Bank of Russia limits leverage trading risks for beginner investors
The Bank of Russia introduces a new category of brokerage clients — clients with an initial risk level — which will include beginner investors with no experience of trading in securities or derivatives. This is stipulated by the Bank of Russia ordinance.
Leverage will be reduced for beginners, while brokers will have to warn such investors in advance of cases where their order might lead to a leverage trade.
In addition, the Bank of Russia has changed the procedure for calculating risk coverage ratios for all categories of clients, extending them to options contracts as well. Currently, the regulation of margin trading encompasses securities, foreign currency, precious metals, and futures. The ratios determine the limits within which brokers may perform clients’ leveraged transactions, as well as risk thresholds that, if exceeded, will result in the forced closing of clients’ positions. This allows brokers to control the amount of losses that might be incurred by clients in margin trading.
The new rules will come into force on 1 April 2025.