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Financial Market Council for Detailed Megaregulator Plan

17.10.2012 12:44 / Interfax

The Financial Market Council has forwarded a memorandum on financial market regulation and oversight reform to President Putin, according to RTS Non-Commercial Partnership (Council member) release.

In early October Putin stated that the controversial concept of unified Central Bank-based financial regulation should be debated with experts, and decisions must follow as soon as possible. "The government proposes FFMS unification with Central Bank. The idea has its followers, and opponents as well. I suggest that the banking and investment communities and all interested parties join in the debate", said Putin.

The RTS release states that the memorandum summarized an 11 October debate in response to Putin`s suggestion to have the megaregulator discussed by the banking and investment communities.

The memorandum that effective market participants oversight cannot be the sole purpose of financial authority reform. The main goal of the reform should be dynamic growth of the Russian financial market in the best interests of national economy.

According to the memorandum, all parties have arrived at a common standpoint on the megaregulator, namely that the financial authority reform should follow a thorough study of its concept, the strengths/weaknesses of each scenario, analysis and resolution of every potential conflict of interests that could arise within the financial regulator.

The professional community should take a most prominent part in legislative base reform, beginning with draft concepts of relevant amendments. Motivated and transparent actions of the megaregulator, its preparedness for public debate on each decision as well as the regulator`s liability for action or inaction should form the cornerstone of the megaregulator principles.

In the interests of the reform, SROs must have a detailed status in the new regulation and oversight system, with their rights and responsibilities clearly defined. SROs must be delegated certain functions of the regulator in order to optimize its resources, streamline processes and make financial market regulation more flexible and expeditious.

The memorandum notes that all parties of the debate have agreed that one regulator should be given all legislative powers in non-banking regulation, bypassing all intra-ministerial approvals in the process of passing regulations.

The Council has agreed that all prudential oversight functions for key market participants should be performed by the Central Bank, with relevant powers to regulate all key institutions, including non-banks.

Regulation should also be consistent: the reform must allow uninterrupted amendment of laws and regulations by amending existing documents.

The Financial Market Council was established on 25 May 2012 by heads of non-commercial financial market SROs. Council members are the All-Russia Insurers Union (VSS), the National Stock Market Association (NFA), the National Asset Management League (NLU), the National Microfinance Market Participants Partnership (NAUMIR), RTS non-commercial partnership, Professional Registrator, Transfer Agent and Depositary Associaton (PARTAD), the National Stock Market Participants Association (NAUFOR) and the National Private Pension Funds Association (NAPF).

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