Russia Forex Country Report

Key Facts: Population: 142,000,000 Currency: Ruble (RUB) Membership: G8, WTO Regulator: Federal Financial Markets Service (FFMS) Economic Overview:
After the fall of the Soviet Union, Russia has moved away from a centralized economy. However, even though efforts have been made to privatize companies, the government plays an active role in controlling Russian firms. An example is leading energy company Gazprom, which had grown substantially between becoming private in 1991 to 2000. Following Vladimir Putins rise to Presidency, he enacted reforms which curbed power of some of the largest Russian firms. Having been effected by the new laws and experiencing restrictions on access to pipelines, Gazprom sold a 10.7% stake in the company to the government for a below market price. Shortly thereafter, restrictions were lifted. The Russian economy is based largely on natural resources such as oil, natural gas, coal steel and aluminum. A recent notable achievement was Russian oil production surpassing that of Saudi Arabia. Following the Russian financial crisis of 1998, the economy experienced rapid growth until 2009. As a commodity driven market, Russia benefitted from low global interest rates which triggered bubbles in hard asset prices. However, the exposure to commodities hit the country hard during the global financial crisis with GDP falling 7.8% in 2009. Since then, Russia has initiated programs to diversify its industries, with a specific focus on growing its financial sector.

With its economy and currency strength closely tied to commodity prices, Russia has experienced high levels of inflation. However, regardless of the inflation volatility, employment levels have stayed consistent due to a diverse set of industries in the country and government sponsored public initiatives.

Forex Landscape
Despite its communist influence, Russia didnt wait long to develop its capital markets. As such, the country has thriving local exchanges led by the merged Moscow and RTS exchanges (MICEX), with volumes and market capitalization rivaling the worlds leading trading venues. The merged MICEX boasts one of the largest destinations for exchange trade forex products. Responding to increased demand from foreign traders, the exchange has recently extended FX trading hours to be in line with the rest of the world. On the retail side, forex trading in the country began in early 2000. As an early entrant to the market on the global scene, Russia is best known for its massive penetration of forex trading technology that exists around the world. Leading the way is Russian, MetaQuotes, whose MetaTrader platform is used by over 80% of all retail traders around the world. Being market leaders in technology also spawned the creation of numerous local brokers. Among those, Alpari, FXOpen, and ForexClub have managed to become global brands, with Alpari being one of the largest brokers by trading volume in the world. However, even with the achievements in the forex space, the industry has had a problem creating trust with clients among the local market. This is due to the lack of forex specific regulation in the country and occurrence of numerous scams as transparency is minimal in Russia. Conforming to the rest of the world, and in advance of possible regulation, firms have begun to become more proactive in providing financial transparency. Recent examples are publishing of revenue and volume details from Alpari as well as from EXNESS. Another change taking place is the increase of Russian based firms gaining regulation from numerous countries such as Cyprus, Australia, and New Zealand. As these firms expand their global reach, it has triggered a need for greater transparency to persuade foreign clients to open accounts with a Russian company. With an established trading culture, it is recommended for firms marketing in Russia to utilize general finance portals in addition to forex specific sites. General portals include www.rbc.ru, www.finmarket.ru, and www.ria.ru/economy. Russian language forex portals include www.radioforex.ru and www.fxmag.ru. Expanded Report is available in Forex Magnates websites Research section