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Russian self-regulatory organization (SRO) National Association of Stock Market Participants (NAUFOR) said on Tuesday it has sent a proposal to the Central Bank of Russia (CBR) concerning possible changes in the existing law for license cancellation for non-banking financial institutions (NBFIs), including management companies and participants on the securities markets.
The SRO suggests the central bank should delicense NBFIs only as a last resort measure in cases where companies have performed significant violations that threaten investors’ interest and no alternative measures could influence violators. In other words, license cancellations should be a right, but not an obligation of the CBR.
In addition, NAUFOR suggests the CBR should be obliged to inform financial institutions and the SROs they have joint when a license revocation is in place. In addition, the bank needs to provide in the license revocation notice a list of the violations that the delicensed entity has committed and which have led to the delicensing decision. The company should receive the opportunity to give an explanation and defend itself in such cases, as well as to appeal the CBR’s decision. All this would lead to a fairer process and decrease in the chances of error, not to mention that it would sent a message to other market participants to pay special attention to compliance with certain standards.
According to NAUFOR, currently the language used by the CBR in its decision notices is too general and vague and no specific violations or reasons for delicensing are provided to entities. This prevents entities from objecting and appealing the decision.
The proposals aim to address some shortcomings that affect the financial market stability, according to the NAUFOR.