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RAFMM participants
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Licensing (License types and guarantees) Contents
General provisions This document regulates the activity of the Russian Association of Financial Market Members concerning the licensing of individual financial markets participants and includes the key provisions regarding the licensing and appropriate guarantees. Any provisions of this document are underlying in the Executive Board work with reference to licensing of individual financial markets participants, and they are additional for the Basic Regulations. Any contradictions between this document and the Basic Regulations can be considered as a reason for provisions revising in the order and on terms described below. This document presents all provisions relative to the activity of the Russian Association of Financial Market Members regarding the licensing of individual financial markets participants, proper decisions making order, and also introduction of changes or/and additions to this document. This document can serve as basic for other (subordinate) documents regulating the licensing activity that will be also described further. Therefore, this document can be supplemented and amplified by any special enclosures, instructions or other document types in case of adopting a decision in the order and on terms described in the appropriate part of the document. Herewith, any enclosure for this document must be corresponding and do not contravene with its requirements and the Basic Regulations. Supplements to this document must be considered as its integral part. Separate enclosures to this document can be useful for any activities described, and separate instructions can describe concrete types of activity or recommend some of carrying out order for this activity. This indenture is considered as agreement accepted by each participant of the Russian Association of Financial Market Members, irrespective of the participant's status within the Association. Goals and objectives of licensing The Russian Association of Financial Market Members (hereafter referred to as the RAFMM) accomplishes licensing of individual financial markets participants with the purpose of setting up equal regulations and quality standards for provided goods and services, culture of business (financial) relations running. Apart from this — in cases, exampled in this document, - to give certain guarantees to the third parties (juridical and physical persons). The minimum guarantee is that having this or that license makes the licensee competent for the RAFMM requirements with relation to the given participants league of the financial markets. These requirements are stated herein and available for any person concerned. Besides, the RAFMM license availability means and guarantees that all documents necessary for this kind of license were supplied, being original and compliant with standards, which is to say that the RAFMM license can be treated as confirmation of the company's high status. Herein is given the licensing order (for types of the financial markets participants mentioned in this document), the license recall order and also guarantees and the RAFMM liability restriction. Among the most important goals of the RAFMM are:
In this wise, licensing of individual financial markets participants is considered as striving to the informative and law transparency, equability and standardization in the industry. Licensing order As consisted with this document, for each financial market participant are allowed several license types. Each license type has strict requirements for this kind of market participants and also has guarantees described herein. Thereat, concerning the guarantees it is necessary to proceed from a precondition that guarantees described obviously are provided exclusively in that measure in which they are presented in the present document (i.e. they can not be interpreted otherwise stated in this document). Any other guarantees (direct and indirect, explicit and implicit) are not provided across the board. This detail is regulated by the subparagraph of this document «Liability restriction». The licensing process is divisible
into the following main steps:
Below each paragraph is investigated in details. Submission of license receipt application To initialize the process of the RAFMM license receipt the candidate should fill in an application form and pass it to the Association's Executive Board for consideration. The appropriate blanks are available at the website of the RAFMM — they are publicly-accessible for any applicant and The application must be filled up manually or in electronic form (scanned copy — by e-mail or fax), and (at the discretion of applicant) in paper form (regular post). Starting from the moment of application inflow, the proper participant of the financial market (who sent the request) is considered as a license receipt applicant for one of the types meant for certain financial markets participants. Clearly, the application must be placed on the agenda and considered at the nearest (regular or unscheduled) meeting of the RAFMM Executive Board in case the application fits the requirements outlined in this paragraph, does not have any corrections, mistakes, slips, it is absolutely readable (identifiable), i.e. does not contain the text blocks, corrupted during the information transfer to the extent that they can not be read. Preliminary investigation of the candidate's application by the RAFMM Executive Board Decision concerning the licensing process start-up is made by voting majority of the RAFMM Executive Board members. The reasons for the licensing refusal can be the following facts:
