List of instruments for retail investors to be expanded: discussion at Bank of Russia
The Bank of Russia has suggested discussing new opportunities for diversifying non-qualified investors’ portfolios. In particular, these are a reduction in the minimum amount of investment in closed-end real estate unit investment funds and a decrease in the rating of bonds purchased without testing from ‘AAA’ to ‘A’. Another option considered is the sale of some simple structured income bonds, provided that they have a transparent yield calculation formula and special requirements for basic assets are complied with. These initiatives were discussed at the meeting of the Expert Board for Retail Investors Protection under the Bank of Russia.
The Board participants generally supported such approaches and agreed about further discussions on specific instruments.
Furthermore, they basically supported the rationale for introducing new more flexible eligibility criteria for receiving the qualified investor status. The key parameters in this regard should be knowledge and experience, rather than the value of assets as it does not characterise how well investors comprehend the risks inherent in especially complex financial instruments. To this end, the Bank of Russia suggests taking into account a degree in economics from any higher educational institutions (and not only some of them, as now). If a person does not have a degree in economics, the Bank of Russia suggests providing for the option of taking the examination for the qualified investor status. According to the regulator, the requirements for the value of assets as an independent criterion should be raised stage by stage, which correlates with the approaches applied in many countries worldwide.
In addition, the Board participants supported the idea of creating a unified register of qualified investors. Thus, investors will not need to confirm their qualification when they choose another broker, which will also promote competition for clients.