Evgeny Masharov: “Negative facts about the forex market will go down in history”

12 May 2016

– Evgeni, curious, but you yourself tried to trade on Forex?

– There is no real money, but the demo account, as well as the mechanism of work of forex companies, studied carefully (smiling). As, of course, both Russian and foreign legislation. By profession I am a lawyer.

– How is the formation of SRO going?

– Пока в России единственный форекс-дилер, имеющий лицензию Банка России – это компания «Финам Форекс». В свою очередь, законодательство обязывает форекс-дилера вступить в СРО форекс-дилеров, поэтому «Финам Форекс» выступил инициатором и стал учредителем Ассоциации с целью дальнейшего получения статуса саморегулируемой организации форекс-дилеров.

In April 2016, the Association submitted to the Bank of Russia an application and the entire package of necessary documents to obtain the status of a self-regulated organization of forex dealers. I hope that AFD will be included in the register of SRO in the financial market as SRO forex-dealers. According to the established procedure, the Bank of Russia must issue a corresponding decision within 30 calendar days. I believe that it will be positive. I note that the Bank of Russia also has the right, if necessary, to extend the deadline for issuing the decision for another 30 calendar days.

– I understand correctly that the law allows that there can be only one participant in the SRO?

In order to enter the SRO in the financial market as a part of a non-commercial organization, at least 26 percent of the total number of market participants should be its members. While it turns out that the “Finam Forex” at the time of submission of documents to the Bank of Russia for the recognition of SRO forex-dealers is 100 percent of the regulated forex market. To get started, the forex dealer should not only get a license, but also join the SRO forex dealers. So the company simply did not have any other options for launching the license of a professional participant of the securities market issued by the Bank of Russia to carry out the activities of a forex dealer, except to follow the path of creating a profile SRO forex dealers.

– It turns out that “the right to work” is now only with “Finam Forex”, but how else do other companies work?

– It is necessary to recall the history of the issue. Until January 1, 2015, the forex market was outside the legal field. Federal Law No. 460-FZ “On Amending Certain Legislative Acts of the Russian Federation” was signed by Russian President Vladimir Putin on December 29, 2014. This law entered into force in stages. The first part of the changes, including the provisions of the Civil Code of the Russian Federation began to operate from January 1, 2015, they gave the right to judicial protection of transactions in the forex market. The second part of the norms came into force on October 1, 2015.Since that moment, forex companies had to begin the process of obtaining licenses and submit to the Bank of Russia relevant documents for obtaining a license from a forex dealer. And from January 1, 2016, those who did not receive the official “welcome” from the Bank of Russia had to stop working. It’s not a secret for anyone that those companies that continue their activity in the forex market do not fall under Russian jurisdiction. Therefore, we can say that in Russia there are two forex markets – regulated and unregulated. The legislator has set a short time for obtaining a license from a forex dealer, because, apparently, he assumed that all companies will manage to get the status of a forex dealer.

I would also like to note the role of the Bank of Russia. I must say that the mega-regulator managed to prepare all the necessary requirements for future forex dealers. The question is why not all companies submitted documents to the Bank of Russia – rather, from the rhetorical field. By the way, in addition to “Finam Forex” a number of organizations have applied for a license to a forex dealer in the Bank of Russia, they are just now in the stage of waiting for it.

– That is, those customers who continue to work with unlicensed companies are deprived of protection of their rights at the state level?

– From the point of view of jurisprudence – yes. But I can not indiscriminately criticize all companies. We do have the option, when the company has accreditation and permission to carry out activities from foreign regulators. Simply then, their clients fall under another jurisdiction and will receive tools to protect their interests within acceptable limits within the jurisdiction of the license of the company with which the client has a contract

I also want to note that our legislation stipulates a number of requirements for future forex dealers. Legislation is formulated quite rigidly from the point of view of control over the activities of forex dealers. This is done, first of all, to protect the rights of consumers. We know the stories when people manic due to the activity of some forex companies were fond of forex and the state’s attitude to the market has not improved from this.

– On a recent roundtable, the law, to put it mildly, was criticized. In particular, they noted the difficulty in calculating risks in the event of bankruptcy of a SRO member. That is, each forex dealer brings in there 2 million rubles each, but there are likely unlimited additional fees in case of bankruptcy of not one but several dealers …

– This is a question connected with the instruction of the Bank of Russia on the formation of the compensation fund of SRO forex-dealers. As for the compensation fund, the current legislation is indeed more stringent than, in relation to other participants of the securities market.

My opinion is that the legislation on the regulation of the forex market is a standard in terms of protecting the rights of consumers of financial services. Just a regulated securities market was formed for 20 years, and the forex market is just beginning to be regulated, and we should not forget that the participants themselves insisted on this process. This norm has appeared for a reason, as the Bank of Russia realizing that it has many complaints about the activities of allegedly participants in the forex market should have protected the rights of consumers as effectively as possible.

And, finally, if we complain about the rigidity in the regulation of the forex market, then we can also say about any other market, they say, it is difficult to calculate the risks. Forex is a high-risk occupation. As, however, and any other business.

– The law also obliges to warn new customers about the risks. Representatives of companies themselves always say that it is not worth waiting for forex earnings and millions of profits from forex. How does this technically happen?

– Of course. The law on the securities market requires that the client be identified. He comes to the office, signs a paper with a notice of the risks. And the identification is carried out according to the form approved by regulatory enactments. I can not speak for the whole market, but those companies that value their reputation, even before the entry into force of the law, identified the client. And forex dealers will simply have to do this, as well as hand in a notice of the risks.

– I can ask a naive question, but why did market participants need regulation? Customers seemed to be, sat on the Internet, I know a friend traded, today with a profit, tomorrow with losses. As if without a special panic and the desire for supervision from the Central Bank …

– And why does the state exist? Including to protect the interests of citizens. Customers who came to this market and experienced all sorts of difficulties in working with a forex company could not count on legal support from the state.

– That is, this step of the Central Bank makes it clear that forex is still not a casino, but a risky instrument, but still legal?

– First, the law on self-regulatory organizations in the financial market, we have already been recognized as a segment of the financial market in the form of institutionalization of a self-regulating organization of forex dealers as an SRO in the financial market.

Secondly, we should not forget about the state’s failure to receive taxes and fees from the activities of forex companies. Those companies that registered in offshore, respectively, were paid there.

Thirdly, it is wrong to assume that all customers lose on Forex. There are very successful traders indeed – and no one has canceled their obligation to pay personal income tax. Now there is a formation of a regulated market and believe that in a few years our market will be a model in terms of effective regulation and protection of the rights of individual investors.

– Now the mass of advertising is on, some companies are again activated and began to attract money from the population at high interest rates. They explain their profitability by successful trading on Forex …

– First of all, it is necessary to understand whether these companies offer services in the forex market or they cover up their activities. The fact is that when this market was outside the scope of regulation, it was profitable for various types of fraudsters to offer their services on behalf of forex companies

I think that this trend will soon pass and scammers will find it increasingly difficult and more difficult to work on raising funds. In addition, law enforcement practice on legislation on countering financial pyramids will be formed. As soon as the regulated forex market starts working, the companies will get licenses, and the SRO of forex dealers will be recognized by the Bank of Russia, then many negative factors that we now hear about this market will become history, and together with the Bank of Russia we will need to work on Practice of implementing the law on forex. I think that there is not much time left, we need to wait a little longer …


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