August, 2016

Recently, the Financial Commission increasingly receives members’ inquiries asking to explain the key provisions and regulation specific in Belarus. High interest in this jurisdiction is justified and can be explained at least by the following:

In this article we want to make a detailed analysis of Belarus forex regulation to make it clearer and answer all industry questions regarding this matter.

In accordance with Edict № 231, Belarus forex regulation came into force in March 2016, since then, six companies and one of the national banks have already been included in the register of forex companies by the National Bank of the Republic of Belarus.

In order to provide services on retail Forex market in Belarus, first of all, it is necessary to obtain license issued by the National Bank of the Republic of Belarus to be included in the register of forex companies (simpler and “softer” analog of licensing), secondly, to undergo an assessment of software used in the National forex center and deposit a quarantee payment to the compensation Fund in amount of 55 000 US dollars (note: the payment will be returned in case of voluntary exit from the market without any uncovered obligations towards clients) and, thirdly, to become a member of the local Association of Financial Market Development – “ARFIN”.

Obtaining of license from the National Bank of the Republic of Belarus requires incorporation of local legal entity as well as preparation of all necessary documentation and going through certain legal procedures.

Financial requirements
Min. capital	~$103,000	Funds must be allocated on the company’s account in one of the local banks
Compensation fund payment	$55,000 – guarantee fee +calendar fees in amount of 5% of the amount of total liabilities towards clients. Important! When the total amount of the company’s clients funds is reducing the calendar fees are paid back to the company.	Funds are transferred to the National forex center and allocated on deposit in a local bank.
Risk management and risk capital	Yes	Regulation has fairly strict risk management requirements which implies that the maximum size of own, not overlapped total position for each instrument may not exceed the amount of equity capital of the dealer. In fact, if the dealer does not have large equity capital, then, almost all clients positions should be hedged on an external counterparty. At the same time, regulation is quite flexible in choosing of counterparties and permits transactions with foreign companies.
Trading conditions
Max. leverage	Client 1:100 Qualified client 1:200 Professional client 1:500	Professional client Local forex company and (or) with license to carry out insurance activity, banking and exchange activity regarding securities; Non-resident legal entities licensed to operate on OTC forex market and carry out banking or other financial activity; The income of legal entity reduced by taxes and fees for the last fiscal year amounts to at least 4 million base units; The total amount of company’s accounting balance by the end of the last fiscal year amounts to at least 2 million base units; Equity capital of the legal entity by the end of the last fiscal year amounts to at least 200 thousand base units; Qualified client – legal entity or individual that: Conducted at least 10 transactions totalling more than 10 thousand base units within each of the last four quarters.; The amount of client long-term and short-term investments, including cash, by the first date of the current month is more than 10 thousand base units; Client – usual client who has minor trading experience or does not have any experience at all. Base unit amounts to 21 Belarussian ruble or 10.83 USD
Instruments	FX and CFD
Trading accounts in different currencies	Yes
PAMM accounts	No	The regulation does not have any specific requirements for asset managers, however, forex dealers can not represent independent managers on their websites and must not participate in negotiations between investors and managers.
Copy trading	Yes	No additional requirements for dealers
Market making	Yes	Accepted risks must correspond with company’s equity capital, if the established normative is exceeded, a mandatory withdrawal of positions on the counterparty must be carried out (see requirements for risk management)
STP	Yes	Withdrawal on foreign brokers is possible
Clients’ and own funds. Choise of counterparties
Segregation of client’s funds	No
Allocation of client’s funds on foreign banks and financial companies accounts	Yes	50% of clients’ funds must be allocated on local bank account
Using of client’s funds for hedging transactions abroad	Yes	Not more than 50% of clients’ funds may be allocated on counterparties’ foreign accounts for hedging and direct withdrawal of orders
Allocation of own funds abroad	Yes	All company’s funds for hedging transactions abroad
Requirements for foreign counterparties	Yes	Foreign counterparty should be an American, Japanese or Russian company with profile license (permission), as well as company with a license (permission) obtained in the European country applying provisions of MIFID. In addition, the counterparty may be a company from another jurisdiction, which is not offshore, if the performance of its obligations towards the forex company is guaranteed by the bank or other entity which financial viability is confirmed by the auditor’s report. Forex company may hedge transactions, in amount not exceeding 5 percent of the amount of client funds, in any foreign company which equity capital amounts to at least 5 million euros, as well as in parent company in any amount, but at its own expense.
Sales and Marketing
Forex services advertising requirements	Yes	Prohibition of guaranteed income promises, mandatory risks warning, prohibition on useage of information that is not evidenced documentary, etc.
Sales ethics control	No	Indirectly (see advertising requirements)
Opening of own offices	Yes	No specific requirements for office operating activity
Introducing brokers	Yes	No specific requirements for introducing brokers
Personnel professional requirements
Director	Yes	Higher legal or economic education, no criminal record (unserved), absence of facts of initiation of criminal proceedings, as well as dismissal due to loss of confidence
Internal Control Officer	Yes	Higher legal or economic education, no criminal record (unserved), absence of facts of initiation of criminal proceedings, as well as dismissal due to loss of confidence
Dealer	No
Sales	No
Taxes and other fees
Annual fee	No
Reporting to the depositary (the National forex center)	Yes	~$ 1,230 monthly.
Company income tax	Yes	Reduced rate in amount of 9% until 2019, afterwards 18%.
Function of a tax agent	No	The Company does not levy taxes from customers.
Clients income tax	No	No income tax on forex trading until 2019. Afterwards 13%.

