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Russia will introduce an investors classification

Tuesday, 6 March 2018 09:26
Russia will introduce an investors classification

In accordance with the conception approved by the Central Bank of the Russian Federation, from the next year a classification of traders is introduced in Russia, according to which the conditions of their work will be determined. There will be three groups of investors: professional, skilled and unskilled. For unskilled there will be available only the simplest financial instruments, while professionals will be able to independently determine the composition of their investment portfolio.

Classification conditions

As reported in the Central Bank official sources, the purpose of classification introduction is to protect novice investors from significant losses. For example, futures or options trading is the riskiest, so only professionals will have access to such tools. This group includes investors:

  • possessing capital in the amount of 50 million rubles;
  • having an international certificate such as CIA, ACCA, CFA.

Traders belonging to a group of professionals will be able to work with any trading instruments and perform any operations.

The second group of "Qualified Investors" will include traders who have at least a year of "positive experience in the investment field". This period can be reduced by half, if the trader:

  • has assets in the amount of 10 million rubles on a personal account;
  • has at least 1.4 million on the brokerage account and successfully passed the exam, proving his investor skills.

The "lowest" group of investors is divided into two categories: traders whose brokerage account is at least 400 thousand rubles, and other. The latter will be available only the simplest assets, characterized by the lowest level of risk. In addition, they will not be able to use such a tool of the derivatives market as "leverage". To expand the list of instruments available for trading, you must either pass the exam, or add a missing amount on the brokerage account.

Some experts believe that the initiative of the Central Bank will cause a massive transition of investors from the regulated securities market to uncontrolled binary and forex dealers. At the same time, small and medium-sized brokers that comply with Russian law will find it more difficult to attract customers.

Regulation of automated trading - the next step of the Central Bank

Not so long ago, the Bank of Russia issued a letter with numerous facts that professional traders conclude a brokerage agreement with unqualified investors. In fact, they operate in a trust management system. Such schemes provide for conclusion of client’s transactions with means of multiple conditional instructions.

In other words, the Central Bank drew attention to the automated systems increasing use or trade robots. The fact is that beginners often do not want to spend time learning, but want to make a quick profit. In this situation, trading robots that conclude transactions for a particular algorithm are a good alternative to trust management, which is used less and less because of tight regulation.

Effective algorithmic strategies give good results and allow you to earn much more than manual trading. The growing popularity of trade robots attracted the attention of the Central Bank, which means that this sphere of activity can also soon fall under the regulation.

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David Melton
David Melton

Financial expert. I work with investors and different companies. I write analytical reviews for newspapers and TV channels and I also manage researching projects

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