The Centre for Regulation in OTC Financial Instruments and Technologies (CRFIN), Russia’s Forex self-regulatory organization, earlier today launched a public poll regarding the new leverage cap stipulated in the latest version of the FX bill.
According to the latest version of the legislative document, the cap is set at 1:50, which is twice harsher than the level envisaged in the previous version of the bill. CRFIN used to defend a cap of 1:100 and finds that the latest restriction would not support the development of Russia’s Forex industry. It is worth noting that many Forex brokers active in Russia currently offer considerably higher leverage, reaching 1:1000 and even 1:2000 in some rare cases.
As stated in the bill, restrictions on leverage are set to prevent substantial losses in short time, thus protecting investors. This has now become a metaphorical tug of war between the Russian government, whose interest is in protecting retail customers, ensuring Russia’s economy is stable therefore not encouraging high risk, high leverage trading among its citizens, and also ensuring that Russia’s regulatory structure is viewed as a read-across to other jurisdictions such as Australia, Europe, the Far East and Europe, and CRFIN which could be considered a gentlemens’ club for FX companies, whose interest is ensuring that FX firms flourish in Russia and thus will tend toward lobbying for their interest.
The leverage restrictions proposed in the most recent reading of the FX Bill bring the cap on leverage in Russia in line with the ones in the United States. Worries have been voiced that such tight rules will push FX businesses out of the country, which is already experiencing losses of income as companies flock to offshore jurisdictions.
CRFIN is now asking the public to speak up regarding the 1:50 proposal. The poll can be viewed by clicking here, with entries accepted until December 31, 2014. The organization aims to use the public opinion during its consultations with the Bank of Russia on the future legislation.
The second reading of the FX bill is scheduled for tomorrow, December 9, 2014. It has not yet been postponed. Could it be that finally Russia’s lawmakers will proceed with that decisive vote?