Russia's Central Bank revokes licences of largest forex companies

Russia's Central Bank revokes licences of largest forex companies

The Russian central bank said it had revoked the licences of the country’s largest companies that provide clients with access to the forex market: Forex-club, Fix Trade, TrustForex, Alpari and Teletrade.

These companies had violated central bank regulations in the span of a single year, the central bank said on its website.

The bank added that the licenses will expire on January 27, 2019, the companies will have to terminate all operations and return funds to their clients.

The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA, former deputy chairman of the Central Bank of Russia Konstantin Korischenko, speaking with Vestnik Kavkaza, expressed confidence that the closure of the five largest forex companies will not hit forex trading seriously. "Others, more law-abiding ones will take their place. On the other hand, now such operations are cross-border in many ways, therefore, the issue of having a Russian license for companies is open. It rather proves the fact that the division of forex companies into foreign and Russian will be fixed in the near future," he said.

This event will be rather unnoticed by the Russian financial system. "Only some redirection of financial flows is possible here, it will not affect any macroeconomic indicators. Those who have traded through these companies will have to look for other intermediaries - but they are unlikely to turn to banks with this purpose," Konstantin Korishchenko explained.

Professor of the RANEPA faculty of Finance, Money Circulation and Credit Yuri Yudenkov was pessimistic about the situation. "Now the market will stall, because these companies are the forex market of our country. Of course, we still have banks participating in this process, they can pick up this business, but still this event is surprising and disturbing for me," he said.

"In the end, it was a very serious blow to the confidence in the forex market. There were no signals from the Central Bank, which is surprising and causes concern. Most likely, participants in this market will not receive their money back, because there are no money return mechanisms. The only positive thing perhaps is that the Central Bank foresaw the forex market is becoming more and more criminal, and the identification of certain schemes forced the Central Bank to take this unprecedented step," Yuri Yudenkov suggested.

"It should be added that the forex market will not die. Large firms worked through banks and other channels. That is, today individuals and small entrepreneurs were hit today," the professor of the RANEPA faculty of Finance, Money Circulation and Credit concluded.

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