A lot of rookie traders gladly experiment in various financial markets. Eventually, they have good fortune on their side, though they have to deal with losses and disappointment on their path to success. However, aiming to safeguard retail investors from trade shocks, the Bank of Russia intends to set restrictions for amateur investors. They will be allowed to invest no more than 50,000 rubles annually (roughly 780 US dollars) in foreign stocks and other risky assets.

The Bank of Russia is discussing a bill that will bring trading activities under control. Of course, the regulator underscores that it puts a high priority on protecting inexperienced traders from heavy losses. Nevertheless, the new legislation could deal a blow to leading brokers. According to their estimates, such restrictions will bar 80% of their clients from 75% of trading instruments. At present, two categories of investors operate in stock markets: professionals and amateurs. The bill proposed by the Bank of Russia divides private investors into qualified and unqualified. Besides, the Russian watchdog defines three categories of private investors.

1. Qualified investors are those individuals whose investment portfolio is worth over 10 million rubles (about USD 156,250) as well as those who have executed deals totaling at least 6 million rubles (USD 93,750) in the recent six months. This category includes traders who hold an appropriate license and certificates or have a vast experience in financial markets. They can get access to foreign securities and private mutual investment funds.

2) Unqualified retail investors represent those individuals who handle assets worth over 1.4 million rubles (USD 21,875) or who have obtained a license or certificate. Such market participants are allowed to trade shares and bonds of Russian companies listed on the Moscow Exchange. Besides, they can provide unlimited investment for trust management.

3) Unqualified investors who need special protection must fulfill the same requirements which are imposed on the above-mentioned category. The third group of retail investors can carry out similar deals, though on some conditions. These market players are allowed to trade shares and bonds only when such assets are secured by the broker’s own funds. Amateur investors must have their knowledge tested. If a trader fails a test, he or she will be able to make deals to the total value of no more than 50,000 rubles (roughly USD 780) per year.

The Bank of Russia believes that such a division is supposed to cushion unqualified investors from extra risks and rash trading decisions. Interestingly, market participants do not share the regulator’s viewpoint. Analysts warn that the new legislation will force Russian investors to buy foreign securities through brokers of different jurisdiction. To sum up, new risks will replace the previous ones.