing changes and amendments and we expect it to hit the stage for a second reading in the autumn. 
But while legislators decide on complicated matters, the common folk are interested in how the upcoming law will affect trading and profits. For that matter, we've decided to present you with a brief summary of a very interesting online conference that took place on June 20, 2013  - it was organized by Russia's self-regulated FX organization (SRO) CRFIN and online portal Ilearnly: it featured questions by anyone interested in Russia's Forex regulation, while representatives of the SRO, brokers and various agencies provided answers.

NO, there are no limits on leverage in sight

Those interested in Forex regulation across the globe are aware of the limitations on leverage that exist in some countries, with the brightest example coming from the United States, where leverage is capped at 1:50.  
Vadim Vinogradov, from CRFIN, elaborated on how the matter is likely to be tackled by Russian regulators. To begin with, the bill does not feature any texts regarding the leverage, so if there are any curbs, they will be implemented separately. But Mr. Vinogradov considers the imposition of such limits as an unfair manner of stifling competition in the sector and its liveliness. Another unpleasant aspect would be the disadvantage at which the soon-to-be Russian FX jurisdiction will be put compared to other FX destinations. But since we are interested in particular numbers, let's  note that according to Mr Vinogradov the wise limit for maximum leverage is 1:100. If a trader is willing to trade with a bigger leverage than that, he/she should be able “to demonstrate his/her qualification”.

Will my broker survive after the new rules come into force?

This is a touchy topic, since we've already discussed that Russian regulation will be quite pricy for brokers. 
Maksim Vassin, from Russia's National Rating Agency explained that the regulatory requirements would probably lead to the end of activity of about 100 smaller FX brokers with operations in Russia. 
There will be a transition period of between three and six months after the enactment of the law during which it will become clear which companies comply with the new regulations and which do not. Unfortunately, traders might be left in the dark about the regulatory situation of their brokers during this period – unless, of course, the company is responsible and updates its clients on the matter.

What's in it for me?

For starters, there will be legal protection in case there is an argument between the trader and the broker. Then, there are the tax benefits (possibility for netting). And last, but not least, no misleading FX broker commercials.

Will the regulations affect trading terms and conditions?

Absolutely not. We clarified the issue with the leverage but now let's mention other items. There will be no impact on spreads, there will be no impact on the use of strategies like scalping or hedging – as long as your broker allows it, the State allows it. You can still make use of expert advisors, various trading platforms and account managers. Cheer up!

More questions

As you see, things are not so complicated and gloomy when it comes to Russian FX regulation –  there will be benefits for traders, especially in terms of security. But there are plenty of matters that are not clarified in the bill. One of them is the status of brokers who will prefer to remain registered offshore and keep operating in Russia. Should their clients pay taxes according to Russian laws or according to the laws of the offshore location?
And, more importantly, the bill does not say anything of segregated accounts – experts participating in the online conference noted that this is how client funds should be kept. But there is still a gap between “should” and “is” in Russia's FX world – let's hope it's filled soon.
TAGS: russia  fx regulation  forex  fx  forex trading  sro  crfin  profits  traders  taxes  forex bill  leverage  spreads  expert advisors 
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