The order on creation of the Bank of Russia Expert Council on sustainable market deviations, published in the Bulletin of the Bank of Russia, published on Wednesday, March 30. As stated in the text of the document, the expert Council is created for Advisory support to Central Bank, trade organizers in the field of combating market manipulation. In particular, the Council will consider trades on the Moscow stock exchange, and to give an opinion to the regulator led these transactions to a significant deviation of prices or volume of securities trading. On the basis of conclusions of experts of the Central Bank shall establish the fact of market manipulations. “If there is no substantial deviation of transaction price of the one that prevailed in the market, it is possible to recognize manipulated the regulator will not” — said the head of the main Directorate of combating unfair practices of conduct on the open market by the Bank of Russia Valery Lyakh.
He explained that now for liquid and illiquid financial instruments that are traded in the market, there are analytical models that allow us to determine whether the deviation of the price or trading volume significant. “For illiquid financial instruments to create such a mathematical model is not possible. In order to evaluate the significance of deviations is created and the Advisory Council”, — said Valeriy Lyakh.
Also the task of the expert Council will also include the development of recommendations for the Central Bank about how it may deviate the market in the event of shocks or events that have a significant impact on the stock exchanges.
To create the expert Council of the Central Bank is planning at the end of April. In him, as told by Valery Lyakh, will not include representatives of the Central Bank and exchanges, only independent members — representatives of the professional self-regulatory organizations and universities. The Central Bank believes that this will avoid conflict of interest. To evaluate the deviation of prices and other parameters, the experts will have blind: participants of suspicious transactions by the Central Bank to disclose will not. “We believe that the work of the Council will increase the speed of identifying market manipulation. Now this can take several months,” said Valery Lyakh.
The Central Bank said that they are now investigating about 40 cases of market manipulation. The deal, which the regulator believes are signs of manipulation, occurred in the period from 2013 to 2015 and was carried out with a variety of assets. At the end of March, the Bank of Russia informed about the new scheme of market manipulation by means of switch transactions through which participants can communicate to each other the asset at a predetermined price by masking the operation under market deal. According to the regulator, to conduct such transactions, the market participants are typically targeted bidding — when the transaction is outside the market and not accounted for in the change of quotations. At closing the switch address mode of bidding is not used, the deal is supposedly on the open market and, thus, is taken into account when calculating quotes.
“The Advisory Council would overlap with the functions of the structures that already exist and to counteract unfair practices in the market”, — said the head of the dealing center Metallinvestbank Sergey Romanchuk. He recalled that a similar structure is, in particular, with the Moscow stock exchange: disciplinary Commission, which examines the problem of unfair behavior of market participants. “As a rule, these groups consist of participants of the market, people who trade directly on the exchange and very well versed in what is happening,” says Romanchuk.
The Director of the Department of active operations “Veles the Capital” Evgenie Shilenkov said that no one better than the participants themselves do not understand what is happening in the market. “There is a risk that because of the opinions of the expert Council will be bad precedent. For example, what do the experts deal, which passed with a substantial premium to the market? This situation can be, if a participant needs to buy paper and sell orders in the market”, — says the expert. In his opinion, if someone would assess the fairness of pricing on deals, this can significantly limit the rights of market participants.