In case the application is rejected the applicant must be informed about it as well as about the reasons of such result within 5 (five) working days. In this regard, the applicant has a right to apply repeatedly or refuse from licensing. In the event of the applicant's request is rejected three times for one and the same reason, the RAFMM Executive Board obtains a right not to include it in agenda and not to consider the request of this financial market member. Favourable decision taken by the RAFMM Executive Board must be authorized by the RAFMM President, after that the applicant gets the status of license seeking candidate. From now on, at the RAFMM website is published the data on the candidate and the information for the fact of initiating the license receipt request with specification of license type. Decision making about licensing process start-up As soon as a financial market participant obtains the status of a candidate for one of the RAFMM licenses, the licensing process takes its rise from data acceptance about this member of the financial markets. Data accumulation on the candidate A licensing applicant must be ready to present to the RAFMM Executive Board all documents confirming the candidate’s compliance to the requirements in accordance with license type and financial market participant. Aside from this, the candidate agrees that this information will be published for unlimited access of all parties in interest at the RAFMM website. In other words, the applicant accepts that this data can be shown to the public and it is not his commercial secret or limited access information. The applicant must submit necessary papers within the time-limit not more than two full calendar months from the licensing process initiation after the RAFMM President approval of the proper Executive Board decision and the candidate’s data release at the RAFMM website. Amid this, in cases specified in this document the applicant can send only electronic copies of papers needed (for example, if the original document is made up in electronic form). Otherwise, - firm (paper) copies of the documents are required, in restrained terms (according to the present document) submitted documents must be notarized. The RAFMM Executive Board keeps a right for the whole licensing period to:
During the data gathering process details about the candidate can be submitted in book-entry form. Upon that, such information can have regard to the RAFMM Executive Board, but it can not be an essential factor for decision concerning the requested license issuance or license dismissal. Besides, the Executive Board can request a documentary proof or refutation if necessary. The result of data collection must be complete package of documents required for taking a decision to issue the asked type of license or to deny the request, and also additional relevant papers able to characterize the candidate, provide essential information about the candidate regarding his compliance with the RAFMM requirements to the financial market participants claiming for a certain license. Document evaluation The collected package of documents is due for evaluation. Each department of the RAFMM including the Executive Board can take part in this analysis within the constraints of its sphere and as directed by Regulations defining each department activity. In such a manner, the RAFMM accomplishes the document evaluation with respect to the given document requirements and active legislation, consistency, with a view to validity period (applicability) of appropriate document etc. In followup of such analysis is made an activity report, which must be submitted for consideration to the RAFMM Executive Board and President. The maximum term of the document evaluation can not exceed one full calendar month since the document package is collected for receiving the license needed. License granting decision At the Executive Board meeting on the basis of activity report is rendered a decision of license issuance to a candidate or license dismissal. In order to this decision to have a power 75% of the Executive Board members or more must vote “pro” such decision acceptance. In case, the number of votes is lower than the minimum of 75%, the Executive Board members must negotiate regarding this matter and set a date of the next meeting not later than 5 (five) working days after the first meeting. During this time a candidate can be asked to provide additional information. To the activity report can be enclosed the papers and data presented in non-documentary form. On the chance, if the point of giving the necessary license type is not settled within three Executive Board meetings, there must be passed a resolution about the application refusal due to impossibility of getting the required number of Executive Board votes. In all other instances (75% or more – “pro” or 75% or more – “contra”), - the decision is brought out on the RAFMM website for the general public and also reaches the candidate with appropriate comments (and recommendations if necessary). Candidate’s data release on the RAFMM website In the event of adopting a positive decision the RAFMM takes the financial markets participant as a licensee. At that, the data for a licensee (received during the information gathering) is released on the RAFMM website for the public exposing. The RAFMM license is an electronic document held in generally accessible data base of the Association which is available by means of the RAFMM website. Upon the data issuance on the RAFMM website, the corresponding financial market participant (instantly) is considered as a holder of a certain license type. Amid this, the information presence in the publicly-accessible data base of the RAFMM unveiled at the website approves the fact that the licensee has necessary license which imposes on him certain obligations to the RAFMM, herewith, the RAFMM has also obligations to any financial market participant (guarantees) in the order and on terms regulated by the given document. The license’s hard copy (on paper) is issued in a single exemplar and must be held by the licensee. It may be scanned and submitted at short notice of any persons in interest. If any financial market participant refuses to convey information on existence or deficiency of the RAFMM license, any related party can obtain this data from the RAFMM website. Absence of any financial market participant in the RAFMM licensee list surely means that the market participant does not have the proper license. Requirements to brokerage (dealing) companies licensing For licensing can be accepted brokerage (dealing) companies established in the Russian Federation territory by the resident entities and consequently, they get under the Russian legislation. The RAFMM can fetch out three licensing standards for brokerage (dealing) companies marking them with Latin characters from A to C. A brokerage (dealing) company pretending to any standard license receipt must measure up the following general requirements:
