FCMC to supervise provision of several currency exchange (FOREX) services
Taking into account expansion of foreign exchange market (FOREX) and its easy access for a wide scale of private investors due to computerization and increasing internet usage, as well as comparatively low initial investments required on the one hand and considering that a range of currency exchange transactions are of high risk weight on the other hand, the Financial and Capital Market Commission (hereinafter – FCMC) will extend its oversight authority over the provision of several currency exchange (FOREX) services for the purposes to protect interests of investors.
Moreover, in view of financial market development trends, increasing variety, complexity and availability of financial products in Latvia, FCMC has evaluated different types of currency trading. During the process of evaluation FCMC consulted with financial instruments market supervisors of other European Union (EU) member states. Regulating of currency exchange transactions has been already in place or is being implemented in a number of the EU member states.
Currency exchange transactions that are not performed for commercial purposes and have following characteristics – an initial security deposit in advance of a transaction is required, expected transaction settlements are net cash settlements, the investor's financial results depend on the currency exchange rate fluctuations – are deemed as transactions in the financial instruments pursuant to the term "financial instruments'' specified in Paragraph 1 of Article 1 of the Law on the Financial Instruments Market (hereinafter - the Law) (financial instruments – agreements that simultaneously give rise to financial assets of one person and financial liabilities or equity securities of another person), and therefore they are regarded as other financial instruments that are not referred to in Article 3 (3) of the Law on the Financial Instruments Market.
Persons who currently provide investment services referred to in Article 3 (4) of the Law regarding currency exchange transactions that conform to above characteristics shall approach FCMC and submit documents for receipt of the relevant licence or permit until 01.07.2010. Credit institutions and investment firms that already are entitled to provide investment services in accordance with the provisions of Law have to enhance existing policies and procedures by 01.07.2010 in line with legal norms.
Head of Office
Financial and Capital Market Commission
Phone 6777 4800