MOSCOW. Feb 13 (Interfax) - The Russian Federal Financial Markets Service (FFMS) has sent the government proposals to increase its powers.

Russian President Dmitry Medvedev, speaking at a meeting of the international advisory board for the creation of an International Financial Center in Moscow at the end of October last year, asked for the proposals to be made by February 1.

"The FFMS considers it timely and necessary to develop and strengthen the system of state oversight in the financial markets, partly by increasing the oversight powers of the FFMS," says a letter signed by Dmitry Pankin, the service's chief, dated January 16, 2012, seen by Interfax.

Signing up to IOSCO

The letter contains seven proposals to endow the FFMS with more powers.

First is the right to obtain information about the bank accounts and transactions by private individuals and legal entities, and by sole proprietors.

The FFMS wants this right in order to join the International Organization of Securities Commissions (IOSCO). This will enable the Russian regulator to gain access to information from the financial markets regulators of other countries, including those where Russian businesses have a strong presence. The FFMS is particularly interested in information from Britain and the United States. It has been trying unsuccessfully to establish bilateral contracts to exchange information with regulators there for years, and signing up to the IOSCO will solve that problem, but the FFMS will have to do so by the end of this year.

Pankin has said the State Duma had its objections because the FFMS would have an unlimited right to request information about any bank accounts, which could be interpreted as encroachment on banking secrecy. The FFMS could also turn into a kind of police service. In reply, Pankin proposed spelling out such situations and the procedure for requesting this information from banks.

The Russian Economic Development Ministry at the end of January published a bill, drafted by the Finance Ministry, according to which the FFMS can obtain access to bank accounts in order to join the IOSCO memorandum.

The FFMS desires

The Russian regulator's other proposals are no less important. Pankin told reporters earlier that the FFMS proposals would concern the more acute issues of the day - access to bank accounts and differentiating fines.

The letter says that the FFMS asks for "the opportunity to apply professional judgment when exercising oversight functions, prudential oversight and reviewing corporate relations."

The FFMS would also like the right to file suits with arbitration courts to safeguard the rights and lawful interests of an unlimited circle of investors, insurers, private individuals who are participants in legal relations pertaining to pension provisions.

The service also wants the right to petition courts to enforce its recommendations and demands and the right to control the fulfillment by organizations under supervision following the withdrawal and annulment of licenses.

"Police" service

Two of the FFMS proposals stand out. One of them is presented as essential to implement the law on insider trading and manipulation. The FFMS wants the right to demand that organizations provide it with records of data exchange and the necessary information "from any person with respect to whom there are grounds to believe that person possesses the required information," and the right to summon that person to provide information and to provide written and verbal clarifications.

In addition, the service is seeking the power "to exercise control over changes and the financial situation of the owners of organizations under supervision." The FFMS previously sought only to disclose the ultimate owners of companies and the right to approve the directors of professional securities market participants, as the Central Bank does with respect to banks.

This and the other powers that it seeks could turn the FFMS into a regulatory body with more authority than the Central Bank.

And that's not all