Bank of Russia introduces differentiated requirements for internal control systems of professional participants
Most professional securities market participants will structure their internal control systems conditional on the category they are assigned: small, medium-sized or large. These system requirements, effective from 1 October 2021, are laid down in a Bank of Russia ordinance registered by the Ministry of Justice.
Adjustments have been made to the framework of indicators whereby a market participant category is assigned based on the type and scale of operations, and the level and combination of risks assumed.
Under the new requirements, small participants may elect not to appoint an internal controller. The internal controller’s functions may be entrusted to another employee of a professional market participant. Internal audits and the permanent post of an internal auditor are requirements applicable only to large professional participants.
Rules are updated for those applying for a professional participant’s licence. Such applicants are only required to have a candidate for the internal controller position as of the application date. Furthermore, a licence applicant other than a credit institution is exempt from the obligation to have the controller (head of internal control) located at its legal address from the filing date.
The new rules implement the proportionate regulation principle and are meant to decrease regulatory burdens on a number of professional market participants including small and medium-sized companies.