A brokerage (dealing) company applying for A-license receipt must meet the following peculiar requirements: * Nominal capital (not less than) 1 000 000 (1 million) rubles; * Availability of funds in the amount of (not less than) 5 000 000 (5 million) rubles on the operating account in the Russian bank; * FSFM license for the brokerage activity; *At least, 2 employees with the FSFM certificates; *At least, 3 representative offices in Russia; *Minimum work period of legal body – 1 year; *Minimum number of clients in Russia - 10 000. A brokerage (dealing) company which puts in a claim for B-license must be absolutely corresponding to the requirements below: * Nominal capital (not less than) 100 000 (hundred thousand) rubles; * Availability of funds in the amount of (not less than) 1 000 000 (1 million) rubles on the operating account in the Russian bank; * At least, 2 employees with the FSFM certificates; *At least, 2 representative offices in Russia; *Minimum number of clients in Russia - 10 000. A brokerage (dealing) company requesting for C-license must fit the bill: * Nominal capital (not less than) 50 000 (fifty thousand) rubles; * Availability of (not less than) 500 000 (five hundred thousand) rubles on the operating account in the Russian bank; * Minimum number of clients in Russia - 5 000. Apart from requirements listed above the C- license challenger must sign the obligation of all requirements performance put for B-licensee during two years since receiving the C-license. Thereat, if this obligation is performed, then the process of B-license receiving is initiated. Otherwise, the licensee can not extend the C-license for two more years: licensee who did not carry out his commitments forfeits his license without relicensing right whenever in the future. Guarantees regarding brokerage (dealing) companies In case of recognition a brokerage (dealing) company insolvent (bankrupt), the RAFMM guarantees (at the expense of specialized risk fund formed for these purposes):
In case of momentary (immediate) factual activity winding-up of brokerage (dealing) company (for example, as a result of force majeure or any other circumstances) and amid impossibility of setting up a connection with the company to come upon with law requirements of the clients’ money pay back, the RAFMM guarantees: The clients of A-licensee - cash disbursement in the amount of not more than 50 000 rubles if at least 1 statement is provided and which is signed by a brokerage (dealing) company (electronic signature is allowed) for the existence period if this brokerage (dealing) company; this amount size is determined by special committee formed for these purposes under control of the RAFMM Executive Board; In any circumstances the RAFMM bears no responsibility, it is not liable materially and does not guarantee any compensations or claim repayments concerning less profits than was expected and also moral (or other nonmaterial) damage reparation claims. Investment projects licensing For licensing are allowed the investment projects related to the funds investment at the financial markets (stock, commodity etc.), financial resources management, employment of collective deposits or general management deposits, pools etc. For the present document targets, any project corresponding to the listed essence is called as an investment project and is characterized by the following key features: *One or several financial market participants (not only professionals) accomplish investment or speculative operations at the financial markets; *These operations are executed using some separate capital, which comes in as a deposit, fund, pool and combined (logically) account group etc.; *Herewith, in this capital formation can take part more than one financial market participant, citizen, groups of people or organizations (not only financial institutes); *Individual (or group of individuals) executing capital operations in fact can have or not have its own share in the separate capital; * Individual (or group of individuals) operating with the capital by all means or on condition of some terms satisfaction obtains a reward in the form of fixed sum or part of profit gained as a result of such transactions, notably, the reward amount is set up in advance, and all persons taking part in the capital formation are informed and do not contradict it. * Individuals taking part in the capital formation are aware of all risks related to the professional activity of the financial markets participants, and also specific risks, which can be consequences of organizational features of any concrete investment project. * Cooperation among all investment process participants is regulated by proper documents (including agreements, offer agreements, internal regulating documents of the investment project, rules etc.) and does not go against the Russian legislation, and to the extent that in the legal system is prescribed such kind of interaction, - it takes into account its requirements. Information project claiming for the RAFMM license must meet the following postulates:
Aside from factors indicated above, a decision on the investment project licensing can be impacted by other (of which unformalized) factors, concerning, for instance, the resource working capacity providing the information software for the project, its availability and the information quality presented in it. Such factors must be analyzed by a committee established specially for this purpose under control of the Executive Board, and if necessary with engaging of independent professionals, experts. At least once in half year, regular (scheduled) investment project audit must take place in order to establish a fact that the project still fits the requirements. On request of the RAFMM member an unplanned audit may be executed (off-schedule), if this RAFMM participant provides convincing facts about violation of requirements by the licensee. In follow-up of any (scheduled or unscheduled) audit may started the process of license dismissal. Otherwise, license validity period lasts 5 (five) full calendar years since the license issuance. The licensee is entitled to extend the license amid compliance with the requirements of the RAFMM to different types of the financial markets participants. Guarantees regarding capital investment projects. The RAFMM's guarantees regarding capital investment projects are limited entirely to the fact that the RAFMM could not specified cases of non – compliance with any requirements for the licensed project in terms of the present document at the time of last audit (or at the time of license grant in case if there has not been any audit yet). In addition, in case if the individual capital of investment project is placed at the deposit (account, sub – account) of one of the RAFMM participant (in the brokerage (dilling) company), who has any company's license, then the RAFMM provides guarantees concerning this deposit, which are described in the present document, in so far as they relate to guarantees in the ratio of brokerage (dilling) companies.
