Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Finance Industry Left Guessing How New Regulator Will Work

A day after President Vladimir Putin created a super-agency to oversee the financial markets, industry players were still clueless as to how exactly the new body would work.

"Right now, absolute uncertainty reigns," said Zoya Konovkova, a spokeswoman for the RTS exchange.

Prime Minister Mikhail Fradkov on Wednesday said the new Federal Financial Markets Service will report directly to him, but as yet the new agency has no staff and its head won't be announced for several days, leaving the country without a stock market regulator since the Federal Securities Commission has been abolished.

"People are worried because of this uncertainty. We are not sure what the structure of the new agency will be, who will head it -- we don't know anything yet," Konovkova said.

The idea to merge the country's financial regulators had been bandied about for months before Economic Development and Trade Minister German Gref officially endorsed it in December. Still, it came as a surprise to most people, especially to those at the FSC.

According to Putin's decree, the new service will take over the control and oversight functions of the FSC, as well as the Finance Ministry's supervisory role over the auditing industry and the Labor Ministry's role as private pension fund watchdog. It will also inherit the financial market functions of the now defunct Anti-Monopoly Ministry and be the sole supervisor of the stock exchanges.

The current lack of clarity aside, most traders and analysts polled said they welcomed the change. "The old securities commission was a bit bureaucratic, and this seems like an efficiency move," said Nick Mokhoff, head of sales trading at Brunswick UBS.

Many traders criticized former FSC chairman Igor Kostikov for launching what they said were self-serving attacks on large investment banks, and for failing to make trading more transparent and accessible.

"It's pretty clear for insiders, but the people who are sitting in London or New York haven't got a clue," said Sam Barden of Trust.

Most market participants polled said it was unlikely Kostikov would be tapped to run the FFMS. The front-runners appear to be State Duma Property Committee chief Viktor Pleskachevsky and former FSC deputy chairman Vladimir Milovidov, who now heads the government's department on financial markets.