From scratch

25 August 2017

The mega-regulator and law-abiding part of the professional forex community begin an active struggle with colleagues who did not want or did not manage to meet the new requirements of the legislation regulating the forex market.


In October this year, it is expected that a law will be adopted that will authorize the Bank of Russia to block the Internet resources of forex companies that do not have a license. These and other topics were discussed on August 24 by participants of the round table “Protection of consumer rights-users of services in the forex market” organized by SRO “Association of Forex Dealers”.

The purity of the ranks is an important condition for the successful existence of any market that claims to be civilized. For industries that are at the stage of formation, this is especially important, since in many ways it is at the initial stages that such a most important thing as consumer confidence is formed. Which, as you know, is long and difficult to conquer, but it is very easily and quickly lost.

As for the forex market in Russia, it can not be called unequivocally young – the difference in the exchange rates of currency pairs in our country is earned for a long time. However, in his new role – a civilized, white and state-regulated segment – he appeared only recently. In fact, its new history began in May this year, when the Bank of Russia approved a basic standard for forex dealers, and for players in this market, it opened the opportunity to work in Russian jurisdiction.


Light and dark


On this basis, the forex market was divided into two camps – those who accepted the civilized rules of the game (forex dealers), and those who decided to (long or short) work on the old schemes (foreign, offshore forex companies serving Russian clients, domestic companies that did not receive a license from the Central Bank, as well as outright fraudulent structures). Recall that the mandatory condition for the official activity in the market of “regulated” forex dealers is the availability of a license of the CBR and membership in a profile self-regulatory organization (for today, there is only one – the Association of Forex Dealers). Alas, law-abiding companies are much inferior in number to those who have not adopted regulatory innovations. According to the AFD, the ratio is about 10 to 200.


However, it is the current period of time that bona fide players consider most appropriate to launch a campaign to expel counterparts from the market, albeit predominant in quantity. Of course, with the support of the regulator, FAS, law enforcement agencies and other authorized government agencies. According to Yevgeny Masharov, head of the Association of Forex-Dealers (AFD),
in 2017, they received about 40 complaints from customers of companies that are not members of the SRO. “A lot of companies that appear for a short time create brands, conduct aggressive advertising campaigns, collect money from customers, and then disappear from the market. Recently, thanks to the work of the regulator, mention of such companies has disappeared from the search engines Yandex and Google. However, there are also social networks through which a lot of clients come to such companies, “the head of the AFD said.

He also shared information that the forthcoming autumn, the State Duma plans to pass a law that will allow the mega-regulator to block the resources of unlicensed organizations. The issue of illegal dealers in the forex market, according to Kirill Pronin, deputy director of the securities market and commodity market of the Bank of Russia, is one of the most problematic. Today, the regulator has a certain set of tools to deal with them, for example, in order to reduce the flow of unscrupulous advertising containing inaccurate information. But, unfortunately, this set is limited. We are very much waiting for the adoption of the law, which was mentioned by a colleague. And we are very strict about the illegal market participants. In the future, we are going to actively involve law enforcement agencies, the prosecutor’s office, “said a representative of the Central Bank. At the same time, he referred to unscrupulous players and those companies that have a license of the Central Bank, which, under cover of its presence, eventually engage in attracting clients to foreign offshore forex companies. Another negative practice, which was mentioned at the round table, is the attempts of various structures that position themselves as educational centers for financial literacy, act as agents to attract clients to the forex market. Moreover, according to Yevgeny Masharov, such “teachers” often deliberately mislead people, they form high expectations for their return on investment. The fact that this issue is on the agenda of the Federal Antimonopoly Service of Russia, said Alexander Razin, Deputy Head of Financial Market Control FAS. He also assured the audience that the antimonopoly service also plans to engage in an active fight against advertising containing knowingly unreliable information about the market. Another object of attention of FAS is companies that have licenses for other services in the financial market (for example, banking), but they are trying to work in the forex segment under this “mute”.
Through thorns
Protection of consumer rights is, in general, a win-win topic, if it is a question of popularizing some kind of services provided to this consumer. And it is this direction that the civilized part of the professional community decided to make a priority in order to “get rid of the negative background” that has developed over many years of unregulated activities of forex companies. We are ours, we will build a new world.

