Russian Central Bank recommends brokers not sell foreign issuers' securities to unqualified investors - letter

MOSCOW. July 20 (Interfax) - The Central Bank of Russia (CBR) has sent a letter to brokers with the recommendation not to sell the securities of foreign issuers to unqualified investors, specifically to block the possibility via mobile apps.

"The Central Bank recommends that professional participants on the securities market engaged in brokerage activities refrain from offering individuals that are not qualified investors to buy foreign issuers' securities, except for foreign issuers' securities issued in accordance with Russian legislation, [such as] foreign securities issued by the Finance Ministry, and shares of foreign issuers that conduct their main activities in Russia," according to the letter published on the regulator's website.

The document also recommends "rendering changes as soon as possible to the software and hardware used for remote interaction between a broker and clients, including mobile apps, in order to prevent the possibility for persons who are not qualified investors to submit orders to purchase valuable securities of foreign issuers."

Meantime, the possibility to submit instructions in order to divest of these securities, as well as to close previously opened short positions, should be retained.

Central Bank Deputy Governor Philipp Gabunia earlier on Tuesday announced the regulator's plans to restrict the access of unqualified investors to trading in a number of instruments, primarily in foreign financial ones.

"The most important matter for which we must account is the reality of the instruments that we allow for trading by unqualified investors; and we will restrict the access and possibility of unqualified investors to increase positions, including in foreign financial instruments as a realized risk," Gabunia said when presenting the concept of improving retail investors' protection.