Self-regulatory professional organizations (NAUFOR, SFD and ADB) have begun consultations with the State Duma on the final wording of the amendments that the Central Bank introduced at the end of December. Their results are not yet known at the moment, but the proposals of the representatives have already been formally formulated
1. It is proposed to shift the start of testing of retail investors for knowledge of the risks of structured products to an earlier date – April 1, 2021, and start testing for other complex financial instruments and operations on October 1, 2021. Taking into account the fact that Russian banks issued structured products in 2020 for 232 billion rubles, the haste in resolving the issue with them is understood.
2. The structural products themselves are proposed to be divided into “simple” and “complex”. It is proposed to understand simple instruments as instruments with a capital return guarantee and a simple formula for calculating income (for example, depending on indices or exchange rates). All other tools will be considered complex. Considering that trading in both types of instruments on the part of nekvalov will be available after the introduction and passing of testing by investors, this can again be assessed as a reflection of banks’ fear of missing three quarters of selling such instruments.
3. It is proposed by the regulations of the Central Bank to determine the requirements for information disclosed about each of the complex financial instruments, with subsequent sanctions for material and repeated violations of these provisions. Risk disclosure regulation is a movement in the right direction, however, additional requirements (in addition to the already introduced testing) impose additional risks on organizations selling complex financial instruments.
Lobbying the interests of large players through trade associations looks quite logical, and for the time being, it suits relatively small participants. The current “raw” version of the amendments to the law on “qualifications” creates risks for all market participants, regardless of their size. Bringing it to mind as soon as possible under the feasible pressure of professional participants is a likely prospect in the coming months, because “money does not sleep.”
Along the way, I would like to note one thing that is stipulated “between the lines” of the notorious law and is of interest to many current holders of securities: the requirement to conduct testing will not apply to contracts and instruments that the client at least once entered into or purchased before the law came into force. Again, while there is no enforcement, brokers tend to take a wait and see attitude. But the hope for a favorable and quick outcome is growing.
Author: Ilya Grigoriev