Bank of Russia extends margin requirements for brokers

On 1 July 2019, a Bank of Russia ordinance takes effect which extends the application of requirements for brokers engaged in transactions on behalf of customers to open positions in derivatives and foreign currency. Previously, such requirements only applied to securities.

Currently, brokers do have an option to consolidate positions in securities, FX and derivative financial instruments in a customer portfolio. However, portfolio margining has not been fully appropriate, with the Bank of Russia’s 2014 rules allowing margin trading with securities only.

The new Bank of Russia regulatory act aims to boost the competitiveness of Russian brokers through portfolio-based optimisation of customer collateral for potential exposure, and to protect customers from price fluctuations in different segments of the financial market apart from securities.

Beyond extending the scope of margin requirements, the regulation modifies the way collateral for opposite customer risks is optimised in the case of hedged positions; also, it clarifies the rules to open and transfer exposures when the initial margin has been exhausted and rules for liquidating customer positions.