SRO Act on the financial markets


Self-regulatory organizations are non-profit organizations which unite the subjects of business activity working in a certain branch or acting in one market or subjects of professional activity of a certain type. The main idea of self-regulation consists in control and supervising functions ver of the market participants activity transfer to SRO by the state.

In the world practice there are successful examples of self-regulation on various markets. For the first time SRO became widespread at the legislative level in the USA and Great Britain, and then also in the countries of the European Union. Self-regulation is most often practiced in the world on the advertizing and financial markets.

In Russia self-regulation is already applied in construction, design, power, advertizing, audit, etc., and since January 11, 2016 in Russia SRO Act has come into force on the financial market. It means that such organizations have to acquire the status of SRO in one or several spheres: there are 16 of them, including brokers, dealers, depositaries, NPF, insurance companies, IFI, Forex dealers activity and so forth.

For obtaining the SRO status on the financial market organization have to unite not less than 26% of all the organizations in the respective sphere, so each kind of activity can have no more than 3 SROs. This restriction is motivated by the fact that it has to lead to prevention of SRO "smalltimers" creation.

As for SRO Forex dealers, special requirements are imposed to them: only Forex dealers can become members of such SRO, at the same time organization is obliged to form an indemnification fund – not less than 2 million rubles from each participant are contributed to it.

One of negative factors of the new law is the binding character of SRO membership unlike the traditional model of self-regulation based on voluntariness of association. By the legislation it is established that since January 1, 2016 participants of the market have to obtain the license at the Bank of Russia for of the activity implementation and have to join obligatory a profile SRO. The problem is that at the moment there are no SRO Forex dealers accredited by the regulator on the market.

Moreover, the law establishes almost a monopoly of SRO that contradicts to the concept of self-regulation: a large number of SROs on the market has to promote competition between them and development of the best standards for the investors benefit. Although according to the new law standards are developed by SRO, then they are approved by uniform body in the Bank of Russia. Thus, self-regulatory organizations are deprived of freedom at establishment of standards and rules of professional activity.

Perhaps, one more negative factor for the Russian companies is the fact that the law does not concern foreign Forex dealers, working on the territory of Russia It has already led to the fact that some participants of the market have closed the Russian structures and began to carry out activity in foreign offices.

The positive moments of SRO Act on the financial market generally concern clients of Forex dealers. As a result of double control from the regulator and SRO transparency of the market will increase. At the same time at the expense of high requirements to the companies and the established standards of SRO unfair players interfering with healthy competition development will leave the market. Besides, the mechanism of investors judicial protection was introduced: earlier transactions on the Russian Forex market had no any.

Nevertheless, so far it is unknown, whether the law will be effective: it will become clear in several months when the first accredited SROs will appear on the market. It is possible to tell that Forex dealers are subject to the highest regulatory risk among all the participants of securities market. It is caused by "dampness" of the law, incomplete regulatory base and the negative relation of the regulator to the off-exchange markets.