Russia has experienced massive changes in its financial regulatory system over the past few decades. As the country transitioned from a communist to capitalist economic model, new regulatory bodies were formed to oversee Russia’s financial markets and protect investors. Two of the most important regulators are the Federal Financial Markets Service (FFMS) and the Centre for Regulation of Off-Exchange Financial Instruments and Technologies.

Overview of Russia’s Financial Regulatory Bodies

Russia’s key financial regulators include:

  • Central Bank of Russia (CBR) – Russia’s central bank, responsible for monetary policy and banking supervision.
  • Ministry of Finance – Oversees fiscal policy, public debt management, and regulation of insurance companies.
  • Federal Financial Markets Service (FFMS) – Regulates securities markets, financial services firms, and microfinance organizations.
  • Centre for Regulation of Off-Exchange Financial Instruments and Technologies – Regulates forex dealers and operations with off-exchange financial instruments.

While the CBR and Ministry of Finance have broader roles, the FFMS and Centre focus specifically on regulating Russia’s capital markets and non-bank financial institutions.

Federal Financial Markets Service (FFMS)

The Federal Financial Markets Service (FFMS) is Russia’s main regulator of securities markets and non-bank financial institutions. The FFMS was formed in 2004 through the merger of the Federal Commission for Securities Markets and the Federal Insurance Supervision Service. It regulates activities across four key areas:

Securities Markets

The FFMS is responsible for regulating and supervising Russia’s securities markets, including:

  • Exchanges – The FFMS licenses and oversees securities exchanges like the Moscow Exchange (MOEX).
  • Brokers/Dealers – It licenses, regulates, and inspects professional securities market participants.
  • Issuers – The FFMS establishes disclosure requirements for securities issuers.
  • Investment Funds – It licenses and regulates mutual funds, hedge funds, REITs, and other investment vehicles.

The FFMS develops regulations, monitors compliance, and can impose fines or trading bans for violations. Its goal is to foster fair, efficient, and transparent securities markets.

Microfinance Organizations

The FFMS supervises microfinance organizations (MFOs) in Russia. It licenses MFOs and establishes rules around lending, fundraising, accounting, and consumer protection. The FFMS maintains a national registry of MFOs and monitors their activities to prevent predatory lending.

Financial Services Firms

Various non-bank financial services firms fall under the FFMS’s regulatory umbrella, including:

  • Credit rating agencies
  • Audit firms
  • Actuaries
  • Appraisers

The FFMS licenses these entities, develops professional standards, oversees their activities, and disciplines them for violations. This oversight promotes integrity and competence in financial services.

Insurance Industry

The FFMS inherited responsibility for regulating Russia’s insurance sector from the former Federal Insurance Supervision Service. Its insurance oversight includes:

  • Licensing insurers and brokers
  • Approving insurance rates and policy forms
  • Monitoring insurer solvency and reserves
  • Protecting policyholder rights

By ensuring a fair and solvent insurance industry, the FFMS aims to promote confidence and stability in this sector.

Centre for Regulation of Off-Exchange Financial Instruments and Technologies

While the FFMS oversees Russia’s mainstream capital markets, the Centre for Regulation of Off-Exchange Financial Instruments and Technologies regulates alternative platforms like the forex and over-the-counter (OTC) derivatives markets.

The Centre was established in 2011 and its key responsibilities include:

Forex Regulation

The Centre licenses and oversees forex dealers that offer currency trading to Russian citizens. Forex dealers must meet financial standards, follow trading rules, and protect customer assets. The Centre can impose fines or revoke licenses of dealers who violate regulations.

OTC Derivatives

Russia permits certain derivatives like swaps and options to be traded off regulated exchanges. The Centre establishes conduct rules and reporting requirements for OTC derivatives activities to improve transparency.

Alternative Trading Systems

The Centre regulates alternative electronic trading platforms that compete with major exchanges like MOEX. These platforms must meet standards for fairness, financial stability, and technical robustness.

New Financial Technologies

As innovative financial technologies like blockchain emerge, the Centre evaluates them and determines regulations to address risks. The goal is to allow financial innovation while protecting consumers and markets.

By extending oversight into these less-regulated areas, the Centre aims to reduce risks and promote responsible finance across Russia’s capital markets.

