Russian self-regulatory organization (SRO) for over-the-counter (OTC) financial instruments CRFIN has blacklisted forex brokerage Tokyo Investment Company since it presents a high risks for investors, the SRO said last week. With the latest addition, CRFIN’s black list consists of 52 entities.
The company, to which the CRFIN refers to as a “project”, promises a guaranteed daily income of 0.8%-1.1% within an investment period of 20-80 days. However, there are no guarantees on clients’ funds, neither is there transparency regarding how the broker pays the promised profit. Moreover, the broker promises substantial bonuses under an especially-designed referral program to clients who recruit new customers, in the amount of about 5% of each new recruitee’s contribution.
According to CRFIN, Tokyo Investment Company falsely presents itself on its website, www.tokyoinv.com, with terms that are usually used in the Russian legislation to describe the activities of the providers of banking services, which require licensing. The company provides no information about having the proper license.
CRFIN warned all investors that by trusting their money with the company they put their finances at high risk.
Tokyo Investment Company was founded in 2014 by three Japanese and and one Russian businessmen, according to its website. Its only office is located in Tokyo. The company presents itself as a forex broker, but its services rather resemble a banking deposit. It promises different profits of up to 1.1%, depending on the deposited amount and the selected investment plan.
CRFIN, or Centre for Regulation in OTC Financial Instruments and Technologies, was set up in late 2010. It has disciplinary and control commissions which supervise and regulate its members, all of which are Russian forex brokers.
In mid-March this year, the Central Bank of Russia (CBR), which is in charge of the forex regulation in the country, decided to set up a register of all SROs in the country and to include several existing ones. However, CRFIN is currently not in the list, but is awaiting registration status. The CBR’s move is in line with the recently-introduced and on-going legislatory framework for the local forex market. As of 1 January this year, Russia-based forex brokers are not allowed to target local citizens, unless they have a license issued by the CBR. However, foreign forex brokers can still target Russian citizens even without a local license.
Many of the major Russian forex and binary options brokers already partake in SROs since one of the prerequisites for acquiring such a license is that brokers need to join a SRO with at least 10 participants. Finam Forex is the only entity to hold a Russian forex license, but there are more that are still on the waiting list.
Although the Russian forex market is fairly comparable with the world’s leaders Japan and USA in terms of trading volumes and clients, it is still dynamic and presents potential for growth. With the recent regulatory improvements, it may become more attractive and tempt even more investors.