The Central Bank of Russia (CBR), tasked with regulating and authorizing financial companies, including Forex brokers, has released data on complaints filed and processed with the Bank in 2019. In its analysis, the CBR indicated that it received a total of 1,000 complaints regarding FX brokers last year, which accounted for 4% of the total complaints in received against financial institutions in that time period.
It’s important to note that last year, in 2018 this proportion was 2.1% of all total complaints, which would signal that market and trader activity among Russians trading FX is increasing year over year, while the total number of FX complaints fell 30.5% in the same time period. But given the amount of customers currently trading with the only four registered brokers in the country is only over 2,000, it has become apparent that the majority of complaints filed in 2019 were against foreign entities and unauthorized firms, that continue to offer their services to Russian traders in the country.
While the CBR has taken steps to limit the solicitation of traders by foreign firms and some of those steps have been successful, with Cyprus-registered firms recently withdrawing their CySEC licenses, traders using such firms have been left with little to no choices in continuing to trade without significantly increasing their capital for trading operations. In essence, one can argue that thousands of Russia domiciled traders have left trading altogether, while others have migrated to other offshore firms, which still accept Russian traders and a small minority have indeed opened accounts at one of four local authorized brokers, having increased their capital and satisfied KYC requirements.
Ultimately, the CBR should show the difference between complaints filed against licensed vs. unauthorized firms to give market participants a better understanding of the negative impact unauthorized firms continue to have on Russian traders given that most have not been able to continue trading under the current conditions set forth by the regulator since FX regulation came about in Russia several years ago.