Brokers and managers to operate under basic consumer protection standards

Professional securities market participants — brokers and managers — will be obliged to disclose, to the fullest extent possible, information about their operations and types of risks related to transactions in the securities market. These and other requirements are listed in the basic standards for financial consumer protection as regards brokers and managers. They were devised by self-regulatory organisations and approved on 20 December by the Bank of Russia.

The basic standards set forth the procedure whereby information is disclosed to financial consumers. Brokers and managers will be obliged to have the following information on display at their offices, on websites, in customer account pages and mobile applications: details of a professional securities market participant licence, membership in a self-regulatory organisation, the list of financial services and service regulations.

The basic standards further make it incumbent upon brokers and managers to provide to financial consumers a risk statement, to lay bare the specifics of securities market transactions.

The basic standard for brokerage operations places heavy emphasis on the broker's duty to inform the consumer in cases where mirror trading is used or units in unit mutual investment funds / derivative financial instruments are purchased.

Also, the standards establish requirements for the consumer complaint handling policies. These oblige the broker or manager to send a response to a complaint within 30 calendar days of receipt.

Importantly, information disclosure and consumer interaction rules also extend to the operations of brokers’ or managers’ agents.

The basic standards will be mandatory for brokers and managers regardless of their membership in a self-regulatory organisation; they will come into force on 1 December 2019.