The Bank of Russia on Friday, 27 may, published on its website recommendations of the brokers to limit the maximum size of the positions of clients in transactions with a currency with borrowed funds. We are talking about margin trading currencies, where, in contrast to the stock market and bonds, to date, no such restrictions existed. If the client takes on excessive risk, using borrowed funds broker, its losses can far exceed its financial capabilities.
In CBA the purpose of the recommendations called client protection “in the case that bidders allow their customers to open too large positions relative to the supplied software”. In such cases, and particularly in conditions of high volatility in the foreign exchange market, customers may face significant risk, said the press service of the Central Bank.
Central Bank does not want to allow them to trade currency on the stock exchange has become an analogue of the Forex market where the risk of the customer virtually unlimited, says the head of “Internet-broker” BCS financial group Paul Forties. TSB has repeatedly emphasized that it is essential that private investors are not traded on the stock exchange of 1-2 years, and then was disappointed and left. Long-term investors should feel comfortable on the market much longer,” he adds. The control of the controller will save from bankruptcy as private clients and participants of the currency market, says Director of Treasury “ATON” Svetlana Antipova.
Before all bidders have limited risks in accordance with risk policy, adopted in their organizations, says Antipova. Now they will be required to lead the risk policy in accordance with the new recommendation. In particular, the regulator advises brokers to ensure that the client’s open position was commensurate with its obligations under the transaction. If the broker detects that the value of the client’s portfolio was less than its corresponding minimum margin, he will have to forcefully close his position before the end of trading. In other words, brokers must not allow “a margin call”, in which the client will be required to Deposit additional funds into the account for the performance of its obligations.
“The biggest impact the recommendations will have on customers who traded with very large shoulders, and in the lives of investors who traded with small, will not change anything”, — said Antipova. Still formal restrictions on margin trading in the foreign exchange market was not, and the broker provides clients with rather high leverage: at 1:7 or 1:8, says CEO of the company “Opening Broker” Yuri Mintsev. In Forex higher leverage is 1:25-50 and can reach 1:100. Inexperienced investors that use of credit funds to currency trading, you can lose significant funds, especially in periods of market volatility.
“In the last year or two on the market it’s a very large number of these [inexperienced] citizens, and it is natural that the Central Bank wants to protect them,” says the Fortieth. The desire of the Central Bank to limit the risks to participants due to the tragic experience of the end of 2014, when after a sharp rise in foreign exchange regulator had to take action to stabilize the situation on the market, says the Chairman of the Board IK “Ah Ti invest” Oleg Filatov.
According to the Moscow exchange, in November 2014 actively traded currency 2,56 thousand people, and the turnover on their operations amounted to about 220 billion rubles. But in December the number of individuals in the foreign exchange market grew more than threefold and exceeded 8 thousand persons, and the turnover amounted to 1.2 trillion RUB Since this figure only grew. In April 2016 the number of active citizens in the foreign exchange market amounted to 18.4 thousand and a turnover of 2.8 trillion RUB.
Recommendations the Central Bank will limit the clients ‘ desire to pursue high-risk operations, and the broker will protect against their effects upon the unstable situation in the market, says Filatov. If market participants are to implement the recommendations, it could trigger an overflow of customers on the futures market, Mintsev considers of “Opening Broker”. “Here, you can also conduct transactions with currency instruments, the risk level is much higher. This segment also do not fall under the restrictions on margin trading,” he notes.