The meeting resulted in the adoption of a resolution which notes that appropriate legal regulation of derivatives market is a necessary condition for a continuous inflow of investment in Russia.
Peter Pettibone, Chair of the Investment Committee, stressed in his speech at the AmCham meeting that sophisticated derivatives market gives more stable and orderly envrironment to the financial market in general. Furthermore, as the high level risks are immanent to the derivatives market, it is important to provide the market with a proper legal regulation.
Holly Nielsen, Chair of the Capital Markets and Financial Services Committee, spoke on the current legal regulation of the derivatives market in Russia and announced that it does not meet up-to-date standards and the level of the market development. The terms and definitions of the derivatives market legislation are not sufficiently clear and unified; there are no unified standards of professional activities in the derivatives market; no distinct areas of responsibility are established for different regulators of the derivatives market; and the legal nature of derivatives transactions has not been determined, which leads the courts to treat derivatives contracts as unenforceable agreements.
The participants of the AmCham meeting noted that recently some progress had been made in this area. At the meeting with representatives of the business association "Business Russia" in October 2001, the President of the Russian Federation supported the idea of adopting a special law on trading in futures and options, and emphasized the importance of the derivatives market in the formation of prices for strategic commodities. Pursuing the objective of creating a legal environment for the derivatives market in Russia, a group of the State Duma members - I.V. Lisinenko, P.A. Medvedev and A.G. Puzanovsky - submitted to the State Duma the draft Federal Law "On the Derivatives Market" on November 2, 2001. The Federal Government submitted an official reference to the draft act. The reference was based on the opinions of the Central Bank, Ministry of Economic Development and Trade, FCSM, Ministry of Finance and Ministry of Justice. The Legal Department of the State Duma Office also made its judgment on the draft law. All these authorities supported the idea of adopting a special law to regulate the derivatives market, though they submitted some remarks on the draft.
The working group formed at the initiative of the Russian Chamber of Commerce and the Russian Union of Exchanges and chaired by the Duma members V.S. Pleskachevsky (Property Committee) and I.Y. Artemiev (Committee on Credit Institutions and Financial Markets), also came to the conclusion that it is necessary to adopt a special act on the derivatives market. The work of the group resulted in the draft Federal Law "On Derivatives Financial Instruments" that was presented for the consideration of the State Duma in December 2002.
Finally, The Constitutional Court in its Ruling No. 282-O of December 16, 2002 stated that "…federal legislator shall consider the level of financial market development, the situation with the state control over the market, the significance of offsetting forward contracts for the accumulation of taxable revenues, and the impact of forward transactions on the stability of the Rouble and shall set forth the rules of access to the derivatives market for the market participants, forms and methods of control over them, the system of guarantees and insurance mechanisms as the preconditions for the organized market of such contracts."
The position of the participants was summarized in the resolution which supports the opinion of the Constitutional Court and announces that appropriate legal regulation of derivatives market is necessary for a continuous inflow of investment in Russian economy.
The American Chamber of Commerce (AmCham) in Russia was established in 1994 as a voluntary non-profit organization of USA businesses operating in Russia. Since January 1994 the organization has been accredited with the Chamber of Commerce and Industry of the Russian Federation. Now AmCham has two large offices in Russia - in Moscow (head office) and in St.Petersburg - and unites over 500 companies which hold more than 90 per cent of Russia-USA trade turnover and American investments in Russia. The list of AmCham members includes a large number of banks and investment companies which work in various AmCham committees and evaluate the Russian financial markets development strategy from the Western investor's point of view. In 1996 AmCham opened its doors to non-American companies and some of major European, Japanese and Russian companies became its associated members. MICEX has been an AmCham member since February 2000. The mission of AmCham is to promote more favorable conditions for the cooperation of American businesses and their Russian partners in the areas of economy, industry and investment.
