The problems of the legal support for the derivatives market in Russia were emphasized in the decision of the Constitutional Court of 24 December, 2002, the written reasoning behind the veto of the RF President of 10 October, 2002, and numerous statements made by foreign and domestic investors. As is well known, the underdevelopment of the derivatives market in Argentina contributed to the severe financial crisis, which has been shaking that country for more than a year. At the same time, not enough efforts have been made in Russia to promote the legal support for the derivatives market. The State Duma's Committee for lending institutions and financial markets and the National SecuritiesMarket Association have helped to make an important step towards the development of the derivatives market in Russia by inviting a leading international organization and organizing its meetings with all circles offering approaches to this problem.
ISDA has worked out unified legal terms for over 20 counties, this is why joint work with this organization will be very important for the adoption of quality legislation on the derivatives market, which would meet world standards.
The head of the ISDA delegation and ISDA's executive director Robert Pikkel welcomed the legislative initiatives of the State Duma and said ISDA's experts were prepared to assist the development of the derivatives market in Russia.
ISDA's meetings focused on the following issues:
- market regulation,
- judicial protection for transactions on the derivatives market and transactions involving derivative instruments,
- the necessity of the netting procedure, etc.
V. Zubov V. Zubov thanked ISDA's experts for helpful cooperation and expressed his hope that this cooperation will continue to develop, helping to create the legislative base of the derivatives market in Russia.
ISDA held a round-table talk with members of the banking community, called "Banks' activity on the market of derivative instruments: international experience and opportunities in Russia." The participants of the round table agreed that lending institutions' transactions involving derivative instruments were important for both the Russian economy (insuring exporters' price risks) and banks themselves (the diversification and hedging of their transactions).
As the round-table talk showed, the derivatives market is interesting and important for banks. The successful functioning of the derivatives market is impossible without the participation of banks, which make trading transactions and perform clearing services. At the same time, the inefficient legal support for the participation of Russian banks in the derivatives market hampers its development. Thus, the 1992 Law "On commodity exchanges and exchange trade", which still regulates the derivatives market, imposes unjustified restrictions on the participation of banks in this market. In this connection, the priority task is the improvement of the existing legislative base. Support, received from such an authoritative international organization as ISDA, is very important.
On 19 March, a conference, called "The tasks of the development of the Russian derivatives market: Western approaches and the international experience", and the sitting of the working group for the problems of netting evoked a great interest of the participants. These events were held with the participation of the International Association of Lawyers, the RF Chamber of Commerce and Industry and the US Chamber of Commerce.
Participants of the meetings decided to continue their work on the development of the Russian derivatives market in the framework of the joint working group of the RF State Duma and the National Securities Market Association for the derivatives market and derivative instruments.
The International Swaps and Derivatives Association (ISDA) is the largest international association comprised of lending institutions of Europe and America. ISDA has its offices in New York, London, Tokyo and Singapore. The Association represents the interests of participants in the markets of financial derivatives for interest rates and currency, credit swaps, swaptions, etc. ISDA's aim is the development of the efficient market of financial derivatives. ISDA's Committee for Central and East Europe was established to promote the understanding of ISDA's Master Agreement and substantiate the necessity of the introduction of netting in the off-exchange trade in derivatives.
