Konstantin Boykachev

CEO Proforexea LLC

Honest Coder

Professional Trader


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Konstantin Boykachev

CEO Proforexea LLC

Honest Coder

Professional Trader

Blog Post

Regulatory organizations in the Forex market


OTC foreign exchange markets are a pressing problem for the world economy. On the one hand, the trade turnover of even one large platform makes up quite a significant share in the investment “pie”. On the other hand, it is practically impossible to regulate speculative trading based on the difference in exchange rates. That is why regulating organizations in the Forex market today, in most cases, replace the officially operating systems of state control over the movements of foreign exchange markets. Who is this regulator? In fact, practically every country in the world has found its own solution to this problem. And the geography of the Regulatory Organizations (RO) seems to be quite extensive, and you can verify this by going to this section.

Regulatory organizations in Forex: foreign experience

The United States has the most significant experience in regulating the Forex market. There are several regulators here, the main ones being: NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission) – an organization founded four decades ago and, in fact, is an independent version of a federal agency. It should be noted that it is in the United States that market regulators have the greatest influence on forex traders, setting restrictions and bans on some aspects of their activities. But at the same time, despite the use of such unpopular measures, it is the North American associations, in particular the NFA, that have the greatest authority in the world of trading.

The UK market also has its own regulator – FCA. And since this state is a member of the EU, most often it is he who is addressed the resolution of various controversial or fraudulent situations in the foreign exchange market, recorded in the course of over-the-counter foreign exchange trading in the countries of the Old World.

However, the Forex market is regulated in one way or another in any country – even if it is purely nominal. You can find the complete RO catalog here.

Forex regulators: what about us?

As for the Russian Federation and the CIS countries, everything is much more complicated here, since forex trading is legally excluded from the scope of activities subject to state regulation. By default, it does not seem to exist, legal disputes are settled on the same conditions as the bet made. And brokerage in this area in most cases is carried out under the strange wording “provision of information services.”

If we consider the existing organizations as capable of regulating the situation in the foreign exchange markets, then the closest to this in terms of its intended purpose was the FFMS (Federal Financial Markets Service), which was replaced by the Bank of Russia Financial Markets Service. But it is precisely in the absence of a coherent legislative framework that the Forex market is simply not included in its sphere of influence. From March 3, 2014, the Bank of Russia Financial Markets Service was abolished

There are also “private” regulators on the Russian market – TsROUFR, KROUFR and others. But, as a rule, they work in direct contact with a rather narrow segment of the market and do not cover it entirely. And any recommendations of such regulators are optional.

However, the most important regulator of any financial issues in the Russian market is the Central Bank. It is he who controls the activities of banking organizations that provide a number of brokerage services to their clients. And it allows you to resolve any controversial situations at the official state level.

Forex market regulation: expectations and prospects

It should be noted that the Forex market has long been the object of close attention from numerous Russian officials of the highest rank. And in the very near future, the adoption of a law is expected, which will help, finally, to clarify the activities of traders, brokers and over-the-counter turnover of foreign exchange funds in general.

In 2013, the State Duma of the Russian Federation already considered in the first reading a draft law on the regulation of foreign exchange markets and, in particular, Forex. But its final consideration was delayed due to the need for substantial revision of the documents submitted. The bill is expected to be re-examined by the end of 2014. And this means that traders have a chance to enter the new financial year with a new status and new opportunities. In particular, with the right to consider controversial situations in the OTC market within the framework of arbitration proceedings.

And, of course, the main goal of adopting the draft law is not just the emergence of mechanisms for regulating foreign exchange markets, but the creation of working conditions in which unscrupulous brokers simply will not have a place in the system. So, in particular, it is supposed to create conditions for self-regulation of the market by creating a single organization for all dealers acting as intermediaries in Forex. At the same time, a system of contributions will have to work, involving the payment of fees for joining the association (about 30,000 USD) and monthly contributions (about 10,000 USD).

In addition, it is planned to create not only a unified legislative framework, but also a fund to protect the interests of traders from the unfair behavior of brokers. The size of the entrance fee to such a fund will be about USD 50,000.

Until this is done, Brokers.ru offers its visitors to use an alternative opportunity to file a complaint against the broker. To get acquainted with the service – go to the “Send a complaint” section.

Find out more about how to influence an unscrupulous company in the article “What does the direction of a complaint against a broker give?

However, even today most of the large dealing centers are trying to adhere to a number of rules in the course of cooperation with their clients. And this serves as a kind of self-regulation mechanism for the market, which today is a fragmented structure that requires global legislative regulation.

Learn more about the types of broker scams and how to avoid dealing with such companies in the article Self-Defense Lessons: Forex Scam


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