Russia’s central bank says that there is a significant increase in FX promotions from unregulated brokers. The regulator has warned the investor to avoid doing business with unregulated brokers.
11 May, 2020 | AtoZ Markets – Unregulated FX brokers are increasing their activities and promotions in Russia during coronavirus lockdown. They are trying to exploit market uncertainty to defraud people. More and more Russians have turned to FX trading, with local broker reporting a surge in trading volumes. They stuck at home and looking for ways to make money online.
FX Promotions Surged in Russia during the Corona Pandemic
The Central Bank of Russia (RCB) acts as a watchdog for the banking and financial markets. It has specifically warned the public against doing business with unregulated FX brokers that promise revenue streams during the Covid-19 lockdown.
The regulator reminds Russians to use caution when considering aggressive promotions for their investment decisions. RCB said in a statement:
FX brokers are promoting to defraud people that the risks associated with online business are relatively low. Even those with limited experience can earn regular income in the volatile markets.
But the central bank said that “financial fraudsters”, including foreign-registered companies offering illegal services, took advantage of the lockdown to defraud people. Almost all consumers who entrust their funds to such FX brokers end up losing their money.
Forex Brokers Complaints Dropped in Russia
During the first quarter of 2020, the central bank discovered 369 companies illegally offering services on the financial market, including 37 pyramid schemes and 53 illegal forex brokers. The latest caution comes after regulators said in February; they observed a continuous decline of customer complaints regarding Forex dealers that provide authorized OTC FX services to Russian.
Russian forex dealers complaints dropped in 2019 and the Central Bank received 246,600 complaints from customers. This represents a decrease of 2.8% from 2018. The number of complaints against the FX broker was 1,000 in 2018. It is 30.5% lower than in 2017. Among all the complaints against market professionals, those targeting forex traders represented 4%. In comparison, the proportion was 2.1% in the last year.
The Bank of Russia has virtually eliminated all competition in the market in just two years after banning some broker’s licenses. Russian authorities are also cracking down on the crypto and forex industries.
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