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Well Done: Market Praises Megaregulator

02.09.2014 00:48 / Rossiiskaya gazeta

The MIFC Taskforce summarized the results of the financial market megaregulator’s inaugural year. Last week’s roundtable discussion at the Moscow Exchange brought together the Central Bank and the financial market participants to a shared conclusion: this was a good year. The other takeaway is: most risks failed to materialize. Head of the MIFC Taskforce Alexander Voloshin called the megaregulator one of the most vital and successful state management reforms in recent years.

He pointed out that there were no gaps in regulation, and market participants barely noticed the transitional period. At the same time, said Voloshin, the quality of regulation has already gone up. “The CB has preserved the best FFMS practices, especially the practice of wide engagement of market participants”, he noted.

First Deputy Chairman of the Central Bank Sergey Shvetsov expressed gratitude to the FFMS team, most of which has joined the new organization, adding that the transition was successfully completed in less time than planned. The next stage will last until 2018, with tasks including a switch to macro oversight, the creation of a competitive environment, entering new markets, and improving financial literacy. Shvetsov also emphasized that financial sanctions have turned the megaregulator’s attention to adjusting the financial market development strategy, in accordance with the Central Bank Act. Amendments to the strategy are in progress, and certain adjustments are on their way, says Shvetsov. He did not outline any details, stating that the general strategy focused on Russia’s place in the global market remains unchanged.

Shvetsov called the failure to pass the Self-Regulating Organizations Act a disappointment. He says the CB has taken on the functions of a megaregulator, while SROs are charged with setting business standards in various financial market segments. He stressed that banking regulation is not universally applicable, therefore standards are key to establishing a new financial market paradigm. Despite the SRO Act not having been adopted, there is some progress in this field already. Deputy Finance Minister Alexey Moiseev remarked that the SRO Act has been drafted and is due to be reviewed by the Government in the first half of September.

Financial market participants spoke about their fears of loss of effectiveness and continuity in regulation during the transition to megaregulator. These fears failed to materialize. According to acting CEO of Alliance Life Dmitry Popov, the situation is completely different, the ‘quality leap’ in regulation is already visible, and the insurance community has seen marked improvement in interaction with the regulator. Many points on the collective wish list are now reality, he said. “Insurers had a long-outstanding problem with OSAGO tariffs, which has been approached from an objective point of view”, remarked Popov. “The CB and the insurance community both have a clear standpoint on the actuaries issue and finally we have some common ground to start a normal discussion”.

Interaction with the megaregulator has been praised by the security market participants as well. National Stock Market Participants Association (NAUFOR) Chairman Alexey Timofeev remarked on the decision to lower own capital limits for licensed participants, enforced recently. Timofeev called it the foundation of the mediator industry, adding that the reform has not been completed yet. An important part of it is boosting the role of SROs, since capital limits for some participants are linked with SRO membership.

National Non-State Pension Funds Association (NAPF) Chairman Konstantin Ugryumov said that the pension fund community has supported maximum concentration of regulation and oversight functions at the CB. The market was previously regulated by four bodies – the CB, Minfin, Labor Ministry and FFMS, which meant that corporatization of NPFs and establishing a guarantee system for pension savings was impossible. Along with other financial market participants, he noted the excellent level of interaction with the megaregulator, stating that ‘the voice of the market is heard like never before’. Ugryumov said that the main concerns were forcing banking regulations on the pension market, which “has not happened yet”. He said that tougher regulation and control for NPFs was what the market needed.

On the whole, say the market participants, a year is not enough for making conclusions. Many things cannot be done that quickly, and the real impact of the reform will become more evident by 2018, when the final stage of transition to the megaregulator model is over.

Evgenia Noskova

Financial markets megaregulatorProject Group №1