As it was said in the welcome letter addressed to the participants of the roundtable by Anatoly Aksakov, the chairman of the committee on the financial market of the State Duma of Russia, the head of the Rossiya Association, there are a lot of questions in the sphere of consumer rights protection from unfair practices in the forex market, remain open and require careful work both from the SRO side and the regulator. At the same time, the deputy in his address, read by Eugene Masharov, noted that “the development of a regulated forex market in Russia is an important condition for the formation of a modern appearance of the financial market as a whole.”
“The way of the industry to the civilized legal market was long and thorny. But we still came to him – in many respects thanks to the well-coordinated work of the regulator, legislators, the expert community, public business associations, and now we are discussing not some abstract prospects, but specific problems of the already functioning new system. While these problems are still enough, “- said Vladimir Koptev-Dvornikov, Adviser to the head of the AFD on issues of interaction with public authorities. He also noted that the market needs to get rid of the negative legacy that remained after the “wild” period, when the results of working with clients depended solely on the degree of decency of certain players. At the same time, this degree was not always at an altitude, because of which people had a lack of confidence in the forex market. Vladimir Koptev-Dvornikov recalled the rather significant potential of the market. “This is about 500 thousand customers, huge turnover … But only about 10 legal companies that have the right to work in the Russian jurisdiction,” he said.
One of the obstacles to the development of the white segment of the forex market is the lack of the possibility of remote identification of customers. “In the draft law of the profile, which provides for the introduction of a simplified identification, forex dealers are not mentioned. It is clear that earlier, when there was no regulated market, this was out of the question. But now, in our opinion, one can think about providing such an option for the clients of forex dealers, “said Vladimir Koptev-Dvornikov.
According to him, the lack of appropriate facilities discourages many legal consumers from legitimate companies who prefer to go offshore, where procedures can be performed remotely with a few clicks on a mobile phone. Evgeni Masharov agreed with his colleague. According to him, there are a lot of concrete examples when potential clients, having learned that they need to visit the office of the company for identification personally, do not go to the rank of real.
Another problem, described by Jan Art, vice president of the Rossiya Banking Association, who moderated the round table, is a narrow product line that is provided by licensed (read, subject to regulatory restrictions) forex dealers. “Honestly, being a client of both a Russian licensed forex dealer and an offshore company, I have recently ceased trading in Russian jurisdiction.Because “there” I have access to options for trading futures for oil and gold or stock indices. And “here” what? The “chic” opportunity to trade a pair of Australian dollar – the Brazilian real? Does it somehow coincide with the news background in which we live? – asked questions Jan Art. – But the manager of the licensed company can tell me that we are “improving mechanisms to protect the rights of consumers.” According to Jan Art, this is not at all a competitive advantage that can stimulate the popularity of the legal forex sector.
“Something must be started. We must talk about the advantages of Russian jurisdiction. To say that the client of the company operating in it will have the right to judicial protection, its interests can be defended by the profile structures of the regulator, SROs, public organizations, “Evgeni Masharov believes. He again recalled that 20 years of unregulated market led to the creation of a negative background. And now, according to him, licensed forex dealers should show the regulator its consistency, competence – and only then lobby for expanding the range of investment conditions.
The topic of the “narrow ruler” was later continued in his speech by Igor Dines, General Director of “TrustForex”. He recalled that the popularity of the forex market is due in large part to the deficit of attractive investment products. “The retail investor simply did not have attractive tools at any time. Its role was played by the weakness of the sector of stock brokers, which at some point could not offer customers adequate products. Banks also lagged technologically, “he said. At the same time, according to the expert, one can not ignore the topic of globalization of the economy.
“There is external competition. Jurisdictions of different countries have to compete with what I would call “great nothing”. This is a gray, uncontrolled mass, which constantly pushes the regulators. In the context of globalization, the national financial market regulation regime is often uncompetitive. As for the Russian financial jurisdiction, it is very young and suffers from growing pains, some kind of underdevelopment. This, in turn, leads to an outflow of national savings and the departure of foregoing forex organizations in other jurisdictions, “Igor Dines continued.
The co-speaker Igor Dines on the theme “Competitive jurisdiction as an element of the protection of the rights and interests of consumers of financial services” was made by Ilya Vanin, Deputy General Director for Financial Market Activities Alpari-Forex. Elona Mildzikhova, head of the legal department of Finam Forex, reported on the work of the expert group on the creation of the concept of a basic standard for the protection of the rights of consumers in the forex market. Dmitry Drigailo, adviser for the development of the forex market “Teletrade Group”, spoke about the company’s activities to improve the financial literacy of consumers of services in the forex market.





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