Professional participants have begun the process of rapprochement – Newspaper Kommersant No. 18 (7463) dated 02/01/2023
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The National Financial Association (NFA) may soon give up the status of a self-regulatory organization (SRO). According to Kommersant’s sources, in fact, this is the first step towards a merger with another SRO of professional participants – the National Association of Stock Market Participants (NAUFOR). In many ways, the functions of the associations duplicated each other, although each had its own characteristics. Now professional stock market participants can consolidate their positions and actions before the regulator, but there will be no competition of ideas and opinions.
According to two Kommersant sources in the stock market, on January 31, the board of directors of the NFA took place, at which it was decided to bring to the general meeting the issue of renouncing the status of a self-regulatory organization. As one of the interlocutors of Kommersant explained, in fact, this is the first step towards a merger with another specialized SRO – the National Association of Stock Market Participants.
NFA members, after the Central Bank terminates its SRO status, will have six months to transfer to NAUFOR. As Elena Mende, lawyer of the Baltic Bar Association named after Anatoly Sobchak, explains, according to the law “On Self-Regulatory Organizations in the Sphere of Financial Markets”, the transition is carried out within 180 days following the termination of membership in the SRO. The associations declined to comment.
Earlier, a Kommersant source in the financial market said that the topic of consolidating brokerage SROs began to be discussed with the regulator after the merger of NAPF and ANPF in the pension market (see Kommersant dated February 2, 2021). In the spring of 2022, the issue of merging SROs was actively discussed (see Kommersant dated June 1, 2022). However, then the NFA abandoned this idea, although, according to one of Kommersant’s sources, the Bank of Russia was in favor of the merger. The Central Bank did not respond to Kommersant’s request.
According to the register of the Central Bank, SROs intersect in the main types of activities they regulate – brokerage, dealer, securities management, depositories and special depositories. NAUFOR includes professional participants with investment fund management licenses, as well as investment advisers, while registration companies are represented in NFA. Now there are 440 professional participants in NAUFOR (primarily brokerage and management companies), in NFA – 209 (mostly banks with the appropriate licenses).
The rights of participants in both SROs are comparable, as are membership fees, said Anna Avakimyan, chief analyst at RegBlock. NFA, according to her, has an annual fee of 170-870 thousand rubles, in NAUFOR – 50-850 thousand rubles. The specific size depends on the scale of the organization and the range of licenses, the expert explains. According to SRO reporting for 2021, cash receipts to NAUFOR amounted to 198 million rubles, including membership fees – 122 million rubles. The NFA received 136 million rubles, including membership fees – 90 million rubles.
A measure of the successful organizational work of NAUFOR was defending the interests of unqualified investors in relation to the range of available financial instruments, market participants note. At the Kommersant conference “The Russian financial market in the face of global challenges”, held on January 31, Olga Shishlyannikova, director of the investment financial intermediaries department of the Central Bank, said that the new regulatory act of the regulator provides for a reduced leverage for investors who are just entering the market. In addition, she noted that the requirement for the size of assets of qualified investors instead of the 30 million rubles proposed last year. “will be lower” (see Kommersant dated December 23, 2022).
In general, the surveyed market participants positively evaluate the SRO merger. Investment strategist of Arikapital Management Company Sergey Suverov notes that a single SRO will be able to consolidate the positions of market participants in the development of the regulatory framework before the regulator. According to Kommersant’s interlocutor in the stock market, there used to be cases when SROs sent inconsistent positions on a number of issues to the Central Bank, “which affected the speed of decision-making by the regulator and the decisions themselves.” The expansion of the membership of the SRO “will enrich it in terms of expertise and financial resources,” a Kommersant source said.
Dmitry Alexandrov, Managing Director of Ivolga Capital, notes that the NFA’s competencies will also be in demand, “since it has more practical aspects in its work, that is, their documents have greater practical application.” However, he fears that in the case of one SRO, competition will disappear, which means that “there will be no room for efficiency growth.”
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