Azerbaijan, Baku, Dec. 23 / Trend I.Khalilova /
Bank organizations will only implement Azerbaijan's market operations on the Forex-OTC foreign exchange market 2011. Azerbaijani State Securities Committee Chairman, Rufat Aslanli stressed that since the global financial crisis, the most pressing issue has become the regulation of financial markets and improving mechanisms for regulating these markets.
"This situation is not surprising as foreign exchange markets in other countries, like the Forex market in Azerbaijan, become a more regulated sector, and the transfer of responsibilities for the implementation of Forex transactions to banks would reduce systemic risks," Aslanli said. "I expect that this will make the currency market even more stable."
He said Forex carried out currency transactions on the market in Azerbaijan. It also planned to enter the market with derivative financial instruments -- "Currency Derivatives." about 1.5 years ago. The company, however, apparently because of non-formation of domestic capacity, did not appeal to the SSC, expressing only intention on this occasion.
The magnitude of the FOREX market is huge, about $5 trillion is bought and sold every day and these volumes are constantly increasing. Stocks are the top commodity on the market. By comparison, the daily volume of the stock market is about $300 billion, while the currency market comes to about $40 billion). Today, Azerbaijan is also actively involved in this exchange circuit.
The MuganBank marketplace is the only platform in Azerbaijan working on Forex today.
First Deputy Chairman of the MuganBank Board, Rasul Jalilov told Trend that from the first day of business the Bank, like all banking institutions, engaged in currency-exchange operations.
"Last summer the bank decided to provide services in this market. Growing individual interest in the Forex market in Azerbaijani over the past ten years prompted us to take such a decision," Jalilov said.
According to him, the introduction of new technologies and the Internet provided people with an opportunity to learn about changes in prices in the international foreign exchange market. Parallel operators in Azerbaijan began offering services to individuals that allowed them access to the Forex market.
"Ten years ago, given the lack of alternative proposals, everyone had to be satisfied with what was on offer. In addition, companies that offered access to the Forex market were registered in Azerbaijan as offering financial-consulting and training services. After having gone through the appropriate training in the methods of the Forex market, they established contact with an offshore company registered in the Bahamas or some other island. The latter guaranteed clients entrance to the Forex market if they transferred their money to it. Many people opt to become clients of these companies, knowing that they were not absolutely legally safeguarded, and that there was no guarantee of a return on their money.
Banks, foundations, insurance and investment companies, large commercial firms and private individuals are all participants in this market. The fluctuation of currencies relative to each other stimulates interest in the market even though making a profit, unlike the stock market, is highly speculative.
Part of the interest in the Forex market stems from the fact that one could make a profit on both the growth or declining rate of currencies, given that their value at any point in time is relative and thus variable.
Jalilov said the idea of organizing a training program for work in the Forex market appeared in Baku Bank Training Center in 2003. Over 7 years hundreds of employees of banks took and passed these courses and today many of them are actually working in the Forex market.
The first bank that provided banking services in this area was MuganBank. MuganBank spent over a year going through the process of preparing the bank's trading platform, setting up necessary documents and full range of services, as well as finding appropriate contractors and suppliers of pockets of liquidity among foreign partner banks. The project was finally launched on July 19, 2010.
Today, MuganBank's Trading Station software and hardware products, developed by the company's Meta Quotes Software Corp - Meta Trader-4, allows everyone access to a full range of banking services in the Forex in real time. The relevant software is available for download and installation on a computer through a contract with MuganBank.
The principal difference between the current market situation and the one that operated ten years ago, lies in the fact that there was no backup guarantee for the monies listed. At that time contracts were concluded on the Forex exchange market with an unknown companies, that did not even allow investors legal recourse to their money. However, today it's possible to conclude a contract with a legitimate financial institution or operator which has the appropriate license.
The process of transition of this segment of the financial markets to banks was common throughout the former Soviet Union. Ten years ago in Russia companies like TeleTrade, Alpari and others provided similar services in their hundreds, acting as intermediaries between the offshore company and interested parties. Today, only a dozen or so are in operation as they were replaced by the banks. In Russia, for example, "Alfabank" is a Forex-operator, while Rietumu Banka operates in Latvia. In European countries the largest operators of the Forex market are Deutsche Bank (Germany), Saxo Bank (Denmark), and MIG Bank ( Switzerland).
It is normal for banks to be competitive in the Forex exchange market. "When the bank sees that there are a number of legal entities and individuals positioning themselves in the Forex market, but who lacks reliability, bank guarantees, and high-quality services at the local market, it takes the provision of these services on itself," Jalilov said.
Being involved in the Forex market brought MuganBank a steady flow of income. Yet, according to forecasts, the bank stands to earn a lot more this year as it clientele increases. "Today the bank has already opened some 100 client accounts. But this is the beginning, if we consider that every day about 20-30 people download our platform, " he added.