Rus News Journal

Freedom arises at stock exchanges

the Chairman of Federal Commission on Securities Igor KOSTIKOV considers that professional participants and stock exchanges should become the basic regulators of the urgent market. He has declared it in interview to an observer to PETER RUSHAJLO.

- What for it was required to accept the separate position regulating the urgent market?
- risks which arise in the urgent market, - the most serious for today. And the Federal commission of history with stock exchanges which carried out operations in the urgent market, well-known. Both the Russian stock exchange, and the Moscow central stock exchange could not execute the obligations, a large quantity of professional participants have suffered losses, which could not be filled in any way. And it has been connected with inappropriate regulation of risks, with inappropriate regulation of clearing. On the other hand, the urgent market is a normal tool, to forbid it it is impossible. Therefore the problem of the given decision, on the one hand, to adjust work of the urgent market, and with another - to deduce it from sulphur market parts in normal that all could use it.
- why the Federal Commission on Securities undertook to regulate the urgent market? Couple of years back its participants asserted that in it the commission on commodity exchanges should be engaged at MAPe - reached even courts...
- we start with very simple position: participation of Federal Commission on Securities in regulation of the urgent market is based on the law on a securities market. On the same position stand both the Ministry of Finance, and the Ministry of Justice, and the Central Bank. And the Ministry of an antimonopoly policy according to the law on commodity exchanges regulates the piece of the urgent market, where a basic active are the goods.
- how much I remember, in the law division of sectors of the urgent market on basic actives is not provided.
- is not present, sekundochku. The law on commodity exchanges does not include the goods, securities and currency in concept, differently the commission on commodity exchanges would regulate both share, and currency stock exchanges. Accordingly, and the urgent transactions which basic active are the goods, do not include urgent transactions with securities and currency. Transactions with currency and securities are in jurisdiction according to Federal Commission on Securities and the Central bank, and this jurisdiction is based on laws About a securities market and On currency regulation and currency control . By them are regulated both share, and currency stock exchanges. About urgent transactions we prepared the decision after this point in question has been considered by the Ministry of Justice in the spring of this year, and the Ministry of Justice has passed the decision that the law does not confirm powers MAPa on regulation of the urgent transactions which basic active are securities, and that jurisdiction definition depends on a basic active of urgent transactions. On the basis of it each regulator is obliged to regulate the part of the urgent market: securities - the Federal commission, currency - the Central Bank.
- the history when in 1998 banks have refused to pay off on currency forwards at once is remembered, and the arbitration court recognised as their transactions of a bet.
- there is such problem, we with it understand. We, when prepared the decision, discussed this question with the Central Bank and we consider that there should be standard approaches to the urgent market. And consequently we have given to the Central Bank the project of our position. And we have an arrangement that they at a writing of own position about the urgent market will mean our position that we did not have essential divergences and we could create uniform market space. And one of problems of this decision which we tried to solve at its writing, - to avoid cases when the parties in case of transaction default necessarily go to court.
- you mean creation at stock exchanges of the arbitration courts with transfer of corresponding functions by it?
- it is not so much it, how many that if urgent transactions are made through the organizer of trade according to requirements of statutory acts, including with the requirement of entering of an initial margin, to the organisation of payment of a variation margin, to compulsory closing of positions and etc., risk of default of such transactions so, and disputes on it considerably decreases.
- at you in a decision preamble it is written that position regulates mutual relations in the urgent market between professional participants. Whether correctly I have understood, what it does not concern such things, how, say, options to managers?
- options for managers do not get under action of the given decision. The bill regulating them now is brought in the State Duma, it has passed the first reading.
- and if we have concluded the future bargain, both without being participants of the market?
- Our decisions regulate the market and activity of professional participants. Among themselves you can conclude any transaction. But the matter is that, as a rule, similar transactions make sense, when they are liquid, when there is a maintenance when risks are regulated and when there are quotations. For this reason the decision regulates the organised market, the market of professional participants and investors. If two persons have concluded among themselves a bet - that is another matter.
- but you regulate only professional participants. Whether you are afraid, what your requirements to professional participants will withdraw all urgent market to, conditionally speaking, to bookmaker offices?
- we are not afraid. Because also we, both Ministry of Justice, and the law recognise that the parties of urgent transactions where a basic active are securities, there can be only professional participants of stock market.
is it is registered in the law?
- yes, it follows from the law. After all that such the urgent transaction which basic active is the security? It is one of kinds of transactions with securities. As well as other transactions with the securities, getting under professional work signs on a securities market, they can be made only by professional participants of a securities market.
- it is possible to tell on - to another - that it not operation with securities, and it is the bet transaction.
- so to say it is impossible. According to the law the urgent transactions which basic active are securities, fall under concepts transactions with securities operations with securities so, can be made as activity only professional participants of a securities market, instead of any bookmaker offices and organizers of games.
- but you just said that nobody prevents to conclude transactions between separate persons.
- Yes, but it cannot be an activity kind. Otherwise the persons making such transactions, will be recognised by carrying out activity without the necessary licence - licences of the professional participant of a securities market.
- you give great attention to an estimation of risks. The lath in 7,5 % as maximum deviation of quotations which the stop of the auctions follows whence undertook?
- we employed over this decision of experts, not only ours, but also foreign. And as a result we have come to these indicators.
- estimations of foreign experts, of course, well. But our market easily can fall to 7,5 %. And then avalanche process of default of transactions will go.
- in that is continually that the logic of the decision is registered in such a manner that participants, knowing a situation, should monitorit risks which at them arise, and not to lead to this situation. That is it is a problem of participants.
- it is not so clear. On open positions it is provided 15 - percentage reservation, instead of full.
- there is one more party. Stock exchanges should stop the auctions in the market. We have tried to write the decision so that there was a system of requirements according to risks. And, accordingly, each organizer of trade when he sees that one of participants of the auctions comes nearer to critical indicators, should interfere. And similar systems at interaction with clients should be and at professional participants of the market.
- if the requirement to risks such rigid why not to make their standard for all stock exchanges?
- I think that the market to it will come, but I do not consider that it is necessary administrative method to it to move it. Our position very simple: we have described a minimum which we consider necessary. But after all stock exchanges can establish and more rigid criteria. Each stock exchange can offer the technique. Each stock exchange will have features, and she can offer, maybe, additional possibilities for a covering of these risks. Someone will insure risks of default of transactions directly, someone will create large guarantee funds - all depends on how the stock exchange of will conduct. We after all not so would like to get into actually market mechanism. It would be desirable to make regulation which establishes a certain corridor which provides decrease in risks. And in this corridor everyone should show, on what it is capable from the point of view of clientele reception. Otherwise we will not leave possibility for a competition, for market development.
- and whether concerning urgent transactions the Federal Commission on Securities system on tracing of non-standard operations will work?
- yes, according to models which will offer stock exchanges, there will be a system of monitoring which will trace non-standard transactions. We now over it still work, the corresponding project will be ready in the spring of next year.
- Stock exchanges should establish independently risk limits on brokers?
- yes. Too it is necessary freedom to give to them, differently they cannot be defined. Because at one stock exchanges, even proceeding from that level of liquidity which at a stock exchange exists, there will be one limits, on others - others. It is natural that when we will co-ordinate documents, we will ask to prove all this business.
- but then you as at a market regulator have too big freedom to demand something from stock exchanges.
- is not present, so it not seems to me. I consider that in the given concrete case of the requirement here are accurately enough registered. Here there is no regulator freedom of action. Freedom arises at stock exchanges.