Russian financial market

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Russian financial market
Federal Financial Markets Service of Russia
Presentation by Dr. Vladimir GusakovDeputy Head
of FFMS of RussiaAmsterdam, 7 November 2005
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Key economic indicators
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Indicators of the capital market development in
Russia appear positive

• Capitalization of the stock market has grown 8
  times since the end of 2000
• Credit rates for Russian enterprises have reduced
  two-three times since the beginning of 2000
• Volume of provided credits grew 7.9 times in 5
  years
• Investment raising on securities market grew 9.7
  times in 2000-2004

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Stock market capitalization, bln rubles
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Credit rates for non-financial organizations
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Dynamics of lending in real sector of economy
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Volume of investments raised by Russian
enterprises on securities market, mln USD
Year Corporate bonds Equities Eurobonds ADRs Total
2000 1 020,3 - 75,0 509,7 1 605,0
2001 963,1 - 581,8 - 1 545,0
2002 1 718,3 13,3 3 692,9 145,8 5 570,3
2003 2 684,1 0,5 8 685,0 - 11 369,6
2004 5 017,5 331,2 9 950,0 233,1 15 531,8
2005 Jan-Jul 3 561,8 222,7 9 996,6 2486,9 16 268,0
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Volume of investments raised by Russian
enterprises on securities market, mln USD (2)
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Development of the financial markets institutes

• Since the beginning of 2000 assets of the banking
  system grew five times and reached 7.9 trillion
  rubles
• Assets of the investment funds grew 17 times and
  reached 146 billion rubles
• Pension reserves of non-state pension funds grew
  11 times and reached 176 billion rubles
• Registered capital of the insurance organizations
  grew 14 times and reached 136 billion rubles

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Assets of the banking system
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Pension accruals
Forecast Source Pension Fund of Russian
Federation
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Assets of the investment funds
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Number of mutual funds investors
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Threats of the Russian securities market

• Many Russian companies dont recognize domestic
  market as a main investments source
• Lack of liquid, quality assets for investment of
  obligatory accumulative systems assets
• Large influence of speculative funds
• Trade of Russian assets goes under foreign
  jurisdiction

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Causes of threats

• Noncompetitive level of entering costs to capital
  market because of underdevelopment of
  infrastructure, instruments and regulation
• High property investment risk because of
  insufficient legislation and weakness of
  enforcement mechanisms
• Inactive retail investors because of inconsistent
  state policy in the pension reform area

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Main strategy of financial markets development

• Increasing competitiveness of all financial
  market institutions including regulator itself as
  well as financial intermediaries and
  infrastructure
• Creating legal environment for advanced financial
  instruments for risk hedging and securitization
• Developing legislation and regulation for
  effective protection of investors and clients of
  financial service providers

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Developing stock market infrastructure

• Creation of the central depository
• Creation of legislative basis for development of
  national capitalized clearing system
• Development of trade and settlement systems on
  the stock market

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Developing the financial markets instruments

• Ensuring court protection for derivatives
• Creating legal environment for financial assets
  securitization (mortgage backed securities,
  credit linked notes, etc.)
• Creating legal environment for commercial papers
  market
• Improving efficiency of investments raising on
  securities market (domestic IPOs)
• Creating legal environment for Russian depository
  receipts

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Better protection of investors rights

• Adopting the law to fight insider trading and
  market manipulation
• Protecting shareholders rights in MA process
• Amending Administrative Code substantial
  increase of fines and penalties
• Improving corporate legislation and corporate
  governance practice

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Federal Financial Markets Service of Russia
9 Leninskiy prospekt Tel. [phone]
119991 Moscow Russia Fax [phone]
http//www.fcsm.ru