Information projects licensing Information projects, ensuring the advisory maintenance of financial markets participants' activity (news, analytics, forecasts, educational materials, policy advices, etc.) are taken for licensing. The information project, putting in a claim for the RAFMM's license, certainly has to measure up the following regulations: - keep within the Russian Federation laws and be without prejudice to them and international legislation in matters of copyright and allied rights protection in terms of intellectual property (the fact of carrying out of this condition is established by a random check using open information source); - keep within the Russian Federation law “TV commercials & Print ads archive” and be without prejudice to it (the fact of carrying out of this condition is established by available information analysis); - keep within the Russian Federation law "On Mass Media" (the fact of carrying out of this condition is established by available information analysis); - user of the project (resource) must be directly and explicitly informed about the possible risks connected with the use of information, information service (or other electronic, software one) or with holons of the project (resource), before he/she starts to use the project (resource); the information about risks must be available at any time during the whole period of resource using (the fact of carrying out of this condition is established by the information resource site analysis and particularly by the risk declaration or any similar document). Besides mentioned above factors, the decision - making on licensing of the information project may be affected by others (which includes not formalized) factors, such as those of them connected with the project (resource) operating capability, its availability and also information quality presented on it. A commission, specially formed for this purpose by Executive Board, has to analyze these factors, if it is necessary with the help of independent specialists and experts. The scheduled (prearranged) audit of information project has to be carried out at least annually. On the requisition of the RAFMM participant the audit may be initiated out of schedule, on condition that this RAFMM participant provides decisive facts, giving evidence of feasibility requirements infraction by the grantee of license. According to the results of any audit (scheduled or unplanned) the recall of a license procedure may be initiated. Otherwise, the license duration comes to 5 (five) full time calendar years from the date of license granting. The grantee has a vested right to extend a license on condition that requirements, lodging by the RAFMM to correspondent types of financial market participants, are satisfied. Guarantees regarding information projects. The RAFMM's guarantees regarding information projects are limited entirely to the fact that the RAFMM could not specified cases of non – compliance with any requirements for the licensed project in terms of the present document at the time of last audit (or at the time of license grant in case if there has not been any audit yet). License revocation order The license issued earlier to one or another financial market participant according to the present document may be recalled in the following cases: the duration of one or several documents, required for the qualifying RAFMM license granting, is expired and the grantee of license has not prolonged his/her full power, determined by these documents or has not started the procedure of its prolongation yet. the grantee of license has permitted a flagrant violation of the present document requirements unconnected with second-rate ones or the RAFMM's Basic Regulations to which this official act is a subsidiary and adminicular. the RAFMM gained access to the information proving the fact of data garbling, falsification, cheat, fake or any other illegal actions on a reasonable basis (for example, falsification of documents) in point of the grantee. the RAFMM gained access to the information proving the fact of existing legislation infraction by the grantee. the RAFMM gained access to the information proving the fact of noncompliance by the grantee of his/her financial or other obligations to another financial market participants (conterparties) without any reasonable verification. the duration of the RAFMM's license is expired and the grantee of license has not undertook any actions for license extension or has not initiated the procedure of its prolongation yet, in case if this type of the license has a duration. Recall of a license is carried out in the following order. The RAFMM Executive Board appoints an extraordinary session immediately after the appearance of the warrant for the recall of a license from the grantee. The question on the alternative choice of the recall of a license is discussing during this session. The present document provides two variants of the license recall: acceptance-free or with the possibility of adopting measures by the grantee to cancel the reason forcing the RAFMM to recall the license. The alternative choice may be defined by a simple majority of the RAFMM Executive Board voting participants. For decision making about the acceptance-free recall of a license there have to be not