Adopted in July amendments to the law “On securities market” can open to Russian investors access to a wide range of exchange-traded funds (ETFs), which are now poorly represented in Russia due to regulatory restrictions. The Bank of Russia began to discuss this issue with market participants, whose opinions were divided. Brokers advocate for ETF and are interested in expanding the list of available tools. However, management companies are opposed to such liberalization because ETFs are a direct competitor of the exchange-traded mutual Funds (BPIF).The national Association of securities market participants (NAUFOR) in response to the request of the Bank of Russia sent a letter to the regulator (“b” familiar with it) to improve the regulation of the admission to organised trading securities ETF (Exchange Traded Fund). The document proposes not to change the existing approach for reducing access not sponsored (used without the consent of the Issuer) ETF, at the same time to improve Bpipe. “There is a danger that in the event of cancellation of the current conditions of the admission of the foreign ETF or a significant weakening” they will get advantages in comparison with the Russian exchange-traded funds, and “the development of Russian exchange-traded funds slowed,” reads the document. According to the President of NAUFOR Alexey Timofeev, without eliminating unprofitable for Russian exchange-traded funds in regulatory arbitrage to simplify the admission of the ETF not. The amendments to the law “On securities market”, there was mention of access for unskilled investors to foreign ETFs (after testing), as well as about restrictions on the funds (they must be created on the basis of indices approved by the Central Bank, either of them are market makers). However, the law is not written restriction on the admission to trading ETF is not sponsored, which was introduced by order of the Federal financial markets service (FFMS) as of 2010. This caused a number of stock market participants to think that this restriction has been lifted. In July, the Bank of Russia sent a letter to market participants (read it “b”), which is within the study of the requirements for the admission of ETF to trading asked for their opinion on this issue.For the development of this segment of the market are brokers interested in expanding the range of instruments. Mitigation or complete waiver of additional requirements for admission of foreign ETFs will lead to regulatory arbitrage in favor of these tools relative Befow, says the Deputy General Director UK “the alpha-the Capital” Nikolay Szwajkowski. In addition, he believes, there are fears that in the absence of these requirements on the market can be allowed instruments that are ETF only formally, but unknown structure of assets and inadequate support infrastructure. Executive Director of division “Inveof justice and the accumulation of” Sberbank Vasily Illarionov said that, before you allow a foreign ETF on the Russian stock exchange, the regulator should create competitive conditions for BPIF. For example, he said, should “give the possibility of payment of current income, to allow the synthetic replication of the index (the Fund does not buy the underlying asset and the futures contract on the index.— “B”) to run funds on commodity assets.”In turn, the President of group of companies “Finam” Vladislav Kochetkov considers that the access to the Russian market ETF available to unqualified investors will greatly expand their ability to generate income, because their assets will have a wider list of indices, securities of various industries, products. He notes that such funds due to high diversification and additional controls safer for the investor than individual stocks. In his opinion, the Russian BPIF usually is just repackaged stock ETF, that is, the investor buys the foreign Fund, but is forced to pay domestic mediator, that looks like unjust enrichment of the latter.It is planned to abolish the order of the FSFM, and the requirements to lock-in “Provision on the admission of securities to organized trading”. As noted in the Bank of Russia, the relevant requirements should not create a preference for ETF compared to the Russian BPIF.Polina Smorodskaya, Vitaly Gaydayev
