Image source: kremlin.ru
Discussion of the private investment boom in 2020 has reached its highest level: yesterday at a meeting on the situation in the banking sector, Vladimir Putin unequivocally expressed his opinion on the restrictions on unqualified investors.
“It is necessary to protect the interests of people who invest their money in the securities market, but who are not professional investors. We need to take care to reduce their risks. We only lacked the “second edition” of the defrauded equity holders. I ask you to pay the most serious attention to this ” – this is how the president described his vision of what is happening
There is no doubt that in the context of the growth of private investment, the protection of the interests of individuals is necessary. But the implementation of this idea may have different logic: the authorities can choose the path of active management of this risk (development of the rules of the game, legal protection tools), or simply remove the source of the risk.
Regardless of the attitude of the professional community and investors, government agencies tend to choose the second option until the picture is fully understood for them. When a new phenomenon becomes widespread, the state tries to choose the safest option for working with it, regardless of the level of decision-making. We can say that the regulator and all levels of the executive branch are unanimous in imposing restrictions, although everyone sees the risks in their own way.
Still, such a persistent search for problems in working with private investors raises many questions. The increased focus on securities transactions does not seem to be very proportional when the problem of misseling in other financial products is even more serious. The overwhelming number of complaints received by the Bank of Russia is still related to the credit and insurance markets. Despite the fact that the number of investment-related complaints for the period from January to September 2020 really increased significantly (by 66%), their number in the total volume is insignificant – only 1.2 thousand out of 215 thousand.
Distribution of citizens’ complaints received by the Bank of Russia by type of organization (January-September 2020 and 2019). Source: Central Bank of the Russian Federation
However, due to the novelty of the phenomenon, not entirely correct comparisons may appear, for example, with the market of shared construction, where the risks of citizens and the motivation for participation are radically different from the stock market. In this context, the approach of the Central Bank with the introduction of testing looks more liberal than the view of other authorities, and it is even good that the regulator has been given a sufficiently large credit of confidence to develop a policy towards private investors.
Author: Ilya Grigoriev