The Bank of Russia unexpectedly revoked licenses of the largest investment companies operating in the Rusian forex market, according to the information posted on the regulator’s website.
Many financiers and analysts had expected this decision back in the 2000s, when forex dealers were regulated by the Federal Financial Markets Service – an agency similar to the US SEC. In 2013, the Central Bank took over these functions, becoming a megaregulator. In the 2000s, trading on the forex market was quite popular – almost as popular as trading in cryptocurrencies a decade later. The operation of Russian forex dealers was always in the balance though – the market participants expected their closure and a ban on forex trading in general any moment. However, this did not happen until 2016, when such trade has long moved out of the focus of public even expert attention.
The operation of forex dealers in the Russian jurisdiction was suspended; however, in spring 2017, it resumed after the companies complied with the regulator’s requirements. Now the Central Bank finally revoked the licenses of five formerly well-known forex platforms such as Forex Club, Alpari Forex, Teletrade Group, Fix Trade and Trastforex citing “repeated violations of the laws of the Russian Federation within one year.”
“The license is terminated from January 27, 2019. From that date, company is obliged to terminate professional activities in the securities market with the exception of actions related to the termination of obligations to customers arising from professional activities in the securities market, and to ensure the return of assets to customers before January 27, 2019,” the Central Bank announcement says.
In particular, Teletrade Group is charged with “violating the procedure for its capital base evaluation; submitting misleading reports to the Bank of Russia; violating the procedure for preparing such reports and breaking deadlines for their submission to the Central Bank; as well as disclosure of misleading information on its website”.
Incidentally, the media and online resources are also full of reports about Teletrade’s other unethical actions such as using “paying interns” – novice financiers who paid for internships with guaranteed employment, but were eventually denied a job with the company.
“The licenses were held by Russian subsidiaries, while the customer services were mainly performed through offshore branches,” explains Sergei Khestanov, economist and associate professor at RANEPA. “Therefore, it is not the revocation of licenses that is important, but the ban on advertising and, indirectly, on moving their money offshore.”