Russia’s CRFIN Shows a Sign Of Confidence In The Pending Regulations Of The Russian OTC Markets

Recently in mid October 2014, the Russian Centre for Regulation in OTC Financial Instruments and Technologies (CRFIN) announced its approval of a major Cypriot Investment Firm (CIF), Rodeler Ltd, expansion of its Russian operational division. For those who are unaware, Rodeler Ltd is the holding company for major online trading brands such as 24Option, ZoneOptions and 24FX.

Russia is a Major Economy with a Fairly Unregulated Banking Sector

rodelerBy itself, this piece of news hardly even caused a ripple in the online trading industry as such as a move has always been seen as the prudent next stage for growth. This is due to the fact that the Russian economy is the 6th largest in the world in terms of purchasing power parity (PPP). Nevertheless, the news is of interest largely due to the timing of Rodeler Ltd foray into the Russian financial markets. Despite being a major economic power, the Russian non bank financial sector is largely unregulated. Instead of being regulated by the government, the non bank financial sector is overseen by the non-profit self-regulated partnership called CRFIN.

Since CRFIN’s main task is the creation of mechanisms that will promote the quality and standards of services rendered in the OTC market, there is very little that it can do in terms of enforcement on erring members. The most it can offer to traders in terms of protection and remedy is to act as an arbitrator through its Arbitration Tribunal. On the whole, most Russian traders are left out in the cold when their broker goes belly up or is involved in outright fraud. It is of little wonder that the Russian online trading industry had earned such a bad reputation over the last few years.

Talks of Regulating Russian OTC Heat Up

Talks of regulating the Russian OTC markets have actually been going on since 4 years ago. However, it was only in the last 2 years that serious strides had been made in coming up with the necessary regulatory framework for overseeing this multibillion dollar market. Currently, the draft legislations are waiting for government approval in the Russian Duma. Initially slated for a vote after its reading on 23rd April earlier this year, the approval for the bill was said to have been delayed due to additional amendments being required.

So while the Russian’s Duma continue its snail pace journey towards government oversight of the OTC market, many financial services providers like Rodeler are eyeing the Russia market with great interest hoping to get a slice of the lucrative Russian market.

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