The draft law on national financial indicators required adjustments
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The bill “On Administrators of Financial Indicators,” submitted to the State Duma back in the summer, received comments from both the legislators themselves and the government. At the same time, market participants note the need to form a domestic system of financial indicators, for which it is necessary to describe all terms and procedures in the law as accurately as possible. Now even the very concept of “financial indicator” is given so broadly that it can suggest different interpretations.
On Monday, December 11, the State Duma Council recommended the draft law “On Administrators of Financial Indicators” for adoption in the first reading. It was submitted to the Duma back in the summer (see Kommersant on July 21) and should resolve the issue of obtaining representative information, a shortage of which arose after the departure of foreign news agencies from the Russian market at the beginning of last year (Bloomberg, Refinitiv). “To create a modern financial information industry in Russia, a legislative framework is needed that provides for the establishment of requirements for the activities of administrators of financial indicators,” says the explanatory note.
At the same time, a number of comments arose regarding the text of the bill. As noted in the State Duma Committee on the Financial Market, at present there is no concept of “administrator of financial indicators” in Russian laws, while the bill requires that its management bodies employ citizens with at least two years of experience in such an organization. In addition, the committee, in its conclusion on the draft law, notes that currently the largest professional participants in the securities market actively use their own indices (financial indicators) for a wide range of investors and instruments. However, in a number of cases, the person calculating the financial indicator is also a party to the transaction, the obligations of the parties to which depend on such a financial indicator. “Consequently, once the specified person is included in the register of financial indicator administrators, he will lose the right to calculate the financial indicator,” the finance committee said in its comments.
In turn, the government, in its response to the draft law, proposes to supplement it with transitional provisions. According to them, the adoption of the bill will not require a one-time change in existing regulations that refer to financial indicators, and the transition to a system of national financial indicators will be carried out in stages.
Market participants draw attention to the need to more clearly describe all concepts and procedures in the law. The Moscow Exchange believes that the calculation of financial and commodity indicators, “especially those used to create financial products, for tax purposes and for other government purposes,” should be regulated. At the same time, the developers of such indicators must have appropriate experience and expertise.
In the current version, as NAUFOR President Alexey Timofeev notes, the bill gives too broad a definition of the concept of a financial indicator, so it is not clear whether it concerns the own benchmarks of financial organizations or not. “If so, then it is unnecessarily cruel, paralyzing their creation and use,” he notes. If the bill does not concern them, then it “needlessly limits the right of the Central Bank to indicate, and therefore regulate, such benchmarks, including allowing or establishing conditions for their use in certain financial instruments,” continues Mr. Timofeev.
The comments boil down to expanding the powers of the Bank of Russia to regulate this area, develop standards and maintain a register of “administrators of financial indicators,” notes Capital Lab partner Evgeniy Shatov. “This is necessary to streamline this area and bring it to common standards, and these problems are best resolved through public discussion with stakeholders: brokers, other professional participants and investors,” he says. However, he does not rule out that as a result of the adoption of the law, the list of financial indicators permitted for publication may be reduced.
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