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Ivolga Capital company blog | For unqualified buyers of HPO, a month before the shutdown. Applied findings from the draft law on restrictions for persons who are not qualifying investors

The draft law “On Amendments to Certain Legislative Acts of the Russian Federation (in terms of determining the amount of information provided to a consumer – an individual when concluding a financial contract, and on restrictions on financial transactions with or at the expense of individuals who are not qualified investors)” passed the first reading in the State Duma.

The text of the bill and the course of its adoption can be found here: https://sozd.duma.gov.ru/bill/1098730-7

In short, out of 17 pages of the document, 2 fundamental points are derived. First, from the moment of its entry into force until October 1, 2021, banks and non-bank financial institutions may be required to reimburse a person who is not a qualified investor incurred due to the conclusion of contracts for complex financial instruments. In other words, sophisticated financial instruments will only be available to qualified investors.

The second important point is the prohibition for unqualified investors to buy bonds on the exchange market below the credit level determined by the Bank of Russia. So far, there is no such level, but earlier representatives of the Central Bank called it as the minimum acceptable rating A- on the national scale.

In general, all that has been said is not new and expected. I set the benchmark for the introduction of restrictions in the middle of spring. Legislators are on track, even slightly ahead of the curve. Apparently, already ± from the beginning of April, the bulk of bonds with a yield of 9% + will be available to a wide range of retail investors only for sale.

As before, I consider the logic of the bill, if not rational, then at least predictable and consistent.

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