The way to self-regulation of the Forex services market in Russia has been set as early as in 2003, when three leading broker companies commenced negotiations and discussions resulted in establishing of The Financial Regulation Agency (KROUFR) in 2004. From Russian its name stands for as the Commission on Regulating Relations between Participants of Over-the-counter market. Creation of KROUFR was the first attempt to bring relationship between Forex operating companies, on the one hand, and clients, on the other hand, to a civilized form. KROUFR elaborated a number of regulating papers and system of voluntary certification with the main purpose of setting conformity of financial markets' players with certain requirements. It is a necessary reservation that such certification does not have an actual legal force and is rather an option of self-regulatory organization (SRO). Certificate of KROUFR guarantees that by the moment of certificating it satisfied all requirements set by KROUFR standards.
Main protection mechanism for participants of over-the-counter financial market within framework of SRO is the work of KROUFR public commission including representatives of brokers, traders and investors, which have interests in the Russian over-the-counter financial market. Internet facilities of the commission provide the possibility of submitting petitions and claims, which are subject to further consideration by the public commission. Decisions of the commission are compulsory for members of SRO. As per rules of KROUFR, traders also can submit claims against companies, which are not members of KROUFR. Upon receiving such a claim, the Commission notifies defendant company by all available means, but all decisions addressed to unlicensed Forex brokers have a character of recommendation and are not mandatory.
As it is officially declared, KROUFR sets following goals:
- Maintenance of activity conditions and coordination of participants of the international financial markets;
- Facilitation in mitigation of risks carried by participants of international financial markets ;
- Introduction of rules and standards for operations conducted on international financial markets including principles of business ethics, dispute settlement, fair competition;
- Establishing of of insurance fund for covering liabilities of Forex companies against clients;
- Information and analytical support;
- Research activity.
At present, core activity of the Commission includes:
- Claim handling and settlement of disputes among participants of financial markets;
- Certification of participants of international financial markets;
- Ensuring performance of obligations by certified participants;
- Advertising activity.
Thus, KROUFR mission in this case mainly underlies in handling and resolution of claims submitted by licensed members of organization, on the one hand, and their clients, on the other hand.
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