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December 24th, 2014, 7:04 am | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Just recently, the Russian Duma (the lower parliament) has proceeded with the second reading of the Russian FX bill which sets forth the full measure in which the FX industry in Russia will be controlled on a federal and official basis. Russian lawmakers indicated their acquiescence for a third reading which has just recently been concluded.

With regards to a third reading, this procedure extends the manner albeit its acceptance by the official government. But according to the Russian legal, the third reading which if duly accepted, the bill will only require the signature of the Russian chief executive in order for it to become a law.

This will invoke, an encompassing and binding set of legal parameters in which the entire FX companies must abide thrusting Russia into the territories of nations along with FX industries namely; the U.S, Britain, Cyprus and Australia.

The reports clarifies the pertinent issues which included a ban on CFD trading in one of the largest jurisdictions in the world. Such move is the very least surprising given that the imposition of such hefty restrictions on the scope of instruments provided for trading clients of FX brokers in Russia were not mentioned. This marked the direction to which it counters that of many industry participants that are presently flocking to issue CFD trading facilities and taking Britain’s well established CFD model to a global perspective.

One plausible reason for doing this is the plan of the Russian government to align the novel regulations with those of the U.S.. This has been reflective in the requirement to Russian FX brokers to become members of a self-regulatory organisation. Like their counterpart rivals in the U.S., which requires registration with the National Futures Association (NFA), Russian authorities basically copied the structure of their longtime rival.
It can be concluded clearly that Russia’s authorities are not that well equipped to allow any platform for that matter to be used other than those which aims to facilitate spot FX.

Truly, if there should be any ruckus as volatile as in the recent times, this ensures that market participants conduct spot FX to ensure stability compared with those wishing to make purchases of futures contracts involving major currency and volatile ruble.

The aligning of Forex regulations had something to do with Russia’s ambitions to augment the role of its national currency despite its present struggle under the pressure of falling oil prices. Bolstering the role of Russia as a marketplace, aligning it with the U.S. and further bulking up the role of the Ruble on the international stage which is regarded as a worthwhile goal.

Strict rules regarding trading software and infrastructure is very vital to achieve all of the aforementioned plans. Supposedly, this involves the requirement in the FX bill that demands Forex brokers to include in their trading software systems (including back-up systems) that are predominantly found in Russia.

Russia’s FX brokers will also be facing one of the highest capital demands of at least RUB 100 million and with this leverage that will be tightly limited to 1:50 with the Bank of Russia to be allowed to extend this 1:100 in most cases, still many still considers it to be within acceptable the range.

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