Bank of Russia sets rules for margin trading in cryptocurrency and digital rights
The regulator has established the requirements that brokers and their clients should meet to be able to accept cryptocurrencies and digital rights as margin collateral and execute short sales, respectively. The draft ordinance has been published for regulatory impact assessment.
Both qualified and non-qualified investors may engage in margin trading. Cryptocurrency transactions for non-qualified investors will be subject to the limits to be established by the Bank of Russia.
The document also adjusts the procedure for calculating risk coverage ratios used by brokers to control leveraged transactions. Currently, brokers calculate these ratios for transactions with securities, precious metals, foreign currency, futures, and options. The document supplements this list with cryptocurrencies and digital rights.
The ratios indicate the margin of safety of an investor’s portfolio. They determine the limits within which brokers may conduct clients’ leveraged transactions as well as thresholds beyond which clients’ positions are subject to forced closure. This will help reduce investors’ losses.