Stock market development prospects: discussion at Bank of Russia
The development of the securities market, its possibilities as a source of long-term money for the economy, mechanisms for improving financial instruments focused on retail investors — these were the issues discussed at a regular meeting of the Bank of Russia’s management with representatives of the industry of professional financial intermediaries, management companies and their self-regulatory organisations.
The stock market is actively expanding, in the first place owing to the inflow of retail investors. Today, nearly six million clients have brokerage accounts really holding money or securities, and approximately 60% of these clients have invested up to 10,000 rubles. The Bank of Russia believes that the market has a significant potential for further growth, but, in the course of this development, it is critical to ensure the protection of retail investors’ rights and prevent misselling of financial products. Self-regulatory organisations should play an important role in control over the quality of sales.
Representatives of the industry focused on the initiatives that were implemented over the past year or are currently being scrutinised. These initiatives address such issues as shorter periods for the delivery of investment units, elimination of regulatory arbitration between Russian unit investment funds and foreign funds, admission of unsponsored exchange-traded funds, and VAT cancellation for specialised investment advisers.
Another topic of the discussion was the development prospects of individual investment accounts (IIAs), including IIAs of the first type. According to the Bank of Russia, IIAs should be adjusted so as to supply long-term money to the economy. In this regard, it is essential to boost the appeal of long-term IIAs of the third type for retail investors as much as possible. The development of this type of IIAs is currently under discussion with the Ministry of Finance. It is important to determine the transition period within which professional market participants will be able to adjust their sales system to this long-term product.
The Bank of Russia supported the idea of IIA opening by management companies, as well as the suggestion regarding cross identification of financial institutions’ clients.
Representatives of the industry raised the issue about permitting investment in crypto assets. In the Bank of Russia’s opinion, if financial institutions provide services related to transactions with crypto assets and their derivatives, this will not serve the interests of investors in the financial market and will involve high risks. Furthermore, the regulator did not support market participants’ suggestion to expand the practice of issuing Russian financial instruments in foreign currency.