Bank of Russia refuses to sell all shares in Moscow Exchange, SPCEX

Bank of Russia, the regulator of all of Russia’s financial markets, today issued an announcement, in which it states it is not willing to stop being a shareholder in the country’s two biggest trading venues: OJSC Moscow Exchange MICEX-RTS (OJSC Moscow Exchange) and CJSC Saint Petersburg Currency Exchange (CJSC SPCEX).

It is not by chance that the Russians call their Central Bank the “Megaregulator”. Under a federal law from June 2013 – ‘On Amending Certain Laws of the Russian Federation Due to the Delegation to the Central Bank of the Russian Federation of the Authority to Regulate, Control and Supervise Financial Markets’, the Bank of Russia gained extra powers and assumed the duties of other financial institutions. It became a megaregulator indeed. LeapRate reminds you that the Bank of Russia will be responsible for the regulation of the country’s Forex industry too.

The law from June 2013 came along with a number of requirements for the Bank of Russia too. Article 49 is the one important to us in this case, as it demands from the bank to cease being a shareholder in Moscow Exchange and Saint Petersburg Currency Exchange. Under the law, the bank should dispose of all capital in the exchanges by January 1, 2016.

The Central Bank has made steps to comply with this requirement last year. In July 2014, it sold 267,274,238 shares (or a 11.73% stake) in OJSC Moscow Exchange. This equalled half of the bank’s shareholding in MOEX.

Today, the Central Bank has changed its stance on the matter, referring to recent geopolitical climate changes. The announcement by the regulator says:

“However, due to the further developments in the geopolitical situation and consequently the necessity to retain comprehensive regulator’s control over the functioning and development of the national exchange infrastructure for an undetermined period, the Bank of Russia considers complete withdrawal from the capital of OJSC Moscow Exchange and CJSC SPCEX inexpedient”.

The announcement specifies that the Bank is seeking the withdrawal of the provision in question from current legislation and that it has held preliminary consultations with concerned participants of the legislative process and has sent the corresponding proposals to the Russian Ministry of Finance.

To view the official announcement by the Bank of Russia, click here.

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