Amendments to the law ‘On Countering the Misuse of Insider Information and Market Manipulation’ to come into force

Legislative amendments coming into force from 1 May will enable issuers to independently compile a list of insider information and expand the Bank of Russia’s scope to determine actions classified as manipulation.

Up until now, issuers have been guided by a list approved by the Bank of Russia when forming a list of insider information. Once the law comes into force, they will be able to compile this list on their own for specific business models, industries, activity types or competitive environment. Organisations will also set, at their discretion, the time frames and procedure for disclosing such information. Over the longer-term horizon, this should bring about a more responsible attitude towards insider information and ensuring its confidentiality.

By issuing a specific regulation, the regulator will in turn be able to supplement the list of grounds used for qualifying manipulation. At present, these grounds are specified in the law.  Under the new legal norm, the Bank of Russia will be able to promptly respond to market developments and supplement the list with criteria identified during its examinations. At the same time, unlike violations established by law and followed by criminal responsibility, violations revealed according to the regulation will only entail an administrative penalty.

The law will also expand the Bank of Russia’s authority to conduct examinations linked to countering the illegal use of insider information and market manipulation. Bank of Russia employees will gain access to all and any information, excluding data constituting state, tax and communication secrets (excluding information on postal money remittances). The law grants Bank of Russia representatives the right to inspect premises, territories, objects and documents. However, it will be necessary to obtain the consent of the Governor of the Bank of Russia or the Deputy Governor to conduct such inspections. There will be a special procedure for these inspections and the inspectors will be liable for the illegal disclosure of information received. On the one hand, this new regulation will enable the Bank of Russia to promptly obtain undistorted information required for investigations, and, on the other hand, it will reduce the administrative burden on financial market participants that are currently providing this information as requested.

‘The new norms will make it possible to combat the misuse of insider information and market manipulation more effectively, and will stimulate issuers and financial market participants to handle information, which may potentially influence both market quotes and companies’ goodwill, more carefully. Our goal is to instill a culture of good-faith conduct and a trust-based climate in the financial market among its participants and financial consumers’, said Valeriy Lyakh, Director of the Department for Countering Misconduct.