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2 Oct, 2009 14:53

Financial Markets Service pushes market reforms and financial education

The RTS stock exchange is to expand its working hours until midnight, possibly starting later this month. The Head of the Federal Service for Financial Markets Vladimir Milovidov spoke exclusively to RT Business.

VM: I believe quite soon we will reconsider the way the RTS index is calculated, and we will make some adjustments to the RTS rules. From now on, the RTS index will take into account the deals concluded through RTS Standard.

Essentially, this means the RTS index will reflect the situation on the market from 10:30 a.m. until midnight. In this way, it will reflect the dynamics of both the Russian market, the European market, and the US market, which opens roughly the same time the Russian market closes.

I think it’s a very important step which will help expand the boundaries of trade on Russian exchanges. And I believe the fact that there is a significant increase in the volume of trade on RTS Standard indicates that people are interested in this.

We very much support this initiative and will do what we can to promote it.

RT: Do you still favor the creation of a toxic bank for bad loans?

VM: There is a variety of investment fund called a credit fund. Currently, some banks are using these funds to hold their bad assets. Such a mechanism does exist, and people use it.

I repeat, I’m in favor the market-based approach. If it’s convenient, let them use this method. If the Central Bank thinks something is wrong with this process, it can regulate it.

Our goal is to provide an instrument, not to impose it.

RT: One of the most common adverts on Moscow metro is on foreign exchange trading. They are targeting one of the most financially-knowledgeable people. Are you planning to legislate against that?

VM: Yes, this problem does exist, and it is quite serious. I think there are several methods we should use to solve it. One of them includes educating people in matters of finance.

We are working hard to educate people in terms of finance.

But in addition to that, I believe we need to work together with the Bank of Russia to have tougher restrictions for those companies which work on the unregulated market and which divert productive savings, which could have been invested in major companies and used for economic growth. These companies divert people’s savings to purely speculative deals, often outside Russia. And in this way, capital flows out of Russia.

Of course, we cannot put up with this. But I repeat, we need a comprehensive approach, and the Federal Financial Markets Service is not the only agency that needs to work on that.