Russian financial “super regulator” to greatly strengthen country’s central bank


PaRR Strong evidence

The draft federal Russian law creating a financial “mega-regulator” will greatly strengthen the central bank in Russia, as opposed to the creation of a new regulator, according to local antitrust lawyers.

“The Mega-Regulator Law does not provide for the creation of a new regulator, but stipulates the transfer of majority of powers currently attributed to the Federal Financial Markets Service (FFMS) to the Central Bank of the Russian Federation (CBR),” said Oleg Khokhlov, a partner at Goltsblat BLP, the Russian practice of the international law firm of Berwin Leighton Paisner (BLP).

“A special committee on financial markets is expected to be created in the CBR to execute these powers,” Khokhlov said.

The re-arrangement of powers following the creation of the “mega-regulator” would result in a much more powerful Bank of Russia, a second, Moscow-based antitrust lawyer said.

As previously reported by PaRR, the Russian parliament has passed on its third reading a law giving the Bank of Russia regulatory responsibility over all financial institutions with the exception of banks.
The final step for the Mega-Regulator Law to become effective is the approval of the President of the Russian Federation. Currently, the effective date is scheduled for 1 September, 2013 as provided therein, according to Khokhlov.

He noted that the Federal Law “On Protection of Competition” (No. 135-FZ dated 26 July 2006) regulates, among other things, competition of the financial markets.

“The Mega-Regulator Law mostly provides for the technical changes of this regulation aimed to solely transfer the FFMS’ powers related to protection of competition to the CBR.”

The new law will also provide for greater participation of the Central Bank of Russia's representatives when a financial organisation violates Russia’s Competition Law, the second Moscow-based lawyer added.

by Oliver Adelman in London

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