Evgeni Masharov, head of the Association of Forex Dealers, in an interview with Finversia.ru, described how the Bank of Russia intends to block dealers without a license, how secure are the rights of a Russian client of legal forex and how long the transition process will last.
– Eugene, in May this year, “Finam Forex” opened a “white” forex market. The remaining seven companies that are members of the Association of Forex Dealers (AFD) also opened their doors?
– Now in the structure of our Association 8 licensed forex dealers. To date, the AFD has registered six framework agreements, the rest are waiting. We took a serious step forward, finally launching a licensed market. But at the same time we realize that the market remains divided into two parts: regulated and unregulated. So far, in terms of the number of companies, we are in the minority. According to our estimates, approximately 200 companies that do not have a license continue to attract money from Russian citizens.
How do you fight them?
– One of the steps is to increase financial literacy. Our Association has developed and distributes the first methodical guide for clients on work in the forex market. After all, how often does it happen? A person comes to the company without a license, makes a deposit, and he is not even offered to undergo training and does not talk about the specifics of this market. Of course, he quickly turns out to be without money. Thus, a negative background continues to accumulate in society. We want to break this vicious circle.
The second step is the Bank of Russia’s efforts to block illegal forex brokers. Now on public discussion there is a bill on giving to the regulator the right to extrajudicial blocking of sites. We support this initiative. Today in the domain zone ru work for about 70 companies without licenses – they must be blocked, in the first place. The vast majority of forex companies work online, and 70% of new customers learn about this market via the Internet.
– As far as I know, in July the Central Bank managed to block one of these sites.
– Yes, there was a precedent. I think that, from the point of view of improving the financial market, such precedents should be. That the companies understand and realize the responsibility, that there is legislation that must be observed. When the regulator speaks of a large number of complaints about a forex company, it is just about complaints about companies that do not have a Russian license.
Speaking of foreign jurisdictions. Do you know that regulation of the forex market is becoming tougher around the world? At the same time, the level of legal protection in our jurisdiction is higher than, say, in off-shores such as Saint Vincent or Belize. At the same time, we are still inferior to the British, American and Cypriot jurisdictions in terms of the product line. But I am sure that it will gradually expand.
– Is it possible to elaborate on the protection of the rights of Russian clients?
– Imagine, you in 2013 became a client of a forex company, which is registered in the Seychelles or in Belize. The company broke the rules, you – lost the deposit. Or instead of the established 2 days for payment, the company paid in a month. Your rights have been violated. Where could you turn? At that time, the Bank of Russia was not the regulator of this market. There was no self-regulating organization.You could not even go to court because it was a foreign organization. Now the situation is the opposite. There is a specialized law, there is a right to judicial protection, the right to file a complaint with the SRO. We, as SROs, have the right to request documents from the company if a conflict situation arises. If we see a violation of the basic standard by the company, then we have the right to conduct an unscheduled inspection of this company. Separately, the issues of appeals to the company and to the SRO will be regulated in the basic standard of protecting the rights of consumers of financial services – it is just at the stage of approval.
Thus, the Russian client of the forex market is now protected.
-And many Russian customers are now in the “white” forex?
– We have established a commission to monitor funds that are on a nominal account with forex dealers. The commission works, we keep statistics. As for the number of clients, we do not collect such statistics yet. I think that in the future we will conduct such work and gather information. I can say that customers are interested. And there are customers who choose the Russian forex because they are not ready to risk their capital. Who is willing to pay taxes. As will be the generalized statistics, we will necessarily share. I am sure that interest in the market will grow. And customers will be more and more.
-Transition process will last how much?
– I think that objectively creating the normal conditions for the development of jurisdiction will take a half or two years. With regard to the transfer of clients from foreign jurisdictions to the Russian, we are conducting explanatory work with members of SROs, who are part of a group of foreign forex brokers. The client needs to close the trading account first there. And if he has a successful strategy ?! New clients, as we see, prefer to immediately start working in the Russian jurisdiction.
– Even despite the limitations of the toolkit?
– I stress that we must start somewhere. Forex in Russia for 20 years was beyond legal regulation. Therefore, the Bank of Russia and the Association need to see how the forex dealers will work. As for the tools. If there is an economic justification, we will lobby for the expansion of the line.
– Returning to the protection of consumer rights. What amendments are currently being considered? What is their feature?
– Now we are working to approve the basic standard of consumer protection. These are requirements for both the premises, employees, and the provision of the service itself, the requirements for third parties, the requirements for dealers in terms of interaction with the client, the requirements for the order of response to incoming treatment. In addition, we are preparing a second methodological manual on countering unscrupulous market participants. I believe that these issues need to be discussed widely, including in the media. To ultimately protect our consumer. This is the most important task.