MOSCOW, January 19. /TASS/. Bank of Russia is concerned about mass entry of Russian citizens, who lack sufficient knowledge of the stock market, to the market of structured products. That is according to an article written by Mikhail Mamuta, head of the Consumer Protection and Financial Services Accessibility Service at the Bank of Russia, and Sergei Moiseev, Advisor to First Deputy Chairman of Bank of Russia. The article is published at the Econs online website.
Earlier Mamuta said that the main provisions of the law on unqualified investors, including the introduction of testing for such investors, will come into force on April 1, 2022.
"Mass entry of Russian citizens, who do not have knowledge and experience, to the market of structured instruments is a matter of concern," the article states.
Selling products that do not initially imply profitability and guarantees of return on investment to citizens can undermine confidence in the financial sector, the authors stress.
In January 2021, the Central Bank temporarily banned unqualified investors from making investments in structured financial products. Citizens will be allowed to invest in such products after passing a test for sufficient knowledge of such instruments.
The ban does not cover government bonds, mortgage-backed securities, a number of other bonds and exchange-traded derivatives.
"This is the first step towards a civilized market where a retail investor can trust both the issuer and its product. So far our market for structured products is not transparent and functions against the rules," the authors of the article note.
Law on unqualified investors
Federal Law No. 306 (On Amendments to the Federal Law on Securities Market and Certain Legislative Acts of the Russian Federation) provides for the introduction of testing for citizens wishing to conduct operations on the stock market, but who are not qualified investors.
The law provides for a testing procedure for unqualified investors before they start working with a financial instrument. He explained that the test will assess how well a retail investor understands what instrument they are going to purchase. The test will consist of two parts: the first will include questions about the investor's experience with the purchased instrument, the second will include questions on understanding the instrument itself. It is planned that the test will take about 10-15 minutes.
Earlier this month, Anatoly Aksakov, head of the State Duma's financial market committee told TASS, that the Russian government may adopt the law on testing for unqualified investors who intend to buy complex financial instruments already in February.