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The Financial Market Relations Regulation Center (FMRRC– the website is in Russian language) is a non-Government and independent self-regulatory agency that regulates Russian financial brokers dealing in securities, derivatives, and CFD trading. The FMRRC is not affiliated with the Russian Government in any manner and is operated strictly as a non-commercial private entity. FMRRC operates under its own regulatory framework that is designed according to an internal team of independent experts, and agency raises all of its funds through membership fees and other transactions levied on its member firms.
FMRRC Forex brokers are regulated according to an informal set of rules and guidelines that are not implemented by any official authorities; therefore, the FMRRC does not have any legislative powers to initiate legal actions against the member firms for any alleged misconduct. FMRRC is a single organization that works on a closed regulatory structure that awards licenses to FMRRC regulated brokers and revoking or suspending them in the case of any financial wrongdoings. Apart from the licensing aspect of the organization, FMRRC does not play any integral part in ensuring the authenticity of Forex brokers in Russia, and the FMRRC may be considered as a private regulatory agency that aims to certify the involvement of a company in the brokerage industry.
History & Working Principles Of FMRRC
FMRRC was founded in the year 2011 by a major Russian broker that wanted to create an independent regulatory organization for certifying financial brokers without any Government involvement. FMRRC quickly grew into a self-sustaining organization that worked towards offering a certificate to brokers that wished to receive some regulatory status in the Russian financial markets. Russia is indeed considered to be at the pinnacle of Forex trading technology, as several high-profile traders, brokers, and other market participants are believed to originate from Russia. However, Russia is also home to numerous cases of financial scams and fraudulent practices, which have rendered a negative image to all firms operating out of Russia. The negative experience of traders from all over the world at the hand of unscrupulous Forex brokers in Russia had mostly put the country in a bad light as to the ineffectiveness of its regulatory policies. FMRRC was one of the revolutionary new concepts in Forex broker regulation that were designed to offer some form of security against broker irregularities and financial scams. The organization quickly succumbed to commercialization and is nowadays seen more as a certifying agency, rather than a full-fledged regulatory body. The lack of any Government recognition or authority also prevents the FMRRC from exercising total control over its regulated firms. The FMRRC operates as a licensing agency that collaborates with its member companies for streamlining the process of regulation and for bringing together the different brokers under a single roof. FMRRC as a group aims to work together with all licensing procedures and issue several guidelines that are imposed on FMRRC regulated brokers at the time of renewal of the certificate or the license. The licensing guidelines are oriented towards reducing the risk for both the investors as well as FMRRC Forex brokers, but the agency rarely entertains any consumer complaints regarding compensation of funds in the event of an investor being scammed by a participating member broker. The FMRRC has devised a detailed compensation plan and complaint resolution procedure to help investors stay safe from broker irregularities. But the lack of any authoritative powers over its regulated member firms does prevent the FMRRC from imposing any penalties or sanctions against licensed brokers. At most, the FMRRC may dissolve the license and may ban the broker from receiving a valid certificate, but an estranged investor will still be in peril while trying to recover their trading capital.
Are There Any Benefits Of Signing Up With FMRRC Forex Brokers?
FMRRC offers a slight bit of consolation for traders that FMRRC regulated brokers are subjected to a few restrictions, which prevent them from indulging in any large scale financial scams. FMRRC certification enables the regulatory organization to review a company for its authenticity before granting a valid license. FMRRC certification ultimately helps an investor to rely on the fact that a broker will lose its reputation if it indulges in any financial irregularities or consumer abuse. Although FMRRC Forex brokers are barred from indulging in any financial crimes, FMRRC does not have any legislative powers to initiate any action against companies for alleged misconduct. Nevertheless, FMRRC regulation can be indicative of a broker’s commitment towards going the extra mile to become a certified broker, which should help in putting the investors’ minds at ease. Investors are encouraged to contact the FMRRC directly in case of any consumer complaints, and the organization promises to initiate impartial investigations into a company if it is found to have deviated from its FMRRC guidelines. The agency also promises to compensate traders if a broker files for bankruptcy, which is a feature offered by some of the largest regulatory organizations in the EU and the US.
The FMRRC’s Shortcomings
FMRRC has posted high claims regarding investor protection and broker regulation, but the FMRRC falls drastically short of its promises. The FMRRC website is poorly maintained, and does not provide a list of all regulated or certified members, which make it difficult for traders to verify the authenticity of FMRRC Forex brokers as claimed by the member companies. There isn’t any sufficient proof that the organization has launched any legal proceedings or penalties against a company for its misconduct, neither is there any evidence of payments or compensations made to investors to recover for the failure of a broker or due to established financial frauds and scams. The process of FMRRC broker regulation is also extremely dubious, as the procedure is not entirely transparent. FMRRC is known to satisfy the needs of specific broker requirements, and the organization does not follow any standard regulatory protocols that are adopted by the more reliable and authentic financial regulators. Since the organization has a commercial nature, the FMRRC might be considered to favor the interest of the companies, rather than the investor. FMRRC is not a highly reliable regulatory organization when it comes to regulating FX brokers in the industry. However, the agency does provide a bit of stability for traders by counting on the knowledge that some reliable Forex brokers in Russia have a valid FMRRC certification. If you are worried about the safety of your trading capital, you should always split it up between differently regulated brokers, so that an investor can be assured of preserving some of his trading capital, even if he loses a significant chunk of money on some fraudulent broker.