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RECAP: MIFC Ready by Autumn

18.06.2011 14:55 / Interfax

Preparatory stages of the MIFC project could be finalized in October-November this year. A number of issues remain unresolved, while the authorities consider moving the MIFC to the city centre or outside the Ring Road.

WHEN?

Preparatory stages of the MIFC project could be finalized in October-November this year, said Urs Rohner, Co-Head of the MIFC IAB and Chairman of the Board at Credit Suisse.

"The groundwork that we have planned will be finished by October-November, so the IAB can meet to announce the creation of MIFC ", said Rohner at the IAB meeting with President Medvedev in St Petersburg this Saturday.

WHERE?

One of the points raised at the meeting was the location of MIFC, as if the authorities do not realize that MIFC is not a territory, that instead of building a reservation for investors they can improve business conditions, investment climate, investor protection, market infrastructure etc.

"I think the city center, partially vacated by state offices, could serve as MIFC headquarters ", said Medvedev.

He also pointed out that the decision is “open for discussions”, and indicated another route. He stressed that improving the overall infrastructure in Moscow is an important factor for MIFC. “Yesterday I spoke about boosting the development of Moscow, and I hope this is important not only for the city residents, many of whom suffer from overcrowding, not only for state authorities who should have started paying more attention to the city needs – this could be stimulated by the move – this is also important for MIFC itself”, said Medvedev.

However, Sberbank CEO and IAB member Herman Gref appealed to the President for “authorizing the move of MIFC outside the Ring Road”. “We already have a prospective location. We think this could solve a number of city infrastructure issues, divert traffic out of Moscow and most importantly create an ultramodern financial infrastructure”, he said.

Gref pointed out that the task could be solved in a relatively short time, but will have to be commissioned by the President. “This will speed up the process”, he added.

“All right, the commission is agreed. Will the Administration please provide the instructions to the Moscow Mayor and government and the Moscow Region Governor”, said Medvedev at the IAB meeting in St Petersburg this Saturday.

As reported, in his Friday speech at the SPIEF, Medvedev mentioned the possible stretching of Moscow city limits and the creation of the “Capital Federal District”. “To adjust the Moscow development to the needs of MIFC and to improve the quality of life for many people, we could also consider stretching Moscow city limits. This means creation of the “Capital Federal District”, spreading beyond Moscow city limits”, he said. Medvedev pointed out that creating the Capital Federal District should be accompanied by transferring a substantial part of administrative functions and state offices outside Moscow.

PROJECT GROUPS

Gref has stated that MIFC development will require nine Project Groups. Currently, the agenda is clear and “we have got the leaders of the world’s largest financial institutions to chair each group”, said Gref.

According to Gref, the Macroprudential Regulation Group will accumulate the methods of mitigating system risks. “We will work on subsidiary relations, including risk management for markets with foreign participation”, he said, pointing out that Dr Joseph Ackerman of Deutsche Bank AG is likely to co-head the Group with a “Russian expert, probably a regulator with macro background”.

The second, Debt Market Group, says Gref, will cover lender rights protection, bankruptcy procedures, bondholder meetings as well as “fundamental tasks related to absence of ‘long money’ in Russia such as the budget and monetary policies”, he said. JPMorgan Chase CEO Jamie Dimon and Gref were approached to co-head the Group.

The third, Equity Market Group, will handle effective privatization, building infrastructure to accumulate private investment, international equity market aspects, stimulating trans-border trading and improving the national equity market liquidity. This Group is tentatively co-headed by VTB President-Chairman of the Board Andrei Kostin and Goldman Sachs President Lloyd Blankfein.

The fourth, Commodities Market Group, says Gref, will concentrate on warehouse bonds, double warehouse certificates, improving the national commodity market liquidity, taxation of derivatives. This Group is tentatively co-headed by Credit Suisse Group AG CEO Urs Rohner and Gazprombank President Andrei Akimov.

The fifth is the Derivatives Trading Group. "The crisis indicated that market regulation needs considerable optimizing, and nevertheless these markets are highly important for financial market development, a normal financial system cannot move forward without them", said Gref. "We are talking securitization development, financial derivatives taxation. Proposed co-chairs for this Group are Morgan Stanley CEO John Mack and Andrei Kostin", he said.

Group Six, according to Gref, will train arbiters for the Arbitrary Courts, developing private mediation. It will be headed by Presidential Aide Larysa Brycheva.

Group Seven will develop the technological infrastructure of the financial market. NYSE President Duncan Niederauer has agreed to co-chair the group with MICEX President Ruben Aganbegyan.

Group Eight will be charged with the city infrastructure, one of its Chairs will be Vnesheconombank Chairman Vladimir Dmitriev.

Group Nine, according to Gref, will work with investment projects, Public Private Partnership development programs. Businessman Suleiman Kerimov has been approached to head this Group.

Head of Troika Dialog Ruben Vardanyan has proposed two more Groups. One for MIFC international marketing, the other – a group of investors to monitor international investors’ needs for Russia. Russian President Dmitry Medvedev supported Vardanyan’s idea.

INFRASTRUCTURE

Head of the MIFC taskforce Alexander Voloshin hopes that the Centralized Depositary issue will be resolved by the end of the year. "We have opportunities to solve the problem this year," he said at the Saturday meeting with the MIFC International Advisory Board members in St. Petersburg. He mentioned that the final meeting on the subject will be held in the foreseeable future with the Russian Deputy Prime-Minister and Finance Minister Alexey Kudrin.

Besides, Alexander Voloshin informed that at the next Financial Market Development Board meeting they are going to discuss two issues: corporate management improvement from the point transparency legislation requirements for Russian companies, and creating a structure for the promotion of MIFC. Draft proposals on both issues are ready, and will be implemented after discussion at the Board meeting.

The Board meeting can take place by the end of June.

Alexander Voloshin`s Taskforce is also working on the development of arbitration, an issue with an outreach beyond the financial market. Several pilot projects are likely to be implemented in this regard.

Dmitry Medvedev stated that Russian issuers will implement IFRS. "I have decided to introduce IFRS for Russian issuers. I have made all necessary arrangements with the Government and the Ministry of Finance", said the President.

Moscow authorities will approve 15 programmes to develop all spheres of life in the capital by October, and all of them will be financed, Mayor of Moscow Sergey Sobyanin informed.

"Today we are developing 15 programmes for the years 2012-2016, which will cover all the key issues to provide an acceptable infrastructure for the International financial center. The programs are aimed at creating a comfortable environment throughout the city", Sergey Sobyanin said on Saturday at the meeting of the Russian President with the MIFC International Advisory Board.

According to the Mayor, programmes are directed at resolving traffic problems. They also cover education, health care, environment, security, information support of all spheres of life in the capital. "We will approve these programmes in October at the latest. They will be financed by budget and non-budget sources", said Sergey Sobyanin.

Project Group №1Ruben AganbegyanJamie DimonVladimir DmitrievHerman GrefSuleyman KerimovAndrei KostinAlexei KudrinJohn MackUrs RohnerSergei SobyaninRuben VardanianAlexander Voloshin