Russia to create new laws to fight insider trading

[JURIST] The head of Russia's Federal Financial Markets Service (FFMS) [official website], Vladimir Milovidov [official profile], said Monday that next year Russia will create new laws that regulate insider trading [FFMS backgrounder] and establish a compensation fund for victims of investment fraud. The compensation fund is to be modeled after a program of the Russian Deposit Insurance Agency (DIA) [official website], which insures individual bank deposits. Milovidov's comments came as an attempt to clarify statements made earlier by Prime Minister Vladimir Putin [official website, in Russian] to a meeting of the government presidium in which he condemned the effect [Moscow Times report] that foreign markets have on Russia's domestic share prices, but added that Russia did not want to restrict foreign investment. Also on Monday the government approved a set of draft laws that would punish the manipulation of stock prices. The laws must now go before Russia's State Duma [official website, in Russian] for approval.

The FFMS was originally created in 2004 as a successor to the Federal Commission for the Securities Market (FCSM) through a decree by then-president Putin. It was given the duty of controlling and supervising activity in the financial markets, including the activity of exchanges, and issuing relevant regulations. In 2006, the FFMS had proposed laws against insider trading, but the original draft was considered inadequate. Last year Russia created a new division [GAAP-IRFS report] within the FFMS in order to help combat insider trading, but it is unclear whether this has had any effect. Russia has two primary stock exchanges, the RTS and the MICEX [exchange websites].



 

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