Russian Forex Dilemma: Leverage Cuts May Trigger 50% Trader Exodus

The Russian Forex market is at an awkward historical juncture. On the one hand, regulators aim to achieve financial sovereignty and "import substitution" through stringent restrictions; on the other hand, the latest industry research indicates that this excessive protectionism is driving over half of active traders toward offshore markets.

To understand the current anxiety in the Russian Forex market, one must look back to December 2018. At that time, the Central Bank of Russia (CBR), due to its extreme aversion to retail risk, summarily revoked the licenses of five major brokerage firms, including Alpari, Forex Club, and TeleTrade. This historic event instantly "vacuumed out" the compliant local market, leaving only a handful of bank-backed dealers (such as Alpha-Forex, VTB Forex, etc.) struggling to survive.

Seven years later, the side effects of this "purist" regulation are beginning to manifest.

A recent study commissioned by the Association of Forex Dealers (AFD) and conducted by the Financial University under the Government of the Russian Federation reveals a harsh reality: the "sterile" environment the regulator sought to create has not allowed the local market to flourish, but rather has led to the shrinking of the client base. The study warns that if regulators continue to tighten policies, particularly by further lowering leverage, the compliant market faces irreversible stagnation.

The 1:30 Leverage Cap and the Offshore Migration Wave

Currently, the maximum leverage permitted for licensed Russian dealers is 1:50. However, according to the regulatory trends disclosed in the research report, this cap is planned to be further reduced to 1:30 in 2027.

What does this mean for retail traders?

50% Attrition Rate: Research data shows that if leverage drops to 1:30, over 50% of active traders indicate they will not hesitate to close their domestic accounts and move to offshore brokers.

BrokersView notes that this planned reduction is not isolated. The CBR is simultaneously advancing reforms to the Law on Qualified Investors, planning to significantly raise the asset threshold for qualifying as a "Qualified Investor" from 6 million rubles (with discussions suggesting increases to 12 million or even 24 million rubles). This means ordinary traders face a double squeeze: limits on low leverage and an increasingly distant barrier to obtaining "high-leverage status."

Regulators have long adhered to the logic that: High Leverage = High Risk = Retail Loss. However, Alpha-Forex, the dominant firm holding 78% of the compliant Russian market share, is challenging this conventional wisdom with internal data.

By analyzing client trading data from 2023 to 2025, Alpha-Forex found that:

In the 1:30 to 1:50 leverage range, the monthly losing account ratio was 53.5%.

Under the extremely low leverage below 1:30, the losing ratio was still as high as 48.9%.

The data suggests that slashing leverage does not significantly change the probability of retail trader loss, but it does drastically kill trader activity—clients with higher leverage typically execute trades 1.5 to 2 times more frequently than those with low leverage. As the Financial University researchers stated, loss is often an objective characteristic of financial markets, not solely the "fault" of leverage.

The Irony of Sanctions: Pushing Capital to "Darker" Shores

In the current geopolitical climate, Russian financial regulation faces an ironic predicament.

To counter Western sanctions, Russia is actively pursuing a strategy of "import substitution" in the financial sector, aiming to keep capital onshore. However, the outdated Forex regulatory mindset is working against this goal.

As an Alpha-Forex expert pointed out: "Current over-regulation does not protect traders; it pushes them toward unregulated offshore companies."

BrokersView believes the situation is more severe than it was in 2018. Back then, Russian traders leaving the homeland could still choose European brokers regulated by the FCA or CySEC. Today, these avenues are largely blocked due to sanctions and payment freezes. If traders leave the local Russian market, their only recourse is platforms registered in "deep offshore" jurisdictions like Saint Vincent or Mauritius, where virtually no legal protection exists.

The Russian Forex market stands at a crossroads. The industry's proposed "differentiated leverage" solution (1:100 for qualified, 1:50 for ordinary investors) represents a compromise aimed at preserving liquidity.

For the CBR, if it continues to ignore the market's need for flexibility and insists on the "suffocating" 1:30 standard in 2027, the ultimate outcome may be a Russian market that is absolutely safe and compliant, but also absolutely deserted—a "zombie market."