Actual problems of regulation of the release and circulation of structured financial products

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Abstract

The market of structured financial products in emerging economies is a young phenomenon which carries a number of disadvantages. In more developed financial systems in the United States and Europe, it operates in conditions of clearly functioning mechanisms for
protecting the rights of consumers of financial services. Despite the efforts made by the Bank of Russia, the system of protection of the rights and legitimate interests of investors, especially individuals, remains incomplete in Russia. There are problems regarding the operation of the information disclosure system, the facts of insider information abuse and market manipulation. Frequent changes in legislation, as well as continuing legislative gaps, create uncertainty. Despite significant discrepancies in the interpretation of the term “structural product”, the grounds for fixing it in legislation and making it “legal” have not yet developed. A structural product, as an artificial or synthetic phenomenon, will be regulated through the application to it of norms relating, respectively, to contracts or securities from which such a product is formed. Also, when purchasing securities on the exchange, the rules on clearing settlements must be observed, and in some cases – on settlements with the participation of a central counterparty, whose functions are traditionally performed by non-bank credit organizations licensed to carry out clearing activities. The task of improving the regulatory framework in order to regulate the issue and circulation of structured products in Russia is especially relevant due to the rapid growth in the number of retail investors.