Position of the Association and UCRFIN member companies is that self-regulation should become one of the key instruments of effective protection of legitimate rights and interests of Forex companies and their clients and should contribute to the cleanup of the Forex business from frauds and financial pyramids. Considering the small size of the Forex business in Ukraine and the limited competence of the governmental authorities in Forex services regulation, which is due to objective reasons, a transfer of a part of control authorities to a self-regulatory organization (SRO) should become an important supplement to licensing, which should be foreseen in the respective legislation.
This thought was expressed by the UCRFIN Association representatives during the scheduled session of the working group on finalization of the Draft Law of Ukraine Nr.2290 «On Forex Dealer Activities in Ukraine», which took place on June 19, 2015. The session was devoted to the issues very important for Forex business development, such as self-regulation and compensation funds functioning on the Forex market.
The experience of self-regulation in other market segments, in particular on the stock market, indicates that operation of several competing SROs doesn’t add transparency to the market, but complicates its regulation and functioning. Moreover, the SROs’ consolidation is quite a logical process, and this is proven by the experience of such countries as the USA. In this regard, the UCRFIN Association is committed to creation of a single powerful SRO, which should take over a part of the regulator’s authorities. Furthermore, the opinion of the Association and its member companies is that membership in the SRO should become a binding pre-condition for operations on the Forex services market, by analogy with the Ukrainian stock market.
The self-regulatory organization should function on the basis of open democratic procedures, which exclude monopolization of decision-making by several market players. By today UCRFIN has developed procedures and mechanisms of decision-making inside the Association, which secure realization of rights and interests of all its members. The Association is ready to share the respective experience with other market participants.
The Association stands for the mandatory creation of the compensation fund under the SRO as the instrument of mutual responsibility of Forex companies and of interests’ protection of their clients. Membership in such a fund should be obligatory for the SRO members. The fund should function in the form of a SRO’s special account on the basis of contributions from its members depending on the size of their market operations. Management of the fund’s finances and their distribution between the affected clients should be conducted according to the transparent procedure fixed in the Association’s internal documents.
As the union of the largest Forex companies of Ukraine UCRFIN will adhere to the mentioned regulation model as it considers it as the most acceptable. UCRFIN is ready to cooperate with all market players and the expert community for its fixing in respective legislative acts. The Association stands for the constructive cooperation between all stakeholders, for the open and transparent discussion around all Forex business regulation aspects. At the same time, the UCRFIN strongly renounces all attempts to receive political and other kind of dividends under the guise of the regulatory model development.
In this context the UCRFIN Association and its participating companies confirm once again their adherence to the need of implementation of the European Forex business regulation norms in Ukraine. In particular, the Association stands for the adaptation the EU MiFID Directive norms to the Ukrainian legislation, welcomes inclusion of this obligation to the Ukraine Financial Sector Development Plan Плану, which was adopted by the National Bank of Ukraine on June 18, 2015.
It should be reminded in this regard that according to the MiFID, the Contract for Difference (CFD), which is the main instrument proposed by Forex companies is recognized as the derivative financial instrument, and operations with CFD – as financial services.