Bank of Russia, the megaregulator responsible for overseeing the activities for the forex brokers and their self-regulatory organizations (SRO) in the country, has issued a new document proposing a set of requirements for the latter. According to the paper, the SROs will be required to prepare a list of rules and standards for their members to become mandatory from January 1, 2017.
Among the main proposed standards is setting a limit of 2 working days for the forex brokers to process and transfer the fund withdrawals of their clients.
The list includes several basic standards for the forex brokers: risk management, corporate management and financial operations procedures.
The first one discusses identification and internal procedures for risk mitigation, as well as technical measures. The corporate management standards include basic principles of corporate governments and their implementation.
The financial operations procedures standards are the most expansive and among other things include rules on the formation of quotes and the stipulation that a broker cannot give a quote on a forex pair that is more than 0.5% higher or lower than the current best quote on the Russian market, if there is such quote. According to the proposed standards, the forex broker must present a report on the trading account to the client no later than 10 working days after a written request.
Bank of Russia notes that the current document is a proposal and gives the interested parties and the market participants until November 13 to present their opinion and/or objections.
It is worth noting that some of the new standards proposed by the Bank of Russia are in tune with recent document of the European Securities and Markets Authority (ESMA) urging the competent EU regulators to introduce and implement tighter rules on the activities of the forex brokers under their jurisdiction.
So far the Bank of Russia has accredited only one forex broker SRO – the Association of Forex Dealers (AFD), while the other one the National Association of the Forex Dealers (NAFD) (formerly known as CRFIN) is still awaiting authorization.