In March, Deputy Minister of Finance Alexey Savatyugin met forex companies, MICEX-RTS, National Association of Stock Market Participants (NAUFOR) and brokers to discuss forex market regulation.

Savatyugin pointed out the necessity of defining the legal status of forex trades and their relevance to the currency and securities market laws. He says forex companies should be regulated according to the principles applied to the rest of the financial market, with the Ministry of Finance acting as regulator and the Federal Financial Markets Service providing oversight.

Lozovoy said forex regulation is likely to require amendments to the Securites Market Act. “We currently view forex companies as dealers. To regulate them, we need to amend the law”, he stated.

Lozovoy also said that forex regulation should be in place by the year-end. “A number of Trading Act clauses will be effected on 1 January 2013, allowing forex companies’ business to be considered trading organizers. In this case they are to be licensed by the FFMS, otherwise their business does not comply with the law”.

Deputy Chairman of the Bank of Russia Sergey Shvetsov expressed doubt that forex companies require regulation. “I am skeptical as to the greater good of this project for the state, investment-wise, in terms of individuals’ savings and the financial market in general. Does the state need to get involved in this market and create obstacles, including advertising restrictions? Or do we consider this business civilized, a taxpaying source of entertainment for the general public? This is worth discussing”, said Shvetsov.

On Tuesday, NAUFOR published forex regulation proposals on their website. He association calls for state licensing of forex companies, introducing proprietary capital limits, amendments to the Civil Code in order to provide court protection for claims, amended taxation rules (including a tax discount for currency pairs trading). NAUFOR also proposes to introduce advertising guidelines for the forex market and an advertising ban for financial services ads by non-licensed companies.

Project Group №1, Alexei Savatyugin, Sergei Shvetsov