Officially known as the Russian Federation, Russia is an Eastern European economic superpower with a population of over 145.9 million, a territory of 17.1 million sq km, and GDP per capita of US$11,289.
After the Soviet Union met its demise in 1991, the Russian government carried through a series of radical reforms that aimed at transforming the country’s economy from a centralized one to one based on the principles of capitalism.
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Today, Russia’s economy continues to be driven by its massive reserves of natural energy sources. The country ranks as the world’s biggest exporter of natural gas and the second-biggest exporter of petroleum.
According to the World Bank, the overall value of its natural resources stands at US$75 trillion. A land of superlatives, Russia is also home to the largest forest reserves on the planet, with over two-fifths of its territory being forested.
After the dissolution of the Soviet Union, the country continued to use the Russian ruble (RUB) as its main currency unit. The ruble, along with the country’s monetary system, is regulated by the Russian Central Bank whose main function is to stabilize the local currency through the control of foreign exchange.
Foreign trade is extremely important to Russia’s economy, particularly exporting crude oil, machines, metals, chemical materials, and forestry products. Its principal partners in trade are other large world economies like Germany, China, and the United States.
Trading Forex is also becoming increasingly popular among Russian citizens. Industry experts claim there are more than 200 offshore brokerages to service the local market and approximately 500,000 customers who trade with them. Many of these companies operate without local authorization. This has forced Russian authorities to toughen their regulatory stance in recent years.
Russia Forex Legislation
Russia’s earliest efforts to regulate its Forex sector began in 2008 when the Federal Financial Markets Service introduced a set of rules brokers on the local market had to follow. The first brokerages approved for licenses were announced several years later.
However, the regulatory guidelines were so tight that only eight companies applied for Russian licenses. Five of those had their licenses revoked in 2018 after failing to meet the tough requirements of the local regulator.
The licenses themselves are issued by the Central Bank of Russia, which is mandated with the oversight of the local Forex market. One of the conditions concerns the brokers’ operational capital, which should amount to at least ₽100 million (approximately US$1.5 million).
Some of the licensing requirements aim at ensuring a transparent and safe trading environment for Russian customers. For instance, licensed firms are expected to contribute to a compensation fund intended for the reimbursement of traders in case of broker bankruptcy. A leverage cap of 50:1 is in place to protect retail customers from losing huge amounts of money.
Licensed entities should also inform their customers about the risks associated with entering a contract for difference. The information should be laid out in a clear and comprehensible manner so that even customers with limited Forex knowledge can understand it.
The authorities surveyed local retail traders back in 2015 to ask them about their opinions on what the maximum leverage should be. Only 6% of the surveyed participants approved the 50:1 cap while the majority voted in favor of more generous leverage.
Despite these opinions, the Russian regulators announced in October 2018 they have drafted a new law that would further reduce the leverage cap to 30:1 for complex derivatives, in line with the maximum prescribed in most other European countries.
The regulators proposed further reductions after they received multiple complaints from Russian traders who incurred huge losses when trading with margin. There are also discussions about altogether banning leverage trading for non-professional Russian customers.
If approved, the new rules would also enable locally licensed brokers to hedge against their customers’ trades, a practice that has been outlawed in Russia since 2015. In the absence of hedging, the traders’ losses become the brokers’ profits and vice versa.
The authorities also plan to expand the number of trading products that locally licensed brokers can offer to customers who trade with leverage. Stocks and securities are likely to be added. At the present moment, locally authorized brokerages can only offer contracts for difference (CFDs) for Forex.
Most of the trading activities in the country are handled by foreign brokers despite the efforts of local authorities to restrict the access to their websites. The tough regulatory climate in Russia has caused local traders to flee to the websites of offshore companies where trading conditions are more favorable.
According to the Russian Association of Forex Dealers, as little as 1.75% of all Russian traders use the services of locally authorized brokerages. What this means is only 7,000 out of 400,000 retail customers are taking their trades to locally approved brokerages.
It appears very few local investors embrace the idea of using the services of brokerage firms that are actually trading against them. This is one of the primary reasons why the Russian authorities are making plans to allow hedging.
Many offshore companies that accept traders from Russia have their operations overseen in other European jurisdictions like the UK or Cyprus. Such brokerages adhere to the stringent guidelines of their local regulators, offering transparent and safe trading conditions to their clientèle as well as a more versatile selection of leveraged financial products.
Russia Forex Regulators
Trading in Russia was previously subject to the scrutiny of the Federal Financial Markets Service (FFMS) which was founded in 2004. However, this organization disbanded in 2013 and its regulatory responsibilities were transferred to the Central Bank of Russia.
It oversees the financial sector in the country and ensures all market participants adhere to the local regulatory guidelines. In addition to this, the Central Bank issues ruble banknotes and coinage and ensures the stability of the local financial system.
There is also the Financial Market Relations Regulation Center (FMRRC), a non-commercial entity tasked with regulating the quality of the services offered by brokerage firms in Russia. Its mission is to ensure a secure and fair environment for stock and foreign exchange traders in the country.
This is an independent organization, which is why there are no brokers among its founders to prevent bias and conflict of interests. The FMRRC issues certificates to approved trading companies, monitors their compliance, and actively partakes in the resolution of customer disputes. The regulator also runs a compensation fund to reimburse local traders in case a certified broker goes out of business.