How the FFMS and Centre Regulate and Enforce Rules

The FFMS and Centre utilize similar regulatory tools and enforcement mechanisms:

Rulemaking Authority

Both regulators can develop binding rules, policies, and standards for entities under their jurisdiction. This allows them to flexibly address emerging issues by imposing new requirements.


The FFMS and Centre require firms to obtain licenses to legally operate in Russia’s financial markets. The regulators screen applicants to ensure they meet standards.

Reporting Requirements

Regulated entities must submit regular disclosure reports to their regulator. This includes financial statements, trading data, consumer complaints, and other information required for effective oversight.

On-Site Inspections

The regulators routinely conduct on-site inspections of regulated firms to audit their practices and ensure compliance with regulations.

Investigation Authority

The FFMS and Centre can formally investigate firms suspected of regulatory breaches. This may involve reviewing records, interviewing personnel, and assessing damages.

Disciplinary Actions

If investigations uncover violations, the regulators can impose disciplinary measures like fines, trading suspensions, or revoking licenses. This punishes misconduct and deters future non-compliance.

Referrals for Criminal Prosecution

In cases of egregious fraud or misconduct, the regulators can refer matters to criminal prosecutors for further action. This holds lawbreakers fully accountable.

By actively utilizing these oversight powers, Russia’s financial regulators promote orderly, equitable markets that serve the public interest.

Impact of Russia’s Regulators on Forex Trading

Russia’s robust regulation significantly impacts forex trading in the country. Here are some key effects on forex:

Strict Licensing for Forex Dealers

The Centre for Regulation’s licensing requirements create a high barrier to entry for forex dealers in Russia. Only firms with sufficient financial resources and trading infrastructure can realistically get approved. This prevents fly-by-night dealers from exploiting customers.

Oversight of Trading Practices

Licensed forex dealers must adhere to regulations on margin limits, order execution, fees, account segregation, and other trading practices mandated by the Centre. This promotes fair dealing.

Disclosure Requirements

Forex dealers must prominently disclose all costs, risks, and conflicts on customer contracts and statements. This transparency assists investors in making informed decisions.

Restrictions on Leverage

Russian regulations limit forex leverage to 1:50 for retail speculators. Lower leverage helps curtail massive losses from amplified currency fluctuations.

Prohibitions on Binary Options

Binary options trading is banned in Russia due to its deceptive and addictive nature. Regulations prohibit forex dealers from offering these toxic products.

Investor Warnings

The Centre frequently issues warnings about unlicensed offshore forex brokers illegally targeting Russian citizens. This helps deter investors from using risky unauthorized firms.

While Russia’s strict forex regulation reduces choices for traders, it provides necessary safeguards against abuse in a highly risky market. Investors benefit from properly vetted and monitored forex dealers.

Challenges Facing Russian Financial Regulators

Despite their extensive powers, Russia’s financial regulators face challenges in overseeing such a large, complex system:

Regulatory Arbitrage

Sophisticated firms engage in “regulatory arbitrage” by structuring activities to fall just outside the rules. This requires constant vigilance and policy updates from regulators.

Underfunded Budgets

Both the FFMS and Centre have limited budgets that constrain their ability to monitor firms and markets. This can allow misconduct to slip through the cracks.

Political Pressure

During times of market stress, regulators face pressure to ease rules to support the financial sector. However politics can undermine prudential regulation.


Bribery of underpaid officials is an unfortunate risk in Russia. This can enable firms to evade proper oversight and enforcement.

Overlapping Jurisdictions

Unclear boundaries between the FFMS, Centre, and other agencies like the Central Bank can cause confusion and gaps in regulation.

While far from perfect, Russia’s regulators have managed to impose a reasonable degree of order and transparency on previously chaotic markets. Ongoing improvement requires support from political leaders and market participants. With greater funding and autonomy, these regulators can continue progressing toward global standards and best practices.


Russia underwent a massive regulatory overhaul as its financial markets transitioned post-Soviet era. The Federal Financial Markets Service and Centre for Regulation of Off-Exchange Financial Instruments and Technologies emerged as key regulators focused on securities and forex markets. Despite facing challenges like corruption and budgets constraints, these regulators have brought standards and stability that benefit average Russian investors and businesses seeking to raise capital. While more progress is needed, Russia now possesses a much sounder regulatory foundation than during the “wild east” days of the 1990s. Overall, Russian regulators have succeeded in balancing financial innovation with prudent oversight to foster dynamic yet stable capital markets.