State Set to Revise Rules on Trading Halts, Brokerages

The country aims to pass legislation this year that will give brokerages access to the Central Bank's refinancing tools and set rules for halting stock market trading, a senior official said Tuesday.

Russian brokerages have been hit by the 73 percent fall in the MICEX Index since May's peak, as stocks they used as collateral in complex lending schemes lost their value and lending between firms halted.

Alexei Savatyugin, head of the government's task force on financial markets regulation, said the government would create a counterparty for market transactions that will take on the risks and allow the Central Bank to step in.

"The Central Bank will not have to study the individual risks in Troika or Renaissance while risks in the central counterparty are clear," Savatyugin said, referring to two of the country's leading investment banks.

He also said the new legislation would allow the Pension Fund to invest about 350 billion rubles ($12.9 billion) of pension savings in ruble-denominated corporate debt.

The money is currently invested in sovereign ruble bonds at negative real interest rates. Savatyugin said the pension fund would be able to invest in mortgage-backed ruble bonds.

Savatyugin also said the government would set the procedure for halting trade on the stock market. Currently, bourses stop trading when their technical indexes rise by more than 10 percent or fall by 5 percent.

Because of market volatility in recent weeks, the rule has resulted in frequent stoppages of the stock market, disrupting trade and undermining investor confidence.

"We should make trade stoppages more orderly. Market players have a lot of questions and we need to do something," Savatyugin said.