Transaction with regulator: new institute in countering market manipulation and insider trading
Individuals or companies facing administrative proceedings initiated by the Bank of Russia based on market manipulation or insider trading facts may be released from liability. For this, they will need to conclude a special agreement, or transaction, with the regulator, pay a certain fee to the budget, and take measures in order to avoid violations in the future.
This mechanism is stipulated by the draft federal law on establishing the institute of agreements with the regulator adopted by the State Duma in the second reading.
Individuals and companies will apply to the Bank of Russia for signing such an agreement at the stage of the investigation. This transaction will become possible provided that the regulator receives comprehensive information on suspicious operations or actions and offenders take specific measures to prevent similar cases. The Bank of Russia will disclose information on the agreements concluded on its website.
‘Such an agreement with the regulator may help market participants avoid reputational and significant financial risks. The very fact of administrative punishment often becomes a ‘black mark’ for them and may cause a loss of business. Generally, long-lasting court proceedings also damage companies’ interests’, said Valery Lyakh, Director of the Bank of Russia’s Department for Countering Misconduct.
Such a transaction will help reduce the period of uncertainty for the market, calm down investors, and reduce the regulator’s costs for investigations. According to international experience, the institute of agreements with the regulator helps create an environment of trust in the financial market and efficiently protect public interests.