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. Last Updated: 07/27/2016

Vasilyev Says New Rules To Regulate Wild Market

Russia's securities watchdog on Friday outlined a strategy it hopes will attract investment in the private sector and lure Russian savings back into capital markets.

The Federal Securities Market Commission, restructured under a July 1 decree issued by President Boris Yeltsin, wants to institute stricter rules for market participants, exchanges and depositories, improve information disclosure and beef up requirements for issuing brokers' licenses.

The ultimate goal is to "create safe and reliable financial instruments for investing the savings of the [Russian] population" in so-far volatile Russian markets, Dmitry Vasilyev, chairman of the revamped commission, said at a news conference.

The 30-page "Concept for the Development of the Stock Market," also confirmed by a July 1 Yeltsin decree, aims to reassure both foreign and local investors that structures will be in place to protect them and their money.

"The conception sets forth guidelines for the development of the capital market ... because successful completion of reform is impossible without attracting investment in the Russian economy," Vasilyev said.

Many issues have yet to be resolved, however, including how brokers, commercial banks, investment funds and other market participants will be licensed. While the document represents concrete progress toward stricter market regulations, it also "raises quite a large number of problems," Vasilyev added.

"Brokers have escaped much of the regulation" of the market to date, he said, promising tougher oversight of brokers' settlement operations as a condition for licensing.

Headed by Vasilyev, the restructured commission consists of six permanent members reporting directly to Yeltsin. The structure effectively de-politicizes the commission, making it a sort of executive agency rather than one responsible to the State Duma, the lower house of parliament.

In addition, the commission will work out proposed regulations with a 15-member advisory council made up of government agencies such as the Central Bank and with a 25-member expert council, also including government agencies and market participants.

A system of indicators for stock market analysis will be put in place, and the government will support the creation of independent ratings agencies and specialized publications about the market, a commission statement said.

Vasilyev said the commission soon will hold a special round-table with Central Bank deputy chairman Andrei Kozlov and the authors of the stock-market development document to prepare concrete rules for depositories and brokers doing the custody work of mutual funds.

Vasilyev added that the government will also soon consider changes in the criminal code to enable the commission to impose sanctions for securities market violations. The measures already have been submitted to the Duma, he said.

The document also calls for a less intrusive role by the state, which would turn over more power to self-regulatory organizations such as NAUFOR, the newly rechristened National Association of Stock Market Participants.

?Ukraine has passed a law granting official status to the commission regulating security markets, Reuters reported from Kiev.

The six-member State Commission for Securities and Capital Markets, headed by a presidential appointee, will supervise the issue and trading of domestic and foreign securities in Ukraine.

Working with the central bank, it also can regulate commercial bank depository and clearing systems.

The law, passed late Thursday, directs the commission to register financial markets and market participants. The commission has the right to fine or halt the activities of market participants contravening the rules.

The commission previously worked under a 1991 law, but the newer legislation officially registers its presence and activities.