What awaits Forex in Russia
The recently adopted law on the regulation of dealer activities in the Forex market has created a lot
of hype among traders and managers of brokerage companies.
Because of this law, rumors spread that most brokerage companies simply would not be able to obtain a license, which means that the companies would simply be liquidated.
The fear of losing money has forced a very large number of traders to withdraw their funds and move to companies that are under another jurisdiction.
The law itself will come into force on January 1, 2016, so you should figure out in detail whether it’s worth risking your deposit with the company or just withdrawing all your money during a panic. Is this law really so destructive for DCs and their clients and what awaits Forex in Russia in 2016?
Moreover, for the first time in Russia, brokers will be forced to fulfill clearly assumed obligations, such as transferring transactions to the interbank market, and not kitchen coups of capital within the company.
Thus, for the first time in the history of independent Russia, the Forex market will become one hundred percent transparent, which means that the number of unscrupulous brokers who are growing like mushrooms will decrease.
About the law itself
According to the law, all Forex dealers must obtain appropriate permission from the Central Bank of Russia, and by this time join the regulated organization RSO.
In order to join the RSO, brokers must deposit 2 million rubles as collateral, thus creating an insurance fund. Also, the minimum authorized capital of a broker must be at least 100 million rubles and must grow exponentially with the growth of client capital.
For the DC manager, a standard has been introduced for minimum work experience, which is at least two years and permitting certificates for such activities. Even based on these minimum requirements, most analysts assume that no more than 10-15 companies will remain on the Russian brokerage services market, and all the rest will either become branches of large players or leave this market.
About the illiteracy of the law
The most interesting thing is that from January 1, all brokers must be licensed, but the law does not even spell out the algorithm for obtaining licenses, namely what procedure the Central Bank should follow.
Therefore, those who monitor the life of this law notice constant amendments to the norms of the law, which simply does not allow it to really make money. In general, it turns out that neither the broker has time to prepare for licensing, nor the authorities themselves know how to carry it out.
At the moment, there is no confirmed information that any of the brokers have decided to undergo licensing. The law also stipulates a transition period of three months, so on January 1 you should not expect any pressure from the regulator.
Impact on clients
The law clearly states that the maximum leverage that can be provided to a client by a broker is 1 to 50. It is clear that under such conditions you can immediately forget about scalping and pipsing.
Accordingly, all potential profits from working in the Forex market are simply leveled out, and for beginners with small capital the market becomes closed.
Many argue that this is a blow to the client’s greed, because it is precisely because of the large leverage that many lose their money. Thus, by reducing leverage , the number of clients who suffer losses will become much smaller, however, I think the number of clients who agree to work with such conditions will also decrease.
Taxation.
Now the client himself decides to pay or not pay tax on the profit received; after the introduction of the law, all licensed brokers become tax agents. And they are required to charge clients from 13 to 30 percent of profits.
This approach is not particularly fair, since taxation must occur after filing a tax return.
Which takes into account not only income but also deductions - expenses for treatment, children’s education, etc. It is clear that it will be extremely difficult to return prepaid taxes. Will brokers really take such a desperate step?
Having figured out why brokers are not particularly worried about this law, you understand that simply no one is going to comply with it.
Most existing Forex brokers are not registered in Russian jurisdiction, and already have international licenses to carry out exchange transactions.
It’s clear that only a few come in to deposit additional funds and obtain licenses, and then also collect taxes from their clients. An example is the situation in the gambling business, after the law banning casinos was passed, they all happily migrated to the Internet.
What to choose in the current situation?
The only ones who will follow the letter of the laws are the large banks already operating in Russia, or, to be more precise, the large bank brokers.
For example, if you want to work exclusively with Russian and pay all taxes, then you have a direct route to companies such as Nefteprombank .
In the same case, if this aspect is not of particular importance to you, open an account at any of the Dealing Centers , paying more attention to trading conditions and work experience than the location of the company.