Bank of Russia devises requirements to prevent conflict of interest for professional securities market participants
The Bank of Russia is proposing measures to prevent the occurrence of a conflict of interest for professional securities market participants which will enhance the protection of investors’ rights and interests. The relevant draft ordinance has been published on the Bank of Russia’s website to be discussed with the market community.
The draft stipulates cases that may be classified as conflicts of interest: e.g., gaining a benefit by a professional market participant to the detriment of a client’s interests, or receiving a fee from a third party for services rendered to a client.
The ordinance prohibits a range of actions on the part of a professional market participant that always undermine clients’ interests. Specifically, these are cases when a professional market participant settles any transactions at its own expense after having received a client’s order where they deteriorate transaction terms for the client. Another example is a situation where the largest benefits gained as a result of obtained transactions closed at the expense of several clients (within the same order) are distributed in favour of particular clients.
The draft establishes the requirements for recording identified conflicts of interest in a special register and for the content of a professional market participant’s internal document on conflicts of interest.
The Bank of Russia will accept suggestions and comments on the draft through 28 May 2020.