The Central Bank of Russia has annulled the Forex dealer license of PSB-Forex, the FX subsidiary of Promsvyazbank, nearly four years after the launch of its operations that have been plagued with weak financial performance.
The regulatory action was expected as the FX brokerage firm has filed to the Russian mega regulator earlier this year to voluntarily revoke the license of its retail brand.
The announcement from PSB-Forex follows after three and a half years of operations, with the broker losing money ever since commencing its operations and only a small active trader client base.
“On December 22, 2020, the Bank of Russia decided to cancel the license of a professional participant in the securities market to carry out the activities of a forex dealer dated April 7, 2017 No. 045-14023-020000, issued to PSB-Forex Limited Liability Company (INN 7725323192; OGRN 1167746652193), for on the basis of a license waiver application,” the central bank said in a statement.
PSB-Forex auditor gave a going concern warning in the company’s latest financial statement because of the continued losses.
Once PSB-Forex stops operating in Russia’s FX market that will bring the number of licensed forex dealers down to three. All of the remaining players are part of larger banking groups.
The Bank of Russia eliminated competition from the entire forex market in the country after it decided to strip several brokerage firms of their license to trade in forex. Most of the foreign exchange dealers operating in the country saw their licenses revoked over the last two years. The list includes Alpari Forex, Forex Club, Fix Trade, Trustforex, and Teletrade Group.
The official reason behind the move was that brokers had been using aggressive advertising tactics to lure Russian clients, providing false accounting data, mishandling risks, and moving clients’ money offshore, among other violations.
This move, however, effectively eliminated forex traders from the retail market and put the business into the hands of local big banks.
More broadly, however, the Russian Central Bank says that fewer Russians are now involved in illegal financial schemes. At the same time, the regulator has seen a notable increase in opening trading accounts with legal providers, for example, on domestic exchanges.