the insider

Russian FX brokers eyeing new jurisdictions for business

Regulations in the Russian forex exchange (FX) market, which began a year ago, have led us to contemplate which regions to explore next if the Russian market becomes unprofitable.

Originally, the Russian Forex Market Act originally came into force on January 1, 2016, however neither the existing infrastructure nor brokers themselves were prepared for this moment.

Seeking a Way Out

While some brokers simply pursued licenses, others instead opted to wait for more complete information about the settling of the regulatory framework, and in particular, the development of the whole regulatory system with regard to retrieving a license.

Still, other Russian units groups decided to remain providing services to Russian customers via a parent company, while others simply altered nothing with their strategy and instead intensified their search for new markets, under the assumption that the Russian market would be closed for them in the near future.

To date, the work of foreign forex dealers is not prohibited by law, and the Central Bank of Russia has no pertinent solution to deal with entities that offer online services to Russian customers. This was confirmed by the first deputy chairman of the Central Bank Sergey Shvetsov at the end of 2016.

However, the absence of a Russian license can greatly reduce the possibility of advertising in the market. Companies also have a fear that in an attempt to limit the ability to work with foreign forex brokers, citizens may be prohibited for payment transactions in their favor. In general, financial companies in Russia have enough reasons to look towards new regions.