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Business / Finance

"Protecting small investors, we make them more vulnerable" interview 05.08.2019 at 05:02

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President of the National Association of stock market Alexey Timofeev has told, about whether or not to worry about the introduction of new categories of investors.

— Why would it be necessary to introduce a new category of investors? What's the point?

— the Initiator was the Central Bank, and his idea, as I understand it, is to provide different degrees of protection to different investors, increasing protection for the least experienced of them — those who may lose money due to the fact that not enough versed in financial instruments. In this regard, the Bank of Russia proposed within an existing category of qualified investors to allocate a special category — "protected investor", which is quite unusual for the world practice.

is There a problem? The market began the influx of retail investors, and many of them inexperienced investors, so the Bank of Russia is worried that this inexperience could be abused by unscrupulous financial institutions. It is clear. I must say that the Bank of Russia, and industry are equally committed to the trust of retail investors as a condition of development of the financial market.

— But brokers are against the new law.

— Indeed, we have the regulator there is a difference in approaches to security interests, including to the extent of such protection. We agree that in those cases, when it comes to complex instruments, you need to check the knowledge and experience of the investors in the investment field. Just so there are foreign brokers, such a test is called the appropriateness of testing. In the case when it comes to simple tools that enough information — stocks and bonds traded on a regulated market, money market instruments, units of UCITS, — the assessment of knowledge is not necessary. The draft law adopted in the first reading, requires testing, which should be held by the exchange or SRO, and then a broker. This is too much. Currently we have reached agreement with the Bank of Russia that will restrict the appropriateness of testing held by the broker, and the discussion focused on the range of tools that can be exempted from such testing are simple tools that can be accessed by protected investors.

the Draft law foresees similar to acting in Europe's exclusion list. However, it is not covered securities which, although traded on a regulated market, but not included in quotation lists. Market participants indicate that, as a result, investors may not be available paper of investment quality which is not worse than those included in the quotation lists. And that is exactly belonging to the quotation list does not imply greater reliability of these securities.

— How many investors, you may lose access to the securities beyond the first or second level quotation?

— of Course, this is only an estimate, but around 70% if we are talking about the distinction between protected investors and other unskilled investors at the level of 400 thousand rubles, and 90% if we are talking about the Bank of Russia the distinction at the level of 1 million 400 thousand rubles.

— Investors may be allowed to risk a small amount, even if they have not received the status of qualified. It was about 50-100 thousand rubles a year. How do you feel about that and whether that amount?

Brokers do not suggest, moreover, objected. From the point of view of the industry, if there will be a normal test system, and simple tools are available to the majority of investors without such testing, the need for such amount will not. On the other hand, if we fail to agree with the Bank of Russia, this amount may be the only opportunity to access a wider range of tools for a large number of investors.

— has Recently adopted the law on financial advisors that includes testing of knowledge of customers. How is this different from testing, which happens if you introduce a new category of investors?

Is a different thing. The broker must check the knowledge of the client, carrying out his instructions for complex tools. The investment adviser, including a broker, if the order is made on the basis of his investment advice, is entrusted with far greater responsibilities. The investment Advisor must not only ensure that the investor understands the tool, that is, not only to carry out the appropriateness test, but also to determine the yield that an investor expects, and, if the investor is unqualified, his willingness to take risks. All together it is called suitability testing. On the basis of this test is made the customer's investment profile and investment recommendations should this profile fit.

— how Many will be hesitant to start investing, knowing that they will examine? Easier to open a Deposit or to buy dollars.

— that's Why you cannot enter the test, in the case of simple instruments. We are not going to regret it if investors decide to purchase sophisticated tools, failing to pass or refusing to take the test. It is impossible to test scared the Russians from wanting to invest in simple tools — stocks and bonds, shares of mutual funds.

— why do you think the regulator wants to prohibit for investors with little capital foreign stocks?

— This question should be addressed to the Bank of Russia. In our opinion, to give Russian investors an opportunity to invest in a wide range of instruments, including foreign securities, is extremely important. And it is better that such investments were made through Russian brokers through the Russian infrastructure, in accordance with Russian regulations under the control of the Bank of Russia than abroad, using foreign brokers. Therefore, we propose to keep the possibility for all investors, including specially protected, to purchase foreign stocks and bonds traded on the Russian organized market, without testing.

Why is it still important? First, Russia is not so wide set of tools which can be suggested to protected investors. Secondly, the country diversification allows you to create a more stable portfolio and all theories is mandatory. Thirdly, some investors had misgivings concerning the exchange rate, and therefore, giving them the opportunity to defend themselves, investing in foreign instruments, we can count on them to greater interest and investment in the Russian instruments. Fourth, the bulk of new investors — today's depositors, and those who prefer foreign currency deposits, will seek to retain at least a portion of its assets in foreign instruments. Not out there, so that protecting small investors, we make them more vulnerable? I believe that if we don't give people opportunities to invest in foreign instruments, we lose part of investors to either provoke them to turn to foreign brokers. A great danger lies in the fact that Russian investors are forced to seek the services of foreign brokers to gain access to a wide range of foreign instruments, you will find that on the Russian market, they can easily work abroad.

— Should I be concerned for those who have open positions on the derivatives market or have bought shares of Microsoft and Apple?

Is discussed as the "grandfather clause." Rather, the paper do not have to sell. And, say, if the investor already has the status of a qualified, then he will be able to save it, despite the fact that will not meet the new criteria.

We are also discussing the timing of the entry of this law into force. I am sure that year, which now says the Bank of Russia, will not be enough — too little to even it managed to make its own regulations and standards provided for them. But only then will we discover all rules that have to obey industry. Only after that she will need one to two years to bring their activities into compliance with the new rules — to budget, to conduct an internal reorganization to prepare internal documents, to change IT solution, train employees.

— If the law will be adopted in the version which is now offering CB, what does this mean for the market?

— the Project is already substantially better than it was. We are slowly moving to compromise, without which risk breaking the trend of the inflow of private investors, which has put so much effort, or to make the beneficiary of our efforts, foreign industry and foreign infrastructure.

Interviewed albert KOSHKAROV,