It is hard to tell whether all segments of the financial market are ready for self-regulation. Speaking of insurance, in recent years the intellectual, management and value potential of this market has reached its peak – and after all the change that we have gone through along with our society, the market has reached fruition. Five major industry unions have stated this in a letter to Minfin and the CB, saying that we are ready for consolidation, ready to delegate powers to a new regulator and share responsibility with him – the Central Bank monitors production forces and will distribute functions accordingly.

Minfin and the CB have drafted the principal version of the financial market SRO act. There are certain details in the draft that pose complex organizational tasks before the insurance market. However, our main concern is balancing responsibility and functions, rights vs. responsibility.

If the CB delegates to SROs functions like pre-licensing practice, standards, business practices and ethics, etc – in return for mandatory membership, which is a strong discipline factor for the market, only one issue remains – supervision over SRO. Some of my colleagues question the heavy involvement of the CB in a non-government organization, including budget and executives approval. Personally, I am not baffled by this. I have many years of experience, starting with the USSR Central Trade Unions Council, a major NGO in the Soviet Union that was still kept on a tight leash by the Central Communist Party Committee.

This is not to say that we are going back to the Soviet times. Some sort of co-subordination, some superior level of authority is nothing unheard of in global practice. Centuries had passed before France and Germany reached a balance of delegation and control: German oversight has deep respect for the German Insurers Union, and vice versa. One cannot live without the other. This symbiosis is what we will eventually arrive at. The CB supremacy over us is absolutely understandable and adequate, but the devil is always in the details – and we are starting to debate these details.

Today, relatively young, promising, yet experienced professionals who have been involved in CB management of banking, inflation and other processes, are paying close attention to the insurance market situation. Judging by my consultations experience, they hear many things. I am not sure what the end product will look like, but there are good chances it will be adequate.

From the self-regulatory standpoint, some practices will be “inherited”. There are three specialized laws in our market: car insurance, agricultural insurance and liability insurance in high-risk production facilities. The laws stipulate a degree of self-regulation in establishing compensation and reserve funds and other procedures.

The main dilemma for the CB in the insurance market is this: should management standards be delegated to a single SRO center (such as the All-Russia Insurers Union), or should rules and standards be set for each market segment. The consensus today is that with the colossal workload for the CB, splitting each financial market segment, including insurance, in 5-6 types to introduce multiple regulation and standards is very costly. It seems that the approach to self-regulation of insurance as an industry is likely to prevail.

The Megaregulator Act stipulates very clearly the aims of the state. What happens next is left to common sense. The Central Bank Chairman Elvira Nabiullina is an analyst who thinks big. I am very positive about us working together for the benefit of the market.

28.11.2014 15:03 / Elvira Nabiullina

OUR POLICY GOALS MUST BE CLEAR A little over a year ago, the Bank of Russia became megaregulator, spreading its control and oversight functions to other financial market segments besides banking. It’s a mass of work, tens of thousands companies: 572 in insurance, 1790 in collective investment, almost 4.5 thousand in microfinance, some 8 thousand pawn shops et cetera. Compare this with a mere 842 companies in banking services, 790 of which are banks.

29.04.2014 15:56 / Denis Spirin

The Ideal Model: Why We Need the New Corporate Code The new Corporate Governance Code, passed by the Government and Russia’s financial market megaregulator, the Bank of Russia, deserves to be the news of the day. Sceptics may object that the Code is merely a recommendation, and the best practice of corporate governance contained therein is detached from reality.

09.04.2014 14:06 / Anatoly Karachinsky

IDENTIFYING PERFORMANCE RESERVES OF FINANCIAL MARKETS Russia’s financial market produces a staggering billion-plus paper documents yearly. Every individual has to open a bank account, buy insurance, pay fines, taxes, and housing bills. Most people do it by signing papers and wasting time in queues. Most companies have to keep paper copies of their official reports and electronic transactions.

25.02.2014 13:30 / Anna Kuznetsova

New listing rules will boost transparency, strengthen corporate governance Moscow Exchange is currently reforming its listing rules, a process that will strengthen the market for both issuers of stocks and bonds, while providing domestic investors with an opportunity to diversify their investment portfolios.

28.01.2014 15:10 / Ksenia Yudaeva

Reserve Currencies and the Role of the Ruble The Bank of Russia policy focus has shifted to inflation targeting, sparking a debate on intervention practice and prompting us to reconsider the prospects of the Ruble as a reserve currency.

14.10.2013 13:35 / Alexei Kuznetsov

Taxes and Russian IFC’s Competitive Edge Taxation should not hinder financial market development. This is the motto of MIFC Taskforce’s Tax Project Group that drafts tax reform proposals.

02.10.2013 12:00 / Sergei Shvetsov

The Regulator Needs to Hear the Market A month has passed since the financial markets megaregulator was established. We have solved the key task for the transitional period of FFMS-Bank of Russia merger — maintaining continuity of service, essential for the functioning of the market. We have now initiated systematic analysis of current affairs — from the regulation, control and oversight perspective — in each financial market segment.

11.09.2013 13:45 / Alexander Voloshin

Reforms that benefit the market More than three years have elapsed since Moscow International Financial Center Taskforce was established. We have managed to achieve various degrees of progress in all key performance areas of Moscow’s development as an international financial center.

11.09.2013 12:15 / Igor Jurgens

Self-regulation is balancing rights and responsibility The adopted financial market self-regulation law and the implementation of related practices is an evolutionary step for production forces, to borrow a scientific term. From a common perspective, self-regulation is an absolute must, with the increasing importance of roles played by civil society and the business community. The pendulum has swung from unchecked democracy of the early 90’s to equal partnership of the 00’s to state supremacy. The pendulum must be kept on track: the state is unfit to handle all regulatory functions without considering the interests and healthy intentions of the business community.

11.09.2013 11:59 / Oleg Vyugin

On megaregulator priorities The key starting objective for the new regulator is to reconsider the paradigm of financial regulation based on the prospective advantages of the ongoing megaregulator project. We must aim to minimize the negative impact of structural overhaul of the regulation system.

11.09.2013 11:45 / Alexey Timofeev

The market anticipates Central Bank’s attention to business specifics The establishment of a Central Bank-based megaregulator is a pivotal change in the entire financial market regulation and oversight system. The reform is one of the key phases of system development. An outstanding contribution to the financial market has been made by the Central Bank predecessors – FFMS, FCSM, Minfin, the Russian Insurance Supervision Service and the Labor Ministry, and it would be inappropriate to call the new reform a clean-up of their failed attempts. Using failures as a pretext to delegate financial market regulation functions means going back to square one, a way to justify any regulatory measures that would appear an improvement by mere contrast. This is misleading, since the financial market that has taken shape in Russia is far from its nascent stage.