Contemplating Forex Trading in Russia? Protect Your Investment by Choosing FMRRC Forex Brokers
Regulation of the Forex industry can be a little confusing, especially if you’re looking for Forex brokers in Russia. Across the globe, there are a number of regulatory bodies responsible for regulation in individual countries, and some are better known than others. The FCA in the UK is possibly one of the most reputable, but there is also CySEC in Cyprus, CFTC in the USA, and BaFIN in Germany. But what about Russia? Do you know the regulatory body responsible for financial services providers? As of this year, 2016, the official and only regulator in Russia is the Central Bank. However, while undertaking our research we came across a number of other organisations that claim they are responsible for regulating Forex trading. We’ll introduce you to one of them here. It is known as the FMRRC.
Introducing the FMRRC and how it operates
The Financial Market Relations Regulation Centre (FMRRC) is an independent agency which is self-regulating. It is a non-profit organisation that was created to manage the level of service provided by brokers and dealing centres. However, we should point out that it has no connection with the Central Bank of Russia, the official regulatory body. The FMRRC has very few legal powers, and it seems to be more of a certification agency; but choosing FMRRC-regulated brokers is certainly one option if you’re considering Forex trading in Russia.
The powers of the FMRRC may be very limited, but it does issue certificates to FMRRC Forex brokers. To be issued such certification, a broker will have to undergo an inspection. If the broker passes the inspection and complies with certain conditions it will be issued a certain type of certificate, depending on the service it provides. The conditions the FMRRC imposes are designed to provide high-quality and fair services for consumers. The FMRRC has a number of functions, including the following:
- Evaluation – of FMRRC-regulated brokers, their activities and certification, and developing evaluation systems
- Co-ordination – of participants and their activities relating to financial markets
- Minimising risk – for participants in the financial markets
- Compensation – by way of a fund that has been established for clients of FMRRC-certified entities.
The legal powers of this organisation may be very limited, but it does have the consumer’s interest at heart, and aims to provide the best possible security of investment for traders.
Why FMRRC was created
The FMRRC was created by a Russian broker in 2011, who was looking for a way to certify brokers with no Government involvement. As there was very little regulation in Russia at that time, the Centre took off rather quickly, and soon became an organisation that was able to sustain itself. It also became a popular choice for Forex brokers in Russia looking for some kind of recognition.
Russia and Forex trading haven’t got along too well in the past, and the country has a poor track record. This is due in part to a number of fraudulent practices and scams that have been allowed to happen. No wonder, then, that brokers looked favourably at the work of the FMRRC, and used its certification to add a level of legitimacy to their operations. The country is also known for its lack of financial services regulation, although this looks set to change now that the Central Bank of Russia is in charge of regulation. It is still early days for the Central Bank, and there are very few regulated brokers in Russia to choose from – which is why you should still consider FMRRC-certified brokers.
When the FMRRC was first created it was thought of as a revolutionary concept, and was able to offer a level of security against irregularities and scams. Now that the Central Bank of Russia has been given its own regulatory powers it does, however, seem that the FMRRC will be more of a certification agency rather than a regulatory body.
How the FMRRC is able to help you as a Forex trader in Russia
Choosing an FMRRC Forex broker will offer you a certain level of protection, but it will be far less than if you choose a broker that is regulated by the Central Bank. The Government has given very little recognition to the FMRRC, and it has very limited powers or control over certified firms. It is still a better option than choosing an unregulated broker, though, because it does at least act as a licensing authority, and work with members to provide a certain level of service. It is very effective with regard to licensing procedures, and provides guidelines for any brokers in Russia wishing to renew their licences; and for you, as a trader, there is peace of mind knowing that the FMRRC is concentrating its efforts on reducing investor risk. The Centre does have a complaints procedure should you find yourself needing to raise a complaint, but it has no power with regard to penalties or sanctions against FMRRC-regulated brokers who break the rules.
What are the advantages of using an FMRRC broker?
Using an unregulated broker will provide you with almost no protection, whereas at least with an FMRRC broker you know a number of restrictions will have been imposed, thereby reducing the likelihood of the service being a scam. Before issuing a certificate to a broker the FMRRC does review the provider for authenticity, and should they be found to be operating in an irregular fashion you know that the licence will not be awarded. It should also be reassuring to know that the broker is making an effort to meet certain standards and obtain validation regarding its standard of service.
If you find yourself needing to raise a complaint, the Centre will investigate whether a broker is considered to be operating outside of the guidelines. Also, should a broker be declared bankrupt you will be able to receive compensation.