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‘Financial Market Megaregulator: First Year Results’ Roundtable

27.08.2014 19:09 / MIFC

On 27 August, Moscow Exchange hosted a ‘Financial Market Megaregulator: First Year Results’ Roundtable by MIFC Taskforce. Speakers included Head of MIFC Taskforce Alexander Voloshin, First Deputy Chairman of the Bank of Russia Sergey Shvetsov, Deputy Finance Minister Alexey Moiseev, Deputy CEO at Sberbank Bella Zlatkis, NAUFOR Chairman of the Board Alexey Timofeev, NAPF Chairman Konstantin Ugryumov, First Deputy CEO at Alyans Insurance Dmitry Popov, representatives of market participants, SROs and Moscow Exchange.

In his welcome address, Alexander Voloshin called the establishment of the megaregulator “one of the most vital and successful state management reforms in recent years”. He said he was pleased that the discussions and the drafting of the Megaregulator Act were open and expedient, with active input from market participants. Initial debate took place in August-September 2012, and the new regulator became operational on 1 September 2013. The transfer of FFMS functions to the Bank of Russia-based megaregulator was performed smoothly, and no regulatory hiatus occurred during the transition.

“The quality of regulation has evidently gone up already – meaning that the megaregulator has hit a key objective. I would like to thank our Central Bank colleagues who, while making things better, preserved the useful practices that FFMS had perfected, especially the practice of wide engagement of market participants”, stressed Voloshin.

“This was the year when the FFMS regulation culture proved effective – most of it we adopted and continue to preserve and build upon. The market well and truly backed us. We felt support from the MIFC Taskforce and the Finance Ministry. The transition went smoothly and our team is in place and fully functional”, said Sergey Shvetsov.

The moderator, MIFC Taskforce’s Ekaterina Malofeeva, brought up the risks identified by market participants in November 2012 and related to the Bank of Russia-based megaregulator. The key risk was disruption of continuity of regulation and oversight in the transition period. The second important risk was creating a monster ministry aggravated by non-banking financial market fears of being overlooked by the megaregulator. Non-banks also pointed at potential red tape issues when dealing with the megaregulator.

Alexey Moiseev replied: “Nothing stopped the Bank of Russia from organizing their new function, and not losing continuity of financial markets regulation at the same time. Last year and the first half of this year saw extremely crucial reform take place. It is incredible that we managed to change horses midstream, cross the river and still have all our horses”. Coordination liaison between Minfin and the Bank of Russia has also improved greatly, Moiseev stressed.

NAUFOR Chairman Alexey Timofeev thinks one year is not enough to draw conclusions on the general outcome of the reform: “Some risks still worry us, since we are unable to tell to what extent, for instance, institutional risks are mitigated by the team and whether these risks pose a threat in the event of HR changes”. The reform is not over until the SRO Act has been passed and the regulatory and oversight jigsaw has fallen into place, said Timofeev.

Bella Zlatkis, Deputy CEO at Sberbank: “It is great to have the megaregulator in place, one that understands the needs of the market. There has been no rise in bureaucracy as far as I have noticed. Compared to other regulators, of which there are plenty, this megaregulator is the best and most worthy example of good management, competence and wise HR choices by the government”.

Act 251, establishing a Bank of Russia-based financial market megaregulator, was enacted on 1 September 2013. Going forward, all financial markets regulatory, control and oversight functions were transferred to the CB.

The Act was passed by the State Duma on 5 July 2013, adopted by the Federation Council on 10 July and signed by the President on 23 July 2013.

On 17 October 2013, MIFC Taskforce hosted a Financial Market Regulation Policy Markers strategic session, following which the Bank of Russia produced a 233-Step Financial Market Development Program.

Financial markets megaregulator