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Exchange Trading Act is Passed

23.11.2011 10:00 / MIFC

On November 22 Russian President Dmitry Medvedev singed the Federal Exchange Trading Act which regulates relationships of commodity or financial markets exchange trading. The Act sets requirements to the exchange trading organizers and participants, and defines the basis of state regulation. The document was passed by the State Duma on November 2 and approved by the Federation Council on November 9, 2011.

The Act unifies basic concepts of exchange trading, conduct of exchange trading principles, price information dissemination, requirements and conditions for acquisition of exchange trading licenses. According to the Act, only a commercial partnership with a stock exchange or trading system license can act as an exchange trading organizer. Exchange trading organizer has a right to hold trading provided that exchange trading rules have been duly registered by the financial market authority.

Exchange trading organizer’s annual report has to include both annual financial reports and consolidated financial statements. The minimum equity capital requirement for licensed stock exchange in the commodity or financial markets as a should be 100 million rubles. The minimum equity capital requirement for a licensed trading system in the commodity or financial markets should be 50 million rubles.

Exchange trading organizers should follow liquidity norms, capital adequacy norms as defined by the federal financial market authority. Exchange trading organizer which combines exchange trading activities with other activities must take actions to prevent and settle the conflict of interests.

It also must disclose the documents of association, trading rules, regulation on exchange committee and annual financial statements with enclosed auditor`s report on annual financial reports and consolidated financial statements. This information should be published on the website.

Moreover, exchange trading organizer should ensure security of the sensitive information provided to the exchange trading participants. It bears responsibility for losses incurred due to the use of unreliable or incomplete information disclosed by the organizer, if the use of such information is obligatory.

The federal financial market authority has a right to perform scheduled checks maximum once a year. It can perform unscheduled checks if a possible violation, acting on private individuals and companies complaints or mass media information. In case of identification of a violation in the business activity of a company, exchange trading can be suspended for up to six months.

The federal financial market authority grants stock exchange and exchange trading system licenses with an unlimited period of validity. A license can be revoked in case of non-performance of a suspension or termination court order, multiple breach of order, multiply failure during one year to present account statements for over 15 days, multiply breaches of disclosure requirements, non-functioning for 1,5 years, and bankruptcy.

The Act does not cover competitive tenders or auctions contracts made in accordance with the Russian law and the wholesale electric power market.

The Act is effective January 1, 2012 with the exception of certain provisions.

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