FMRRC – is a center for regulating of relations in financial markets. Was founded in 2011, the organization is non-profit, the certification is not obligatory. As well as other organizations in Russia, it exists on the contributions of its members. In every sense of the word, it is not a regulator, as it does not have significant leverages.
Main goals and functions of FMRRC (similar to CRFIN):
- Evaluation of brokers work and the work of financial companies, their licensing, keeping license in actual state. All the licenses are published on a site of the organization (but it is difficult to find them in direct access). The broker, who cares about his reputation, publishes a link on FMRRC website. The document is scanned in color, has start and expiration date. Certificate renewal is provided once a year;
- Minimization of risks in financial markets;
- Co-ordination of work of financial market participants on the world platforms;
- Formation of compensation fund for the clients (investors) of the companies (including brokers) for loss compensation in case of illegal actions from broker-participant of FMRRC side;
- Upgrading of systems of financial state evaluation and systems of risks.
FMRRC is a very reputable organization among with KROUFR and CRFIN. But, if if refer to to the moment of establishment of so-called regulator, we may notice, that this organization was established by one of the leading brokers of Russia and Ukraine as an opposite to the existing CRFIN (where the leaders of current stock-exchange market of Russia stand at the origins. Though the broker where the pocket controller was FMRRC, does not exist any more, the organization keeps doing its work.
Nice point can be called the fact that the website is continuously updated: in addition to General information, you can see the companies that have received recent certificates. The disadvantage is the fact that there is no list of brokers, who obtained a license on the website.
Advantages of FMRRC membership for the broker:
- Presence of certificates shows that the broker went through thorough examination and is recommended for co-operation;
- Marketing course, that allows to express yourself as a stable and trusted company;
- The formation of an image of serious broker organizations, which care about their reputation;
- Documentary evidence of the competitiveness of a broker;
Advantages of FMRRC membership for the investor:
- guarantee for clients that the broker is really reliable and effectively working company;
- protection of investors ‘ rights in case of conflict situations;
- payment of money to investors if the broker goes bankrupt.
Unfortunately, the regulator just declares such a high goals and that’s all. We could not find online evidence that FMRRC helped anyone in resolving disputes (and what for is a judicial system then?). We may even do not pay attention to the negative feedback, who complained, that there was no support from the regulator. But the bankruptcy of a well-known broker, who had an FMRRC certificate, and the absence of the reaction from the organization, tells us, that the compensational fund is just nice words, and the organization itself has significantly undermined its reputation.
To obtain the certificate of conformity of the broker companies, the broker should have worked on financial market for 2 years, have over 5000 registered clients, have a minimum number of open accounts – 2500, have offices in several Russian cities. As of January 2015, 21 member of FMRRC are known, the information at the beginning of 2016 year is not yet available.
The company also offers to obtain certificates of conformity in the field of information and investment projects. The basic requirements to them – openness and transparency of public information, notification of financial market participants about the possible risks, copyright compliance, timeliness of information, guarantee of the security of the information resource.
Steps to obtain FMRRC certificate:
- the applicant submits a request for getting the certificate. This can be done on the website;
- at the same time with filling in of the request, the company (broker) submits documents: license and the certificates in accordance with the law;
There is no information about the financial reports and statutory documents, about the owner structure, and also about what farm should the documents be filed, that regulate the relationship of broker with a client, licenses. To compare: serious regulators of Europe and the USA, not only require full information about the broker, including the qualification of top managers, but also ask to provide notarized copies.
- Next step: the conclusion of the certification contract and payment for the services. The application is considered for 5 days.
According to the information from the FMRRC website, the organization itself collects data about the broker’s activities and evaluates its activities. Interestingly, the application is considered 5 days and then FMRRC reports on the conditions of obtaining a certificate. For comparison, to obtain a license of FCA, NFA takes for about 6 months.
To summarize. Externally FMRRC looks very presentable, but, as shown, the efficiency of the regulator is not particularly observed. However, as with other Russian regulators. We would recommend to focus on brokers that have more significant licenses and certificates.
Official FMRRC website: http://crofr.net