Aggregated News From Investment Management Regulators

Complex financial products not to be sold to non-qualified investors

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According to the ordinance drafted by the Bank of Russia, professional securities market participants will be prohibited to carry out a range of transactions on behalf or at the expense of non-qualified retail investors for the period until the launch of the testing provided for by the law.

Specifically, professional market participants will be prohibited to offer Russian or foreign bonds to non-qualified investors where payments depend on whether or not particular circumstances occur. Exceptions are mortgage-backed securities and bonds with a coupon rate of at least two-thirds of the key rate, the issuer’s obligation to buy back a bond from its holder for its full amount, and the bond issue’s or issuer’s credit rating not below the level established by the Bank of Russia Board of Directors.

Pursuant to the ordinance, professional market participants will not be allowed to offer financial derivatives to non-qualified investors if related agreements are concluded not at the exchange.

The Bank of Russia considers it inadmissible to sell complex instruments to newcomers in the financial market lacking sufficient knowledge and experience. According to the regulator, when people not comprehending the specifics of products and instruments form unreasonable expectations and incur losses, this may discourage newcomers from investment opportunities available in the financial market.

See PDF here: https://www.cbr.ru/StaticHtml/File/41186/210111-59-1.pdf

This news item was originally published by the Central Bank of the Russian Federation (CBR RU). For more information, see the Source Link.

Regulator Information

Abbreviation: CBR
Jurisdiction: Russian Federation

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