Forex is qualified

12 May 2016

The corresponding bill was discussed the other day by an expert council on over-the-counter financial activity and protection of individual investors’ rights and will be submitted tomorrow for evaluation to the State Duma Financial Market Committee. Amendments are introduced immediately into several laws regulating the work of self-regulating organizations in the financial market. In particular, changes to the law “On the securities market” completely exclude the participation of unskilled investors in the forex market.

According to the text of the bill, “the forex dealer’s conclusion of contracts with an individual who is not an individual entrepreneur is allowed only if this person is recognized by a forex dealer as a qualified investor in the procedure established by the Bank of Russia.” The desire to place an insurmountable barrier against non-professional investors in the forex market is dictated, according to Olga Shishlyannikova, deputy director of the Securities and Commodity Market Department of the Central Bank, with a large number of complaints from former clients of forex companies. Ms. Shishlyannikova noted that the current level of financial literacy of citizens does not allow them to understand the economic essence of the tools that are offered in the forex market. At the same time, the notification of the risks, which the forex dealers are obligated to provide to customers before concluding the contract, does not work, because at the same time clients receive information about what incomes will be brought by their investments.


Potential forex dealers (now in Russia there is only one licensed company – Finam-Forex, other participants of the market are in different stages of preparation for licensing), this norm is categorically not satisfied. “The proposal is in disagreement with the plan of measures to which the Central Bank itself intends to systematically introduce categorization of the population in order to determine the most appropriate type of financial instruments,” Igor Dines, head of the expert council on over-the-counter financial activity and protection of the rights of individual investors, said at a meeting of the expert council.In his estimation, this service is very popular among the population. However, in the absence of a significant number of qualified investors, this means that we create conditions for the broad development of those very unfair practices when a client for a service goes into an unregulated sphere, “Mr. Dines believes.

In addition, according to potential forex dealers, the authority to assign a qualification gives rise to a direct conflict of interest, since the dealer will be directly interested in issuing such statuses to as many customers as possible. “The forex dealer should not himself assign the status of a qualified investor to the client, this should be done by an outside organization that conducts educational activities,” says Evgeniy Rastorguev, managing partner of Profit Group. However, the Central Bank objects to this approach, since in this case it is not clear who should bear the responsibility for damages to the client in the event that the inconsistency of his status of real qualification is proved.

In the current version of the amendments, this responsibility is directly assigned to the forex dealer – all losses incurred by this client will be reimbursed by him. Moreover, such a claim can be filed by the client within one year from the date of receipt of the corresponding report by the forex dealer, the document says. In order to avoid conflicts of interest, the Central Bank will oblige future forex dealers to separate the units dealing with issuing statuses to clients from business units selling forex market instruments.

The Expert Council intends to present its version of the amendments to the State Duma’s financial market committee. The final document, after agreement with the committee, will be sent to the second reading.

Maria Sarycheva


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