The companies with Forex dealer licenses will have to show they have sufficient capital based on risk assessments.
A new document that the Central Bank of Russia has filed with the Ministry of Justice proposes new formulas for the calculation of minimum sufficient capital of Forex brokers (officially known as Forex dealers in Russia).
In brief, the document states that the capital amount should depend on the risks that a company faces: these include credit risks and market risks. The higher the risks, the higher the capital requirement will be.
The new requirements will be calculated on a monthly basis and the relevant reports will be provided to the Central Bank. The regulator explains that the aim of these new formulas is to make sure that the Forex brokers will be able to cover any losses from their own capital in case the risks materialize. Overall, the change is supposed to increase the financial market stability and to minimize any repercussions in case a Forex company leaves the market.
The new requirements are expected to enter into force on May 31, 2018.
Only companies with a Forex dealer licenses issued by the Central Bank of Russia are allowed to offer OTC Forex services to Russian clients. The FX law, however, includes requirements that have dissuaded many companies from trying to obtain a license – for instance, a minimum capital requirement of RUB 100 million. Thus far, eight companies have secured Forex dealer licenses in Russia.
In the meantime, the Russian regulators are slowly moving towards tackling the activities of financial services companies, including Forex brokers, that target Russian clients without having the necessary regulatory permission.
In July, an important step was made in this respect, as the Ministry of Сommunications and Mass Media published a bill that proposes amendments to the Law “On Information, Information Technologies and Information Protection”.
The amendment of interest to us is the one concerning the reasons for including domain names and website addresses in the special registry of online resources that contain information whose dissemination is prohibited in the Russian Federation. Once a domain name and/or a website address are included in the registry, the access to them is blocked by the Russian authorities.
Under one of the proposed amendments, the Bank of Russia may decide whether to include a website in the registry, in case the regulator determines that the information provided from a given website is related to the provision of financial services in Russia by an entity that has no permission to do so.
The proposal is set to affect Forex brokers too, as the large majority of Forex companies that target Russian clientele do so online, without having the necessary Forex dealer license issued by the Bank of Russia.
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