The procedure for motivated judgement proposed by the regulator to be clear and transparent

Photo: Matej Kastelic / shutterstock

The Bank of Russia intends to gradually extend the scope of motivated judgement in the course of its supervision of all financial market players. These are the findings of a public discussion that took place following the release of the regulator's consultation paper on the subject.

Overall, the authors of the document won the support of market participants. At the same time, market participants emphasised the need to take into account both a company’s financial market profile and size when setting the scope of motivated judgement. In this way, stage one of the rollout will see motivated judgement being applied in accordance with an organisation's size and significance; application will be further limited to high risk operations and to those fields discussed in the consultation paper.

A risk-based approach to the implementation of motivated judgement suggests the Bank of Russia will be adopting a more tolerant stance towards the regulation and supervision of responsible entities.

Market players further expressed their support for a complex and multi-phased procedure for applying motivated judgement. This provides for a constructive dialogue between the regulator and market participants, alongside a pre-trial framework for appeal. Moreover, a decision made by a collegial body based on motivated judgement, together with the regulator-published review of judgement operation, will ensure integrity, objectivity and consistency in Bank of Russia decisions. Therefore, the regulator-proposed procedure for motivated judgement, from the standpoint of both its formulation and application, is set to be clear, transparent and based on dialogue with regulated companies.

Separately, market participants highlighted the need to specify the procedure whereby motivated judgement would be applied in terms of legislation.

The Bank of Russia intends to refine the findings of the consultation paper and subsequently come up with a bill. Its public discussion is scheduled for spring 2018.

26 December 2017

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