These new functions required a considerable overhaul within the Central bank, essentially a brand new control and oversight infrastructure. We completed the task of establishing the megaregulator, integrating the FFMS, 9 months ahead of statutory deadline.

The three work streams of the megaregulator are financial market regulation and oversight, market development, rights protection for financial services clients and minority shareholders.

It is hard to overstate the importance of control, but what is more essential today is to maintain the growth of the financial sector in general. Pension savings, insurers’ reserves are all long-term money sources for the economy, a factor that shapes the domestic investor, and the formation of the domestic investor, our own, internal one – becomes a matter of vital importance when access to foreign capital markets is limited.

These markets are currently under-developed. At the close of Q3 2014, for instance, the insurance assets to GDP ratio was 2%, which in developed countries is 30%, pension funds to GDP is 3%, versus 70% in developed countries. This indicates a very high growth potential for the above mentioned market segments.

We think the aims and goals of our policy should be clear and transparent, and we are currently drafting Key Financial Market Development Policies 2015-2017. The document will essentially be the development strategy for all financial market sectors. The main areas and methods will be outlined there as well.

What exactly have we done? We have launched the Financial Oversight Committee (an analogue of the Banking Oversight Committee). The mandate of this Committee includes key regulation and oversight issues in the financial market.

We have established a unified inspection – The Bank of Russia Supreme Inspection. It performs audit of banks and non-banks, creating thorough control in the financial market, mitigating risks of migration of suspect transactions from banking to non-banking.

We have introduced Monitors for Top 20 companies in the insurance market, similar to banks, allowing us to nip in the bud any problems that major insurance companies may have.

We have stepped up closed-end share investment fund oversight, battling speculative prices that allowed puffing up balance sheets.

We have stepped up supervision of depositaries to eliminate abuse of owners’ rights and ban false assets from balance sheets.

2015 will see the launch of non-state pension fund guarantee system. Today, the corporatization procedure has been greenlighted by 44 non-state pension funds. These are the majors, accounting for a 90% share of the pension savings market. Thorough audits are underway in order to make sure only the financially stable companies are accepted to the system.

Radical reforms have taken place in Motor Third-Party Liability regulation.

The Bank of Russia has drafted necessary regulations, namely Motor Third-Party Liability rules, maximum limits of base insurance tariffs, insurance tariff ratios and their structure, insurance premium calculation procedure et cetera.

This summer, the Bank of Russia audited 17 insurance major network companies for Motor Third-Party Liability forms. We know it was a problem: ‘no MTPL forms available’ was the pretext for not drawing up contracts. Complaints regarding the absence of forms – we hope our audits played a part in this – have been reduced by 17%.

At the same time, we have boosted financial stability oversight in insurance companies selling Motor Third-Party Liability.

However, a lot remains to be done in this market due to the backlog of problems that have accumulated over the years. Central Bank will actively pursue this line of work to make the insurance company business model more robust, but primarily to provide access to reliable and quality service for clients.

We have set up a special financial market consumer rights protection service. We intend to make its outreach broader and expect to hear more complaints as a result. Today, people often prefer to not complain, because they see it as futile, expect no reply. We hope that as our efforts become more effective, we will hear more complaints and do more work to improve control and oversight.

(From Ms.Nabiullina’s address to the Federation Council, 26 November 2014)

28.11.2014 15:03 / Elvira Nabiullina

OUR POLICY GOALS MUST BE CLEAR A little over a year ago, the Bank of Russia became megaregulator, spreading its control and oversight functions to other financial market segments besides banking. It’s a mass of work, tens of thousands companies: 572 in insurance, 1790 in collective investment, almost 4.5 thousand in microfinance, some 8 thousand pawn shops et cetera. Compare this with a mere 842 companies in banking services, 790 of which are banks.

29.04.2014 15:56 / Denis Spirin

The Ideal Model: Why We Need the New Corporate Code The new Corporate Governance Code, passed by the Government and Russia’s financial market megaregulator, the Bank of Russia, deserves to be the news of the day. Sceptics may object that the Code is merely a recommendation, and the best practice of corporate governance contained therein is detached from reality.

09.04.2014 14:06 / Anatoly Karachinsky

IDENTIFYING PERFORMANCE RESERVES OF FINANCIAL MARKETS Russia’s financial market produces a staggering billion-plus paper documents yearly. Every individual has to open a bank account, buy insurance, pay fines, taxes, and housing bills. Most people do it by signing papers and wasting time in queues. Most companies have to keep paper copies of their official reports and electronic transactions.

25.02.2014 13:30 / Anna Kuznetsova

New listing rules will boost transparency, strengthen corporate governance Moscow Exchange is currently reforming its listing rules, a process that will strengthen the market for both issuers of stocks and bonds, while providing domestic investors with an opportunity to diversify their investment portfolios.

28.01.2014 15:10 / Ksenia Yudaeva

Reserve Currencies and the Role of the Ruble The Bank of Russia policy focus has shifted to inflation targeting, sparking a debate on intervention practice and prompting us to reconsider the prospects of the Ruble as a reserve currency.

14.10.2013 13:35 / Alexei Kuznetsov

Taxes and Russian IFC’s Competitive Edge Taxation should not hinder financial market development. This is the motto of MIFC Taskforce’s Tax Project Group that drafts tax reform proposals.

02.10.2013 12:00 / Sergei Shvetsov

The Regulator Needs to Hear the Market A month has passed since the financial markets megaregulator was established. We have solved the key task for the transitional period of FFMS-Bank of Russia merger — maintaining continuity of service, essential for the functioning of the market. We have now initiated systematic analysis of current affairs — from the regulation, control and oversight perspective — in each financial market segment.

11.09.2013 13:45 / Alexander Voloshin

Reforms that benefit the market More than three years have elapsed since Moscow International Financial Center Taskforce was established. We have managed to achieve various degrees of progress in all key performance areas of Moscow’s development as an international financial center.

11.09.2013 12:15 / Igor Jurgens

Self-regulation is balancing rights and responsibility The adopted financial market self-regulation law and the implementation of related practices is an evolutionary step for production forces, to borrow a scientific term. From a common perspective, self-regulation is an absolute must, with the increasing importance of roles played by civil society and the business community. The pendulum has swung from unchecked democracy of the early 90’s to equal partnership of the 00’s to state supremacy. The pendulum must be kept on track: the state is unfit to handle all regulatory functions without considering the interests and healthy intentions of the business community.

11.09.2013 11:59 / Oleg Vyugin

On megaregulator priorities The key starting objective for the new regulator is to reconsider the paradigm of financial regulation based on the prospective advantages of the ongoing megaregulator project. We must aim to minimize the negative impact of structural overhaul of the regulation system.

11.09.2013 11:45 / Alexey Timofeev

The market anticipates Central Bank’s attention to business specifics The establishment of a Central Bank-based megaregulator is a pivotal change in the entire financial market regulation and oversight system. The reform is one of the key phases of system development. An outstanding contribution to the financial market has been made by the Central Bank predecessors – FFMS, FCSM, Minfin, the Russian Insurance Supervision Service and the Labor Ministry, and it would be inappropriate to call the new reform a clean-up of their failed attempts. Using failures as a pretext to delegate financial market regulation functions means going back to square one, a way to justify any regulatory measures that would appear an improvement by mere contrast. This is misleading, since the financial market that has taken shape in Russia is far from its nascent stage.