Proprietary trading firms in Russia are facing increased scrutiny as the Bank of Russia raises alarms over potential risks of market manipulation and instability.

Regulatory Gaps and Market Risks

"These companies occupy a significant share in the turnover of trading in securities and derivatives market instruments," stated the Bank of Russia in its 2024 annual report to the State Duma. "Their activities influence the formation of the parameters of organized trading due to the use of template trading strategies, the multiplicity of traders involved in trading, the high frequency of transactions in certain periods, and significant transaction volumes."

Currently, the absence of specific regulations governing prop trading firms creates regulatory blind spots. This lack of oversight enables these firms to operate in a legal gray area.

First Instances of Market Manipulation Identified

The concerns of the central bank are backed by concrete evidence. Following inspections, authorities uncovered instances of market manipulation involving futures contracts and shares traded on organized exchanges. Although actions have been taken against identified cases, structural vulnerabilities remain unaddressed.

"The first months of 2025 suggest that the economy is gradually restoring balance," said Elvira Nabiullina, Governor of the Central Bank of Russia. "Price growth is decelerating, while the economy is still growing, although at a more moderate pace. Production capacities continue to expand, while the increase in demand is becoming more balanced, without provoking a further acceleration of inflation and depreciation of the ruble."

Call for Stronger Internal Controls

The Bank of Russia urged prop trading firms to implement stronger internal controls and provide comprehensive training to prevent breaches of financial market regulations. It specifically emphasized the importance of oversight for individuals managing trading operations and developing trading strategies.

Potential Global Impact:

This warning serves as a significant reminder for proprietary trading firms globally to review their compliance frameworks proactively. Given the interconnected nature of financial markets, such regulatory attention in Russia could signal similar reviews elsewhere, potentially influencing international regulatory standards and compliance practices.


See Other countries who have flagged non-compliant Prop Firms : Ukraine Flags Two Prop Trading Firms

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