RUSSIAN FEDERAL SECURITIES COMMISSION

The Russian Federal Securities Commission was created in 1996 to oversee registration of equity shares issued by Russian private enterprises.

Although the stock market existed in Russia prior to mass privatization of state enterprises, the volume and significance of stock exchange transactions increased many times as a result the rapid privatization that began in 1992. It therefore became necessary for the Russian government to develop the institutional structure necessary for a stock market and private equity ownership to work efficiently and lawfully. Among other things, this requires a public registry of stockshare ownership. This had not been required prior to 1996, and Russian enterprises maintained their own registries, a situation that was conducive to fraud, misrepresentation, and difficulty of access. The 1996 Federal Securities Law mandated that companies place stock registries with an independent organization, and created the Russian Federal Securities Commission to resolve custody disputes and settlements in accordance with international practice.

The Federal Securities Commission was also charged with coordinating the activities of the several agencies that have overlapping jurisdictions governing the securities market, including the Central Bank, the Anti-Monopoly Committee, the Ministry of Finance, and certain Parliamentary committees. This has not been an easy task. Also, although legislation gives the commission the power to levy civil and even criminal penalties, it must rely upon the police and tax inspectors to enforce any penalties. Enforcement has remained a problem, but much progress has been made since 1996.

See also: privatization; stock market

bibliography

Gregory, Paul R., and Stuart, Robert C. (2001). Russian and Soviet Economic Performance and Structure. New York: Madison Wesley.

Gustafson, Thane. (1999). Capitalism Russian-Style. New York: Cambridge University Press.

James R. Millar