About us / Project Groups

Project Group №2 →

Corporate law and governance, financial transaction taxes

Project Group №1

Financial infrastructure and financial market regulation


Back to Media

Duma passes IPO/SPO bill in second reading

05.07.2022 18:41 / TASS

The State Duma adopted in the second reading a bill aimed at developing the institution of public placement of securities on the Russian financial market. The document, which amends the law "On combating the misuse of insider information and market manipulation," was initiated by a group of deputies and senators headed by Anatoly Aksakov, chairman of the State Duma committee on the financial market.

An integral part of the IPO / SPO mechanism in European countries is the institution of price stabilization - maintaining the price of placed securities for a certain limited period of time from the date of placement in order to form a fair market price during the placement of securities securities and reducing the pressure on their price due to an oversupply for the sale of such securities. The draft law proceeds from the fact that stabilization is carried out by a trading participant, which can perform transactions on its own behalf and at its own expense, or on its own behalf and at the expense of the client, if there are relevant instructions from the client. At the same time, maintaining prices in connection with the placement and circulation of securities at the expense of clients is attractive for issuers, since international investors, among other things, take part in the IPO / SPO, the accompanying materials to the document say.

According to the draft law, actions of a trading participant's client are not market manipulation if such actions, as well as actions of a trading participant performed on behalf of the client, are aimed at maintaining prices or demand for securities in connection with the placement and circulation of securities.

"Taking into account the fact that the actions carried out within the framework of stabilization are similar in their mechanism to those carried out for the purpose of manipulating the market, which is a gross violation in the financial market that negatively affects its attractiveness, the withdrawal of stabilization actions of clients from the elements of manipulation market is possible only when requirements for such activities are established. In this regard, the competence of the Bank of Russia to establish the procedure and conditions for activities to maintain the parameters of exchange trading in order to recognize it as bona fide is supplemented by a similar competence of the Bank of Russia in relation to stabilization carried out with the participation of a client - a trading participant", - the explanatory note says.

The draft law provides that the specific conditions for maintaining prices and demand for securities (for example, the duration of stabilization, the price level at which stabilization is carried out, the requirements for marking instructions (instructions) of clients submitted in pursuance of stabilization obligations), as well as the procedure for conducting stabilization are established Bank of Russia.

“Further on, the Bank of Russia may establish requirements for trading participants that carry out maintenance, as well as their clients (in particular, for the size of the trading participant’s own funds, that the trading participant’s client has a certain license of a professional participant in the securities market, the status of a qualified investor, etc.). ),” the authors of the bill believe.

The norms of the bill "are able to have a generally positive impact on the development of the Russian financial market, creating favorable conditions for the entry of more companies into the market and providing additional protection for the rights of investors as part of the placement of securities," the authors of the document point out.

The amendments adopted in the second reading establish that a credit institution has the right to carry out transactions on operations, including with processed natural diamonds.

It also provides that the Bank of Russia is obliged, in accordance with the procedure established by it, to disclose on its official website the following information: on the suspension or cancellation of a license to carry out professional activities in the securities market or a license to carry out another type of activity licensed by the Bank of Russia, if the basis for accepting this decision is a violation of the requirements of the law and regulations adopted in accordance with it, on the administrative penalties imposed by him for the unlawful use of insider information and (or) market manipulation, on sending an order to eliminate the relevant violations, on agreements concluded in accordance with the norms of the Law "On countering the misuse of insider information and market manipulation".

Financial markets megaregulatorProject Group №1