OREANDA-NEWS. The Bank of Russia recommends that trading participants calculate capped amounts of their customers’ positions for leveraged foreign exchange deals – margin transactions.

The approach, while enabling customer protection against material losses, would also help establish more transparent rules in the financial market.

The regulator-developed Guidance Notes lay down the procedure for computing these limits and that for trading participants’ conduct in cases customers exceed these limits. This is the first time such recommendations are released, published in the Bank of Russia Bulletin today, albeit based on the similar regulations applicable for the security market.

To determine capped positions, trading participants should valuate, on an ongoing basis, their customer’s total portfolio with due regard for all its assets and liabilities. Calculations should also be made to determine benchmarks against which to compare the total cost of portfolio, i.e. the amounts of initial and minimum margins.

Portfolio valuations should employ data including the current foreign exchange rate, the balance of monetary funds in the customer portfolio, the amount of fees and reimbursements the trading participant is contractually entitled to, and other measurements. Initial and minimum margins are computed with consideration of the rates subject to be disclosed by clearing organisations.