Russia Due to Approve Binary Trading

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Russia has announced plans to regulate binary trading options and recoup advertising income from this new industry.

Attitudes towards binary trading from the rest of the world, and especially Europe, have been moving towards outright bans on binary trading options being offered to retail consumers. However, Russian lawmakers appear to be taking a different approach and are thought to be preparing to approve their use.

In the Central Bank of Russia’’s 2017 annual report, the country’’s authorities are involved in binary options for gambling products, which could explain why they are planning on introducing legislation that would regulate them. It has been reported that the Central Bank of Russia has taken part in the drafting of the new laws that are set to be announced at some point in the coming months.

The current situation in Russia

In mid-2017, Valery Lyakh, the head of the Bank of Russia’’s Department for Countering Malpractice announced that government bodies could be considering introducing regulations to manage binary options in order to regulate the illegal practices that currently take place within that space. However, it was also confirmed at the time that investigations had been taking place into some binary options websites, although no action had been taken to close down specific websites to date.

The Russian Federation lists binary options as a form of gambling tool as it stands – a stance at odds with many European countries. In the Netherlands, for example, the Authority for Financial Markets introduced a ban on a number of products, including binary options, in the first quarter of 2018. With figures currently showing that between 70% and 90% of customers lose money when it comes to binary trading options due to the lack of understanding of the risks associated with them. In late 2017, the UK’’s Financial Conduct Authority launched a governing body to regulate the binary trading options industry.

Russia to regulate binary options

If the country goes ahead and allows binary trading options to be used as a gambling instrument and introduces market regulation, it would become legal to advertise them within the country. As it stands, Russian users were responsible for around a third of all traffic on the top three binary options websites in 2017, according to Forbes’ Russian edition. By using data estimated from SimilarWeb.com, they believe that Russia generated 29% of the traffic to four of the biggest binary options websites in April 2017. Together, the combined traffic added up to more than 50 million visits, meaning that Russia was responsible for over 14.5 million of them.

This has piqued the interest of the Russian government, despite other countries moving towards bans for binary options when it comes to offering them to retail clients. However, the Russian approach appears to be gentler, with lawmakers seeking to regulate and monetize where possible after last year’s shakeup of the countries gambling laws, especially with respect to the rights to advertising gambling activities in the country.

And here is the takeaway: If Russia labels binaries as gambling instruments, then binary options advertising is also set to be allowed, potentially a whole new market.

Why the different approach?

It goes without saying that Russia’’s approach to the binary trading options problem is relatively far removed from that of its neighboring countries and global peers. It is hoped that the approach will be more effective than an outright ban, as it could see providers collaborating with the government in order to obtain licenses and ensure that their operations fall within the regulations. With last year’s shakeup of gambling advertising rules in the country still fresh in the minds of CEOs, it would be interesting to see how the proposed move would impact on the advertising of binary options in Russia. Although tellingly, with rules in the country already being relatively removed from other countries in Europe it may be that the move would not cause the shockwaves it would cause elsewhere.

The main risk remains the lack of understanding at the consumer end, which may be addressed if the legislation is drafted effectively.