Russia might pass prudential oversight bill in 2012 - regulator
MOSCOW. Nov 23 (Interfax) - The State Duma might pass a bill on prudential oversight as early as in the spring session, the head of the Federal Financial Markets Service (FFMS), Dmitry Pankin said Wednesday at the Russian Financial Forum organized by Vedomosti.
Pankin said the regulator believes that capital requirements for professional market participants are important for surviving a financial crisis. The bill on prudential oversight would tie minimum capital requirements for market participants to the amount of risk they carry, he said.
In addition, Pankin said, the world is currently discussing quasi-cyclical regulation, where tough capital requirements are set in a stable situation amid economic growth, but reduced at times of crisis.
"This subject is controversial and very interesting. It requires a balanced approach," Pankin said.
In conditions where the domestic market is dependent on the international market, additional restrictions on the stock market "will not work," Pankin said. He recalled that during the 2008 crisis the regulator resorted to suspending trading and imposed restrictions on short trading and margin deals.
Pankin said that the FFMS plans to change the mechanism for suspending trading by the end of this year. Trading will be suspended for 30 minutes instead of for an hour, as is the case now. In addition, there are plans to introduce the mechanism of discrete auction.
Pankin believes that a central counterparty is a fairly strong mechanism for financial market stability as it increases the reliability of trade settlement.
Pankin also said that in 2012 there are plans to introduce tracking of over-the-counter derivatives, which will enable the regulator to assess the depth of the market and allow market participants to carry out liquidation netting (mutual settlement of obligations when one of the counterparties goes bankrupt).
"We have an armored train, and the cavalry is waiting in the bushes. It'll come if needed," the chairman of MDM Bank , Oleg Vyugin said after Pankin's speech.