Finally, certified firms must become members of the local Association of Forex Dealers. The AFD is a self-regulating entity and was established in 2015. It is accredited by the country’s Central Bank and requires companies to commit with a deposit of ₽2 million after they become members.
Those who are granted membership must also set up local offices to deal with customer complaints. Approved brokerages should have at least five years of experience in the financial industry.
Russia Forex Payment Methods
Russia Forex brokers give local customers the chance to trade with virtual credits by opening demo accounts. While this is a good way to improve your trading skills and test new strategies, you need a live account to trade with real money.
Despite being commonly available, credit and debit cards are not that broadly implemented by Russian Forex traders. They prefer to process their payments via digital wallets like those provided by Yandex and Qiwi.
Both are tailored specifically to the needs of customers from the Russian and Eastern European markets, enabling them to top up their wallets’ balance with electronic money transfers, cards or cash at self-service kiosks.
Russian traders are keen on e-wallets because they facilitate instant and secure electronic transactions in the local currency, the Russian ruble. When a customer chooses to initiate a deposit with Qiwi or Yandex, they are redirected to the platform of the respective e-wallet. This enables them to carry out the money transfer anonymously and with minimal risk.
Apart from Qiwi and Yandex, Russia-friendly brokerages offer internationally available e-wallets like those provided by PayPal, Skrill, and Neteller. WebMoney, which originated in Russia and has its headquarters in Moscow, is also an option in many cases.
Those who want to deposit or withdraw with cards should feel free to use Visa, Mastercard, and Maestro. It is also possible to conduct a standard bank transfer but the transaction might require a couple of days to process.
Moneta.ru is another locally available method that enables Russians to conduct money transfers online. The registration for this e-wallet is free, with users having a choice from three base account currencies, RUB, USD, and EUR. You can top up your Moneta.ru balance with cards by Visa and Mastercard, bank transfers or other digital wallets like Yandex and Neteller.
Traders from Russia should carefully consider which deposit solution is the most suitable for them. Many Forex brokers automatically return withdrawals via the same methods customers have used when depositing. Factors like minimum deposit amounts, spreads, commissions, and minimum lot size should also be taken into account when choosing a Russia-friendly broker.
Popular Trading Software in Russia
The best Russia-friendly brokerages utilize advanced trading software that is both intuitive and easy on the eye. A decent platform for Forex trading should also boast additional tools for market analysis and lightening-fast execution speeds.
One such platform should provide traders with real-time quotes so they can react adequately to the price movements regardless of how small they are. It should include various tools for advanced charting to the benefit of more experienced traders.
One platform that meets all of the above criteria is MetaTrader 4 (MT4). Interestingly enough, it was created by the Russian developer MetaQuotes Software. The company was founded in 2000 as FX Charts and initially provided charting packages for Forex margin trading.
It rebranded as MetaQuotes in 2001, four years before the official launch of MetaTrader 4. MT4 went on to become the most commonly used trading software not only in Russia, but in the whole world.
The platform is highly intuitive, easy to use, and comes with a plethora of great features including automated trading, customizable charting with graphical objects, and nine timeframes. Thirty indicators that facilitate powerful technical analysis.
Five years after the launch of MT4, MetaQuotes released its successor MetaTrader 5. MT5 differs from its predecessor in a variety of ways. For one, it facilitates trading with a greater number of financial products.
Apart from Forex, MT5 users can trade in stocks, futures, bonds, and options. Also featured is a multi-threaded strategy tester (the one in MT4 is single-treaded) along with the Depth of Market functionality that enables users to easily manage their positions’ stop levels and pending orders. Both MT4 and MT5 are cross-compatible and support the Russian language.
Although less popular, cTrader, NinjaTrader, ActTrader, and ZuluTrade are also used by some Russia-friendly trading sites. Others rely on proprietary platforms whose features are brokerage-specific. The best brokers on the Russian market provide a choice from multiple trading platforms to accommodate all traders, regardless of their skill level, preferences, and experience.
Mobile Trading in Russia
Whether you are a professional trader from Russia or are merely looking to trade in your free time, having round-the-clock access to the Forex markets is of vital importance for your performance. To be successful, traders should be able to react to price fluctuations on time, especially when trading with significant currency volumes. This is particularly important for short-term investors.
The easiest way to achieve this would be to install a Forex trading app on your smartphone or tablet. This would give you constant access to important market data in real time. Many Russia-friendly brokerages offer dedicated mobile applications optimized for use on touchscreen devices while at the same time maintaining the same functionalities offered by their platforms’ desktop versions.
Each broker’s app has its distinctive features but mobile traders from Russia would generally benefit from accurate real-time quotes, charting, push notifications, various tools for analysis, and a great diversity of currency pairs. Most apps are compatible with the two most common operating systems, Android and iOS.
The apps give Russian traders full control over their Forex accounts, enabling them to review their portfolios and previous trading histories whenever they wish. The best mobile software also supports different execution methods and gives users access to the latest financial news.
There is no need to worry about safety when trading on the go. All trusted Russia-friendly brokers equip their Forex apps with highly effective and encrypted firewalls to shield users from hacker attacks and fraud. It goes without saying the apps are available in Russian and support payments in the local currency, the ruble.