Bank of Russia aims to limit access to foreign stocks for non-professional investors
The regulator wants investors to pass a market skills test to become ‘qualified’
The Central Bank of Russia continues to pursue rather strict and cautious policy to avoid financial risks. On 3 December, the regulator announced that retail investors would have to prove their knowledge by taking a special test to get access to foreign stocks.
Russians will have to take a test to prove they understand financial markets if they want to carry on trading foreign stocks, says Reuters citing the Russian Central Bank’s plan aimed at stemming potentially heavy losses among retail investors. Earlier, the regulator announced its intention to limit access for non-professional investors. According to the bank, some of them might lack the knowledge and experience needed to play foreign markets without undue risk.
After talks with Russian brokerages and market lobby groups, the regulator decided to introduce a test instead of banning access, said the bank’s First Deputy Governor Sergey Shvetsov. “The testing which we have agreed on with self-governing organisations regarding splitting investors to ‘qualified’ and ‘non-qualified’ will be a natural barrier against... emotional purchases,” he explained. According to Shvetsov, the number of Russians interested in foreign stocks and bonds keeps increasing. The Moscow stock exchange alone has more than 3 million retail clients.
Shvetsov gave no further details about how the exam would be structured, while head of the bank’s Service for Consumer Protection and Financial Inclusion Mikhail Mamuta said the test was likely to contain between five and ten questions. According to Anatoly Aksakov, who chairs the State Duma’s Committee on Financial Market, the proposal is likely to pass into law this month.
Proposing trading restrictions last year, Shvetsov said investments in foreign shares would deprive the Russian economy of investment capital, says Reuters. Russia’s Central Bank has adhered to rather strict control policy since the regulator’s current head Elvira Nabiullina took up the reins in 2013. At the end of November, the bank warned Russian lenders against conducting operations in euros and keeping “excessive” amounts of foreign currency on their balance sheets. Doing business in euros brings no profits to Russian banks because of the negative interest rate environment in the eurozone, considers the regulator.