Before January 1 of 2016, there were no regulations in Russia governing foreign currency exchange, more commonly known as Forex. Forex is a decentralized global market where all the world's currencies trade. It is the largest, most liquid market in the world with an average daily trading volume exceeding five trillion USD.
There is clearly a great deal of opportunity in the currency exchange market, but in order to engage in this activity legally in Russia, now you must obtain a license and meet additional requirements. We explain these requirements here.
Legal Requirements to Trade Currency in Russia
Forex dealer activity is acknowledged to be the activity of making agreements on your own behalf and at your own expense with individuals who are self-employed entrepreneurs and not a part of on-exchange trading. Currently, to legally perform this activity in Russia, a Forex dealer must:
- Obtain a professional securities market participant license.
- Upon obtaining the license, enter a financial market self-regulatory organization (SRO) uniting Forex dealers. When entering an SRO, a Forex dealer must make a contribution to the SRO indemnification fund in the amount of two million RUB (approx. 32,000 USD). If a Forex dealer fails to enter an SRO, the Bank of Russia may cancel the license for carrying out professional activity on the securities market.
Once licensed, a Forex dealer may not combine his or her activity with other professional activity on the securities market or with any other activity.
Additional Requirements for Dealers and SROs
The law also establishes additional requirements to Forex dealers and procedures for regulating the activity of Forex dealer SROs. In particular, the Directive of the Bank of Russia determines the following:
- The procedure for assessment of funds in the Forex dealer’s nominal account.
- The requirements for bringing funds in conformity with federal law if the amount of the funds in the nominal account exceeds 150 million RUB.
- A list of risks to be read and understood by an individual related to the execution, fulfillment, and termination of obligations under a framework agreement made by the Forex dealer.
- Requirements related to the Forex dealer’s software and hardware.
- The length of time that a Forex dealer may not make similar separate agreements with different counteragents under various conditions.
Moreover, additional requirements have been introduced to regulate advertising of Forex dealer services.
How Jus Privatum Can Help
Because these new regulations of the Russian securities market are complex, we recommend consulting professional Russian lawyers to obtain a Forex dealer license and to enter an SRO. The experienced business attorneys at Jus Privatum will help at the initial stage to determine if the company wishing to obtain the license meets all requirements and if it has all of the documents and infrastructure necessary to obtain the license. We will also help to prepare and submit a set of documents to the Central Bank of the Russian Federation, and control the process of getting the license. In case of complex follow-up support in the process of obtaining a Forex dealer license, we perform the following work:
- Assistance in preparation of documents, including the development and expert evaluation of Articles of Association, expert evaluation of communication agreement, postal services agreement, software agreement, agreement with data center, lease agreement, office evaluation, personnel evaluation, and own funds evaluation.
- Preparation of a set of documents for the Bank of Russia, including internal documents such as managerial accounting rules, business plan, internal control rules with the purpose of AML/CFT, internal control instruction, etc., applications, surveys, verification of certificates, and resumes of employees, in accordance with Licensing Instruction 168-I.
- Monitoring of compliance of the company with the requirements for license applicants, which includes editing documents with regard to changes in the laws while the documents are stored in the Bank of Russia. Thus, at the time of an audit, all the documents will comply with the laws as of the corresponding date.
- Preparation and verification of additional documents of the company (or consultations on preparation of these documents) to respond to requests from the Bank of Russia and any field audit by the Bank of Russia, including job procedures, internal accounting ledgers, provisions on departments, personnel documents, accounting documents, samples of internal documents, orders, resolutions, and website structure.
- Preparation and verification of office readiness for a field audit by the Bank of Russia. This includes arrangement of employees, work seats, availability of furniture, computers, and software.
- Personnel training, including preparation for the Bank of Russia field audit and consultation about answers to any questions from the Bank of Russia that may arise during the audit.
- Software testing.
- Accounting records maintenance control.
- Verification of conformity of the company to the requirements of the Bank of Russia during the consideration period.
How Long Will It Take?
Preparation of documents for submission to the Bank of Russia usually takes one to two months. The Central Bank of the Russian Federation considers the documents and makes a decision or rejection of the license within 60 business days from the date of receipt of the set of the documents from a Forex dealer. In total, obtaining a license takes at least four or five months.
Contact Just Privatum Today
If you are planning to enter into the business of trading foreign currency in Russia, make sure you go about it the right way to prevent delays and keep your activities legal. Connect with us through the link on this page and we will get back to you shortly to discuss what you need to do to become a Forex dealer.