Dealer activity regulation: public consultation outcomes

The activity related to concluding financial leverage agreements and securities transactions based on a public offering or over the Internet using specialised software must be included in the regulatory sphere covering dealer activity. According to the outcome of the discussion of the consultative report, ‘Improvement of dealer activity regulation’, market participants agreed with this approach

At the same time, while the market participants supported the Bank of Russia’s view that the activity related to the public conclusion of financial leverage agreements should be regulated, they voiced their opinion that it was necessary to settle the issue regarding the choice of licence under which the activity would be performed.

The representatives of the market community also agreed that market maker activity in the securities and derivatives market should be performed based on the dealer licence. However, the Bank of Russia and the most part of the respondents did not regard licensing of market maker activity in the FX and commodity markets as necessary. Nearly all discussion participants supported the opinion that it was necessary to retain the opportunity to perform market maker functions at clients’ expense and as per clients’ order (client market making), which is important for exchange liquidity.

The Bank of Russia will take into account the opinions of the professional community received during the discussion of the consultative report as it prepares proposals on the development of national legislation on dealer activity and appropriate regulatory acts.