The Central Bank has proposed to introduce new restrictions for private investors


The Bank of Russia proposes to increase the requirements for qualified investors and to introduce a new category of “professional investor”. This is stated in the report (at the disposal) of the head of the service for protection of financial services consumers and minority shareholders of the Bank of Russia Mikhail Mamut, which he submitted in the framework of the XXV International financial Congress in Saint-Petersburg.

According to the Central Bank, the risk of investments cannot always be objectively assessed by the investor. Therefore, the regulator proposes to limit qualified investors in their right to buy “complex investment instruments, which include derivatives, as well as to forbid them to make unsecured transactions (transactions with borrowed funds broker). To invest in derivatives and other risky instruments, they can only through independent investment Advisor. The regulator proposes to require an Advisor and claim compensation for investor damages if he invested in instruments with unacceptable for that level of risk.

At the end of June the state Duma in the third reading adopted amendments to the law “On securities market” legalizing the status of investment advisers — brokers, asset managers, financial advisers — those who give advice to customers on the stock market. They will need to log in to the self-regulatory organization and meet the qualification requirements of the Central Bank. However, on Wednesday, June 29, the Federation Council rejected the amendments by sending the document back for revision.

The regulator also intends to tighten the criteria of a qualified investor. Now, private investors who trade on the exchange, may obtain the status of qualified at the request of the broker or management company, if possess own property of not less than 6 million rubles, have higher education (or qualification certificate of financial market specialist) or have experience in the securities market. If one of these conditions is met, the investor gets the opportunity to work with a wide range of assets such as foreign shares or units of closed-end mutual Funds and private equity funds.

“Match one of these criteria does not always guarantee the necessary level of understanding that investor characteristics, features and risk of financial instruments intended for qualified investors”, — stated in the report of the Bank of Russia. For example, one investing savings in securities by a certain amount, the investor may not acquire the necessary experience for transactions with complex financial instruments. In addition, the regulator, often a qualified investor recognizes on its face, and sometimes simply credited to the account of customers of the paper at 3 million rubles., recognize him as a qualified investor, and then they cheat.

Therefore, according to the regulator, for assigning the status of qualified investor citizen will not only have a significant amount of savings (6 million roubles), but also experience active trading in the stock market (from one year) or a qualification certificate. With the exception of private investors, whose assets exceed 12 million rubles, with an annual revenue of 4 million rubles, — they can be recognized as qualified investors without professional experience or education. The property restriction does not apply to those who have worked in investment companies and actively traded on the stock exchange for more than two years.

The Bank of Russia proposes to introduce a new category for private investors, professional investor”. It will get those who is ready to invest RUB 300 million (with an annual income of 10 million rubles.), or those actively traded on an exchange or held a senior position in companies operating in the financial market and has assets of 150 million rubles. Professional investors will be released from restrictions on investments.

President, Chairman of the Board of “Finam” Vladislav Kochetkov says that the proportion of qualified investors does not exceed 10% of all trading on the stock market. “But they commit over 30% of all transactions, as are credit shoulders. This is a very valuable and profitable category of customers,” he said. According to Kochetkova, the Central Bank decision to change the existing system of investors ‘ assessment will enable brokers to use a more flexible approach in assessing the risk profile of the customer: “We will be able to recognize a qualified investor client who has a trading experience in the market, but accumulation of less than 6 million rubles.”.

In the end, according to Kochetkov, a more flexible approach to the assessment of investors will increase the availability of financial instruments for all categories of investors and will lead to an influx of private capital into the stock market.

A “qualified private investors according to several criteria is usually applied in developed markets. Regulators have worried about the restrictions for the citizens when the market began to appear complex products with high risk. In this sense, the Central Bank, tightening the requirements to go on the same track,” says managing Director, BCS Broker Oleg Chikhladze. He noted that the regulator is trying to reduce risks for citizens. “The sale of risky products beneficial to the sales of financial companies and banks, because the Commission on them is higher than on standard bonds or equities,” said Chikhladze. Therefore, according to him, if new qualification requirements of the Central Bank will take effect on the one hand, increase the level of investor protection, but on the other hand can shrink the sales market of such products and to reduce citizens ‘ interest to risky investments.