The Central Bank is taking on a weaker basis – Newspaper Kommersant No. 223 (7424) dated 12/01/2022

The Central Bank is considering the possibility of extending part of the measures taken in the spring to support the stock market, which expire at the end of the year. First of all, the professional participants ask to keep the relaxations in accounting for blocked foreign securities and their ratings when calculating the capital of companies. In addition, they propose to cancel concessions gradually, doubting that the situation on the market will seriously improve in 2023.

According to Kommersant’s sources, the Central Bank is discussing with professional market participants the issue of extending part of the relaxations adopted in the spring during the acute phase of the crisis. One of Kommersant’s interlocutors clarifies that the issue was raised last week at a meeting with the Department of Investment Financial Intermediaries and this week already with the Department of Financial Market Infrastructure. The Central Bank did not respond to Kommersant’s request.

In the spring, against the background of expanding sanctions, the collapse of the stock market and the blocking of the inter-depository bridge of the National Settlement Depository with Euroclear and Clearstream, the Central Bank adopted several packages of measures. They were mainly aimed at softening regulatory requirements for transactions with Russian and foreign securities and their accounting. In addition, all professional participants were given the opportunity not to publish reports.

According to the presentation of the Central Bank (Kommersant got acquainted with it), the regulator confirmed the termination from the beginning of 2023 of support measures related to fixing the value of securities, both Russian and foreign, the approach to assessing prudential standards and a number of other measures. “Part of the measures taken were of a pronounced anti-crisis nature. Today, when market participants have generally adapted to the situation, the abolition of a number of concessions is understandable and justified,” says Andrey Salashchenko, Deputy General Director of Otkritie Investments.

At the same time, the regulator is considering the possibility of retaining some of the relaxations regarding operations with blocked foreign securities, their accounting and disclosure of information by professional participants. According to the managing director of Ivolga Capital, Dmitry Alexandrov, although the blocking issue is “partially resolved” through replacement bonds and the conversion of depositary receipts, “there are still too many such securities.” Nikolai Shvaikovsky, Head of Government Relations at Alfa Capital Management Company, calls the decisions related to the composition and structure of mutual funds assets, including the non-applying of enforcement measures to violations and the ability to include replacement bonds, the most important measures to support fund management. “The easing will allow the management company to continue working on the issue of unblocking assets without terminating the fund,” says Artem Mayorov, director of the asset management department at Ingosstrakh Investments.

At the same time, the Central Bank intends to partially remove the relaxations in the field of information disclosure, primarily reporting under RAS and IFRS (with the exception of notes to them). “The publication of reports could create difficulties for just a few players, while many actually abused their right to become less transparent,” Mr. Alexandrov believes. “Now, in working order, you can request the necessary information from the counterparty before concluding an agreement, but we have all got used to information transparency for a long time,” agrees Galina Karyakina, COO of Tsifra Broker. At the same time, companies will be able not to disclose information about major transactions and transactions with interest in 2023, and there remains a ban on disclosing information about all counterparties.

Professional participants are also in favor of maintaining measures aimed at easing capital requirements. From the beginning of 2023, the permission to use international ratings assigned as of February 1, the use of prices for foreign securities as of February 18, ceases to be valid. “For those who have significant investments, the abolition of easing will lead to the need for revaluation of securities, and the indicators of standards, including equity capital, may decrease,” explains Alexei Timofeev, president of NAUFOR. The problems, according to one of Kommersant’s interlocutors, will primarily affect companies with large capital.

NAUFOR proposes to retain the refusal to take action for violating the requirements for information security and operational reliability. “These requirements cannot now be fully implemented due to the lack of a sufficient supply of software and hardware from domestic manufacturers,” emphasizes Mr. Timofeev.

In general, Ms. Koryakina adds, the lifting of the easing should be “more smooth and gradual, as 2023 will most likely be just as difficult as 2022.”

Vitaly Gaidaev