Source: Central Bank of the Russian Federation in English
17 November 2020
Members of the Bank of Russia Expert Board for Retail Investors Protection have come out in support of the initiative which sees testing for entry-level investors starting between 1 July and 1 October 2021 — several months earlier than established by law.
Although the numbers of entrants to the financial market have recently risen quickly, most first-time investors fail to fully understand the specifics and risks of investment financial instruments. There are plans to implement the tests through self-regulatory organisations’ standards.
The tests will consist of two parts: questions about product specifics and those about investor experience with a product. The market’s self-regulatory organisations, the National Finance Association (NFA) and the National Association of Securities Market Participants (NAUFOR), have proposed basic content for the tests, which is to be verified with focus groups shortly.
The Expert Board’s members are supposed to look into the proposed set of questions and make changes as necessary. All brokers should receive the same number and content; in this way, the equal footing principle for investors will be guaranteed.
‘The testing process should be straightaway and not protracted. It should also make a filter to protect an entry-level investor against irrecoverable errors which may occur, including owing to unscrupulous financial advice’, said First Deputy Governor of the Bank of Russia Sergey Shvetsov.
The Board’s members discussed the issue of delineating responsibility when information system failures occur in remote trading. The issue will need follow-up efforts.
Also, opportunities and channels were deliberated to clarify new regulatory requirements for entry-level investors. The Board’s members spoke on the importance of cooperation with bloggers and opinion makers to enhance consumer awareness about investment opportunities and risks. In particular, the Board intends to advance its interactions with the Financial Literacy Development Association, which set up the Financial Blogger Club.
Rostislav Kokorev, head of a financial literacy laboratory at the Lomonosov Moscow State University, was elected Head of the Expert Board for Retail Investors Protection.
Preview photo: Jacob Lund / Shutterstock / Fotodom