Following last week’s acceptance by the Russian Duma of the second reading of the recommended FX bill, a third reading has been recently been scheduled in the third week of December which if duly accepted will require the Russian Chief Executive to officially sign the bill, however only spot FX will be permitted.

Just a day subsequent to the Russian Duma having accepted the second reading of the Russian FX bill which paves the full criteria by which the FX industry in Russia, it will now be monitored and regulated on a federal basis. Russia’s parliament is now being mandated for a third reading of the proposed bill set for the second week of December.

In an issuing third reading, this protocol prolongs the procedure albeit its acceptance by the official government. However, according to the Russian legal, should the third reading be accepted, the bill will only be requiring the signature of the Russian Chief Executive in order for the bill to be passed as a law.

Invoking an encompassing and binding set of legal parameters in which all existing FX companies must strictly follow, thrusting Russia into the territories of nation with developed FX industries such as the U.K., the U.S., Australia and Cyprus.

Along with the scheduling of the third reading of the FX bill, the lawmakers recently published the final version of the bill which is presently underway for its approval.

The text merely made some clarifications pertaining to certain issues including the ban of CFD trading in one of the largest jurisdictions in the world. This move is least to say very surprising given that such restrictive terms on the scope of instruments provided for trading to clients of FX brokers in Russia had not been mentioned prior which marked a direction which offset that of many industry participants which are presently collecting to issue CFD trading facilities in order to take Britain’s established CFD model to a worldwide theatre.

One possible reason for implementing the said plan is the intention of Russia to align with the regulations set forth by the U.S.. This has already been reflected in the requirement to Russian FX brokers to be included as members of a self-regulatory organisation akin to that of their rivals in the U.S. that have yet to be registered with the North Futures Association (NFA).

Russia’s authorities are simply not that well equipped to allow any platform to be used other than those which currently facilitates spot FXs.

If the problem persists as volatile as in recent times, ensuring that market participants only conduct spot FX may ensure stability compared with those contemplating to purchase futures contracts involving a major currency and a highly volatile ruble.

This straightening of Forex regulations may have something to do with Russia’s ambitions to augment the role of its national currency which is presently struggling under the pressure of falling oil prices.

Bolstering the role of Russia as a marketplace, aligning it with the U.S. and enhancing the role of the Ruble on the international stage is a beneficial aim. Stricter rules regarding trading software and infrastructure will be necessary to achieve all of the plans.

Russia’s FX brokers will likewise be facing one of the highest capital demands in the world at least RUB 100 million. The leverage will also be firmly restricted at 1:50 with the Bank of Russia to a be given an extension to 1:100 in cases which it considers it to be suitable

Last Updated: December 19th, 2014