Precious metals to become eligible as collateral in leveraged transactions
Brokers’ clients making leveraged transactions (involving borrowed funds as well as own funds) will be able to regard precious metals as collateral on liabilities to the broker, in addition to money and securities. The relevant Bank of Russia ordinance has been registered by the Ministry of Justice.
The new rules for leveraged transactions (margin trading) are set to expand the set of instruments available to investors, thereby enabling brokers to recognise more assets as collateral.
The relevant legislative amendments were passed in late 2019. The Bank of Russia ordinance will help put these amendments into practice, supplementing the former ordinance that regulated margin trading. The basic provisions of the document enter into force on 29 January 2021, save provisions extending the regulatory requirements to portfolios excluding securities but including foreign exchange or precious metals. Such portfolios are subject to the provisions of new ordinance from 1 October 2021.
Importantly, the Bank of Russia has previously recommended that market participants refrain from offering complex financial products to non-qualified investors, including margin trading, which should only be for investors having the relevant experience of financial operations.