Wondering About Forex Trading in Russia? Read our Guide to FMRRC Forex Brokers
Anyone considering Forex trading in Russia should be prepared for a complicated and rocky ride. The current situation with regards regulation is still a little hazy. There are a number of ‘so-called’ regulatory bodies which makes it very confusing for those of you looking for the right one. There has been a lot of discussion recently with regards regulating the Russian Forex industry and as of 2016, the only official regulator is the Central Bank of Russia. However, there are a number of other organizations who seem to consider themselves responsible for Forex trading and one of these is FMRRC.
What is FMRRC?
FMRRC stands for the Financial Market Relations Regulation Center. It is an independent self-regulatory agency which was created to provide a level of regulation for derivative dealers and brokers. It has no connection with the Central Bank of Russia, the official regulatory body in Russia, and has very few legal powers with regards regulating FMRRC regulated brokers. However, with the regulation of Russian Forex brokers in such disarray, it is one sensible option to look for FMRRC Forex brokers.
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What can the FMRRC do?
The FMRRC is able to certify financial organizations. The certification process involves a detailed inspection, following which the financial organization will be issued a certain type of certificate. All FMRRC certified Forex brokers comply with the Centers conditions, which are designed to provide fair and high-quality services for consumers. The main scope of activities for the FMRRC include:
- Evaluating financial organizations, their activities and following certification
- Co-ordinating participants activities in respect of financial markets
- For market participants, its aim is to minimize risk
- Developing evaluation systems for financial organizations
- Establishing a compensation fund for clients of FMRRC certified organizations
The ultimate aim of the FMRRC is to provide traders with the best possible security of their investment.
The history of FMRRC
The FMRRC was established in 2011 by a Russian broker who was looking for a way to certify Forex brokers without Government involvement. It didn’t take long for the Center to grow into an organization which was able to sustain itself and became a popular choice for Forex brokers in Russia who wanted to receive a level of regulatory status. Russia doesn’t have a particularly good track record when it comes to the Forex market and there have been a number of financial scams and fraudulent practices. So the establishment of the FMRRC was seen as a good thing by Russian brokers looking for more legitimacy. There have also been numerous reports of the lack of continuity with regards to regulation of Russian financial services. We’ve already mentioned the Central Bank of Russia has now taken over the regulation of the industry and a broker wishing to set up business in Russia or provide services for Russian citizens now has to obtain a license from the bank. However, the situation is still very much in a state of flux and there are very few licensed and regulated brokers available. At the time of its founding, the FMRRC and its activities were seen as a revolutionary concept and was originally set up to offer some level of security against irregularities and financial scams. In light of the new legislation, which puts financial regulation firmly in the hands of the Central Bank, it looks like the FMRRC will become more of a certifying agency rather than a fully-fledged regulatory body. FMRRC has received very little recognition from the government or been given any real authority so it is restricted in how much control it is able to have over certified firms. It does, however, act as a licensing agency which works with its members to streamline the process of regulation as well as bringing together like-minded brokers and presenting them under one roof. As an agency, it works well with regards licensing procedures and regularly issues guidelines for those FMRRC regulated brokers wishing to renew their license. For traders, it is good to know the guidelines lean towards reducing investor risk, but it is nevertheless disappointing to learn it has little clout or interest in investigating customer complaints. It does have a compensation plan and complaint resolution process should there be any broker irregularities. But the Center’s lack of authoritative powers means it is able to do very little with regards imposing penalties or sanctions against FMRRC licensed brokers.
Are there any advantages to choosing an FMRRC Forex broker?
There is a flicker of hope for any traders choosing FMRRC brokers because they are subjected to a number of restrictions. Which will greatly reduce the risk of large-scale financial scams. The issuing of a certificate requires the Center to review the applicant for authenticity before the certificate is awarded. It is also reassuring to know a certified broker found to be participating in financial irregularities or consumer abuse is at risk of having its certification removed. There is also a section of the FMRRC website which lists companies which have been found to be falsifying certificates. There doesn’t appear to be a section where you will be able to search for certified brokers, but there is an online contact option with which you should be able to request such information. You should also be able to gain some confidence in the fact that a broker has chosen to go the extra mile and look for validation of its services. Should you find yourself with the need to make a complaint concerning an FMRRC regulated broker you are advised to contact the Center direct. The organization promises to investigate impartially if the broker is thought to be deviating from the guidelines. It is also possible to receive compensation in the event of a broker declaring bankruptcy. The only piece of sensible advice we can give is to refrain from putting all your eggs in one basket. Instead, split your investment between a selection of regulated brokers. As there are certainly plenty to choose from.