MICEX-RTS mulls applying 'comply or explain' principle to exchange listings
MOSCOW. April 3 (Interfax) - MICEX-RTS is considering applying the principle of 'comply or explain' to exchange listings, the merged Russian stock exchange's deputy director for the primary market, Oksana Derisheva told Interfax.
"We are now discussing the issue of whether to introduce the principle of comply or explain in Russia in regard to exchange listing," Derisheva said.
She said this principle, in international practice, does not assume that the issuer will comply with the recommendations of the corporate code of conduct, but in that case the issuer will have to explain the failure to comply.
Derisheva said the corporate code of conduct recommended by Russia's Federal Securities Commission (predecessor of the Federal Financial Markets Service) in 2002, "needs updating."
"We want to develop our own exchange code for public issuers," Derisheva said.
She said MICEX-RTS plans to develop its own set of corporate governance rules that issuers in the top two lists should comply with.
Derisheva said earlier that MICEX-RTS plans to change its listing system by the end of this year. The exchange plans to replace the current six sections of the exchange list with three. The names of the new sections are still being discussed, along with the new exchange requirements, including corporate governance requirements, for market participants.
Derisheva said the first (higher) quotation list would be based on the existing lists A1 and A2, the second would be based on lists B, V and I, and the third section would include securities from the current non-listed section.
The corporate governance requirements will apply to issuers whose shares are in the first two sections of the exchange list, or whose bonds are in the first section. The requirements will not apply to issuers in the third section, just as now corporate governance requirements are not applied to non-listed securities. Derisheva did not specify what the requirements would be.
Derisheva also said that based on the first two lists there are plans to create a separate premium segment that will be subject to additional higher corporate governance standards, as well as required disclosure of information in the English language. Issuers will be able to include their securities (common shares) in the premium segment simultaneously with their inclusion in the first or second sections of the exchange list, or apply for the inclusion of securities (common shares) already included in one of the top two sections of the exchange list.
Derisheva said the changes to the listing system would not lead to a dramatic decline in the number of issuers in the first two sections of the exchange list. "We should not lose issuers, on the contrary, we have every chance of increasing their number with securities that are now non-listed," she said.
