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Financial Market Unions Want More Power for SROs

03.12.2012 13:17 / Interfax

Financial Market Council has circulated a letter to Minfin, the Central Bank and Federal Financial Market Service (FFMS) calling for stronger self-regulation in the financial market as part of the ongoing regulatory reform.

The letter has been published online on NP RTS CEO Anatoly Gavrilenko’s official website.

Apart from RTS non-commercial partnership, Financial Market Council members are the All-Russia Insurers Union (VSS), National Stock Market Association (NFA), National Asset Management League (NLU), National Stock Market Participants Association (NAUFOR), Professional Registrar, Transfer Agent and Depositary Association (PARTAD), National Microfinance Market Participants Partnership (NAUMIR), and National Private Pension Funds Association (NAPF).

The letter states that SROs are a vital part of all civilized financial markets. SROs are better suited for quick and qualified mediation between market participants and their clients, as well as compliance control.

"In this regard, financial market regulation reform directed at establishing a megaregulator must at the same time increase the power of SROs and define their functions, as stipulated by applicable laws", says the letter.

Market participants’ associations concur that the major part of today’s requirements to licensed financial market participants (except banks) must become SRO standards.

At the same time, states the letter, mandatory SRO participation must be introduced following a “statutory transition period". SRO standard compliance must be legally binding for all market participants.

Authors propose delegating to SROs compliance control over state licensing requirements as well as document check procedure for license applicants.

"Regular audits of financial market participants will gradually be delegated to SROs, inasmuch as control over members’ compliance with professional standards, including licensing requirements and partially prudential norms, is the function of SROs”, says the letter.

The letter also envisions a minimum 50% SRO membership in the collegiate management body of the state regulator "in order to maintain system-wide regulation in the non-banking financial market".

SRO heads also propose including their representatives in the regulator’s Administrative Code Enforcement Commissions for non-banking financial market participants. In the mid-term, SROs are to be granted the right to conduct inquests into Administrative Code violations.

A joint SRO registrar is to be kept by an authorized federal executive body with SRO control functions.

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