22 Dec 2022 09:47

Bill to give foreigners access to forex trading in Russia passed in first reading

MOSCOW. Dec 22 (Interfax) - Banks and brokers from countries that are trade partners of Russia and are not members of the Eurasian Economic Union (EAEU) might be allowed to participate in organized trading of foreign currency in Russia as of January 1, 2023, which would provide the necessary forex liquidity.

A bill granting such access has been passed by the State Duma in the first reading. The bill (No. 210089-8) was submitted to parliament in October by the chairman of the Duma Financial Market Committee, Anatoly Aksakov and a group of senators.

Under current Russian law, participation in organized forex trading is open to credit institutions that have the right to conduct banking transactions with foreign currency based on a license from the Central Bank of Russia (CBR); the central counterparty; the CBR itself; the Federal Treasury; as well as other legal entities that operate in accordance with the law on currency control.

However, the rules for access to organized trading on the Moscow Exchange forex market specify that trading is open to credit institutions that are residents of Russia with a license that is valid for at least six months; non-credit financial institutions that are residents of Russia (brokers, asset managers, insurance companies and payday lenders); non-credit institutions with capital of at least 500 million rubles and other requirements as regards certification of professionals; state corporations; non-resident banks from countries that are members of the EAEU; international organizations founded in line with international agreements of Russia that have the right to purchase/sell forex; and clearing organizations.

A memo attached to the passed bill said that, essentially, non-resident banks from EAEU countries, as well as banks from Tajikistan now have direct access to the Russian forex market, and the non-residents operating on this market consist of 21 credit institutions.

The bill will give the Russian government the right to approve a list of jurisdictions, the credit institutions and brokers of which will be given access to organized forex trading in Russia.

"The bill also allows for the possibility of giving foreign credit institutions and brokers from friendly countries access to trading of derivatives, the underlying assets of which are forex and interest rates, which will enable trading participants to hedge forex and interest risks," the memo said.

The bill stipulates that the personal law of the foreign financial institutions that might be granted access to trading must not prohibit entering into forex purchase-sale contracts and derivative contracts in the course of organized trading, and that these institutions will only be able to conduct transactions with the central counterparty.

The CBR will set requirements for foreign banks and brokers who might be given access to organized forex and derivatives trading.

"In addition, in order to ensure the stable operation of the financial market, it is proposed that the Bank of Russia be given the right to set restrictions on transactions conducted by foreign organizations on the forex and derivatives markets," materials attached to the bill said.

The law will go into effect on January 1, 2023 if it is passed.