Summing up all the analysis of forex regulation in Belarus, it can be said that:

For instance, at first glance it may seem that the requirement of allocation of 50% of client funds in Belarus looks tough enough as it deprives the dealer’s ability to use all client funds for hedging client positions on external counterparty. This point may seem especially painful for dealers working exclusively on STP model. However, in case of obligatory segregation of client funds such as, for example, in Russia, the client funds can not be used at all. Consequently, the dealer will have to do it either at his own expense or by obtaining a credit line from counterparties what is almost impossible if the forex license is not recognized by the state where the dealer’s counterparty registered.

In this case, Belarus regulation offers a compromise, which, on the one hand, gives the dealers the opportunity to use part of client funds for hedging transactions and, at the same time, prescribes to allocate half of client funds “at home”, thereby, significantly reducing risks of foreign counterparties which are supervised by authorities of other states.

August 22, 2016 – Hong Kong & New York: The Financial Commission, a leading financial services independent external dispute resolution (EDR) organization, today announced the successful certification of technology products provided by XCritical – Trading Platform, Xcritical CRM and XCritical Analytics.

Using a rigorous review process to evaluate technical information requirements within the Trading Platform, Financial Commission established a comprehensive list of points to verify including system security, capacity, business disaster recovery and continuity plan, as well as reporting and record keeping, among other fields deemed important to certify.

Xcritical Trading Platform – allows clients to trade from anywhere using a variety of devices, combines live data streams with various trading functions, and is available in several languages. It includes numerous features, including built-in charts, fund deposit options, extra trading features such as one-click trading, and integration with the Xcritical CRM.

Xcritical CRM – manage your entire business processes in one system including marketing activity, sales-force pipelines, back-office administration, business analytics, real time risk management. With Xcritical CRM your data is stored on your servers safe and secured.

Xcritical Analytics – provides executives with a real-time overview of the business in order to increase profits and minimize risks. Using Xcritical Analytics helps to gain control on sales and retention KPIs and minimize risks by monitoring flow toxicity and exposure.

The Financial Commission is an independent external dispute resolution (EDR) organization for consumers/traders who are unable to resolve disputes with financial services providers that are members of the Financial Commission. The Financial Commission set out to provide a new approach for traders and brokers alike to resolve any issues that arise in the course of trading the Forex market. The Financial Commission was established to be a neutral 3rd party committee to fairly review and resolve complaints in an effort to facilitate a simpler, swifter resolution than through industry regulators and the legal system.

Technology developers seeking membership status with the Financial Commission can learn more about the process and expected requirements as part of the technology certification process in advance of applying for membership or in the preparation of submitting an application.

For more information, please contact The Financial Commission: [email protected]

August 15, 2016 – Hong Kong & New York: Financial Commission, a leading External Dispute Resolution (EDR) organization, operated by FinaCom PLC, servicing online brokerages and technology providers within the financial services industry, today announces the appointment of Nir Porat to its Dispute Resolution Committee (DRC).

As a leading specialist in the field of capital markets, including forex, binary options, electronic clearing and billing, as well as financial and gaming regulations internationally, Nir brings a diverse set of skills to the Financial Commission’s DRC.

In addition to his capital markets expertise for companies in various jurisdictions globally, Nir’s clientele include technology conglomerates such as LG Electronics Group, Malam Team – one of Israel’s largest IT firms, and Israel-based communications firm Netvision Group, among other private and governmental entities across related IT and investment industries globally.

Nir represented Israel while participating in the Jessup International Law Competition in Washington D.C. in 2005, before coaching his national teams in the subsequent two Jessup competitions in 2006 and 2007.

While studying in the field of Commercial International Law, Competition Law and European Union Law, Nir graduated from the Summer school program at Oxford University and Queen Mary’s College, University of London in the United Kingdom.

Nir was admitted to the Israeli Bar Association in 2008, and holds a law degree from the College of Management with a focus on commercial and international law. He is fluent in English and Hebrew and has basic knowledge of French and Scandinavian languages.

Nir is the latest person to join the Financial Commission’s DRC – which consists of a diverse panel of industry experts who help provide independent views to process and resolve complaints from member’s clients.

Financial Commission Chairman, Peter Tatarnikov, said regarding the appointment, “Nir brings a proven track-record in dealing with complex technology and capital markets-related legal matters to Financial Commission’s Dispute Resolution Committee.

Mr. Tatarnikov added: “Nir’s experience with a diverse range of corporate customers and across international jurisdictions further complements the collective ability for Financial Commission’s existing DRC. We are very pleased to welcome Nir as the latest DRC appointee.”