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

. Last Updated: 07/27/2016

Vyugin Resigns With a Promise

VedomostiOleg Vyugin
Oleg Vyugin, head of the financial markets watchdog, announced Thursday that he was resigning for a job in the private sector, but promised that his investor-friendly reforms over the past three years would continue under his successor.

Vladimir Milovidov, an aide to Prime Minister Mikhail Fradkov, will replace Vyugin next week at the helm of the Federal Service for Financial Markets, the government said.

"The change of management doesn't mean a change of agency's policy," Vyugin said late Thursday.

He said he had been considering leaving since last year and that Milovidov had been chosen from a long list of possible replacements he had given the government.

Milovidov has kept a low profile during his three years as an aide in the Cabinet. From 2000 to 2003 he served as the deputy head of the Federal Securities Commission, the forerunner to Vyugin's agency.

Market players said they did not expect changes in the agency's policy but warned that some reforms could slow down over the next year.

Vyugin, who oversaw the RTS and MICEX, the two main stock markets, said he had a number of job offers, all in business. "I've decided it's time for me to work in the private sector," a visibly relaxed Vyugin told reporters. "I am leaving without regret."

He declined to comment on a Vedomosti report that he had likely accepted a job at Goldman Sachs, saying the shareholders in the company where he hoped to get a senior role needed a few weeks to make a decision. "I hope it will happen in May," he said.

Vyugin previously has worked at Troika Dialog and the Central Bank.

Goldman Sachs' Moscow office declined to comment on whether Vyugin might be offered a job, and a company spokesman in London, Erlendas Grigorovic, said he was unaware of any possible offer.

The Vedomosti report appeared to catch the government off guard, and it hastily posted Fradkov's decrees confirming the shuffle, both dated May 9, a public holiday, on its web site.

"I am sorry he's decided to leave for business," Fradkov said at a Cabinet meeting shown on NTV television. "He's worked over three years in this position and worked well. You can't make someone stay.

"I am hoping his successor will support Vyugin's efforts, which have created a favorable environment for the financial markets," Fradkov said, Interfax reported.

Vladimir Milovidov
Milovidov made no public comments Thursday.

Vyugin said "some of the radical ideas" he had had when he joined the agency in 2004, such as cracking down on insider trading, had faced hurdles that the government only began to address when state companies like Gazprom tapped the markets.

Vyugin has been pushing a raft of bills dealing with mutual funds and transparency through the State Duma, and he promised that Milovidov would see the legislation through.

Vyugin also has urged Russian companies to raise funds at home rather than abroad by introducing the so-called 30/70 rule, which demands that 30 percent of all new equity be floated in Russia. Under Vyugin's watch, the RTS almost tripled, with the total capitalization of the country's companies approaching $1 trillion.

Vyugin's departure "could slow the process of further liberalization of the mutual funds industry, expected later this year," Vladimir Osakovsky, an economist with Aton Capital, said in a research note.

Vyugin might have left because he ran into a brick wall with his efforts to transform his agency into a central financial regulator along the lines of the British Financial Services Authority, said Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, a business lobby group.

Vyugin refused to link his departure to that effort but said a central regulating hub was needed to coordinate the piecemeal efforts of various financial regulators.

Osakovsky, Shokhin and others suggested that Vyugin might be leaving to avoid having to look for a job after the presidential election next year.

"He has perfectly estimated the risks," said Sergei Ulatov, an economist with the World Bank in Moscow.

"Let's hope it won't serve as a signal for many officials to go off into business before the start of a natural Cabinet reshuffle connected to the presidential election," Shokhin said, Interfax reported.

MICEX president Alexander Potyomkin praised Vyugin as the first market regulator who realized the importance of new shares being floated at home and ending the equity drain westward.

Deutsche Bank chairman Joerg Bongartz expressed confidence that Milovidov would follow in Vyugin's footsteps. "Vladimir's return to the [agency] will provide a further positive input going forward, helping to improve the financial system and develop a competitive market in Russia," Bongartz said in a statement.

Vyugin said he would formally leave at the end of next week, adding that he had asked his deputy, Vladislav Streltsov, to stay on until September to ensure continuity.

Streltsov said he did not want "to work here all my life," Interfax reported.

"But we can't all get up and leave," he said.