State Duma passes Financial Marketplace Law

16.07.2020

Legal Update No 779

Bryan Cave Leighton Paisner (Russia) LLP (formerly Goltsblat BLP in Russia) advises that, on 9 July 2020, the State Duma passed, at the second and third readings at one stroke, Draft Federal Law No. 617867-7 “On Making Financial Transactions Using a Financial Platform” and a number of associated amendments to the current regulations.

The bill regulating the so-called financial products supermarket (marketplace) provides for a new system to be established in Russia by the end of the year, enabling users to open deposits with several banks at once and access a wide range of financial services at any time, without leaving home.

The bill sees the financial platform as an information system enabling financial transactions by facilitating online cooperation between financial institutions or issuers and financial services consumers. Access to the system is provided by the financial platform operator.

Once registered in the system, individuals will be able to invest their free cash via the marketplace: obtain banking and insurance services and make deals on the securities market and with financial instruments. For instance, it will be possible to build a portfolio of deposits with different banks and make tap-and-go cash transfers.

The bill was designed to afford banks and financial and insurance companies a new channel for attracting clients, with use of the digital platform cutting servicing costs.

The bill also entitles issuers (as defined in Federal Law No. 39-FZ dated 22 April 1996 “On the Securities Market”) to offer financial transactions with their securities via the financial platform. Only individuals or dealers instructed thereby may enter into such transactions with issuers.

Consumers and service providers will interact on financial platforms, which will be required to clear the transactions in compliance with all the digital security requirements. A financial platform’s terms of use constitute an accession agreement and lay out the rights and obligations of e-platform participants and the operator when transacting via the platform.

Transactions between financial institutions (or issuers) and individuals will be facilitated by the financial platform operator, which must be a joint-stock company with an equity capital of at least RUB 100 m.

All system operators have to be entered on the Bank of Russia’s register available on its website for anyone to check whether an operator has been registered.

An operator may not combine these activities with that of a credit institution, unless as a trade organiser, depository, specialised depository or registrar, and may not be party to the financial transactions made using the financial platform.

The operator must effect all settlements using a designated account for transactions with clients’ funds. The bill sets the range of transactions that may be effected on instructions from the designated account owner.

Such an account may only be opened with a bank functioning as a settlement centre of a systemically important payment system or other credit institution with a credit rating of at least that set by the Central Bank.

The bill also provides for setting up a unified register of financial transactions to accumulate information about a financial institution’s exposure to a financial services consumer under bank deposit agreements concluded via the electronic platform.

In addition, the bill sets requirements on information to be provided about financial deals: no guarantees or promises of future investment profitability are permitted (other than for fixed-income products). A consumer entering into a transaction must be informed about all associated transaction costs. At the same time, fees due to the financial platform operator should not affect how it posts information about financial transactions by comparing their conditions or about comparison findings.


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