less than 75% of the RAFMM Executive Board voting participants. In case if the necessary votes low has not won, then the RAFMM Executive Board participants will have to open negotiations upon this question or to start voting again regarding the alternative choice of license recall. If the simple majority of the RAFMM Executive Board insists on the acceptance-free recall of a license then the negotiations on such decision making will have to be carrying out till that moment when 75% of the RAFMM Executive Board participants do not vote “for” this decision. In other words, the delay of recalling the license assuming that it has to be recalled in the acceptance-free scheme is not admitted. In case, if there are 75% or more votes “against” this decision, then the scheme of the license recalling may be revised or the question on the recall of the license may be completely taken off from the agenda (for example, on condition that the facts about motives to recall the license were false). In case if the acceptance-free recall of a license has been chosen, the license will be undoubtedly recalled, no matter whether the grantee has taken any actions to cancel the reasons which led to the license recalling or not. Moreover, in case if the license was recalled from the grantee in the acceptance-free way, then this financial market participant will never be entitled to the RAFMM license trade and it is related to any of the licenses types. In certain cases the prohibition on further (recurring) licensing may also be extended to the grantee's affiliated persons or to his/her subsidiary legal personalities. At the acceptance-free recall of a license the information about the reasons caused the necessity of license revocation and about the grantee himself/herself, the license of whom is been recalling, are embedded on the RAFMM site. Since the moment when this information is placed at the site, the suitable financial market participant ceases to be considered as the RAFMM grantee of license. In case if the variant of license revocation has been chosen, which provides the possibility of taking actions to reasons' rectification, forcing the RAFMM to recall the license, the procedure of recalling will be divided into the following steps: - the Executive Board informs the grantee about the reason incipiency for license revocation, - the grantee of the license is given from 5 working days to one full calendar month (by the decision of the Executive Board) for this reason rectification, - at the expiration of the granted to the licensee period, the Executive Board will again consider the situation upon this issue and if the reason was completely solved then issue is deregulated from the agenda, - in other cases (if the reason which caused the necessity of the license revocation was not deregulated by the grantee, was not entirely solved or in an unduly way) the Executive Board votes on the question about the license recall. In this case for license revocation not less than 75% of Executive Board members votes are necessary. However, if needed votes minimum was not achieved during the first Executive Board meeting upon this question, then the extension of time for the final decision making up to 10 working days may be appointed. During this time the Executive Board members have to negotiate and/or, if it is necessary, to compile additional information, essential for decision making. At the recurring meeting the decision must certainly be taken. In case, if there are more than 75% of Executive Board members votes “against” the decision about revocation, the question may be finally taken form the agenda. On condition if the final decision about the license revocation is taken, this information including the reason of recalling and details about the financial markets participant, from whom the license is been recalling, are published at the RAFMM site. Since that moment the financial market participant ceased to be considered as the RAFMM licensee. Moreover, in this case, as at the acceptance-free recall, the financial market participant loses the opportunity to become the RAFMM licensee some time regarding any type of licenses. Liability restriction The guarantees described in the present document are complete and capable. This means that none of other guarantees can be taken into account, be implied or be treated as implicitly provided. In other words, the RAFMM guarantees nothing by no means and is not responsible in no shape concerning any third parties, no matter whether they are the licensees, candidates for license granting or fellow applicants or do not take any part in the procedure of licensing, described in the present document additionally to those guarantees and that responsibility which are explicitly specified in this official act. In particular, the RAFMM under any circumstances can not be whatsoever responsible for the financial markets participant obligations (including financial obligations to third parties), even if he/she is a licensee, unless otherwise is not indicated herein. The same applies to the cases of a dispute (conflict) situations between the financial markets participants, force majeure and the occurrence of contingent liabilities such as any guarantees and any liabilities of the RAFMM for the obligations of the licensee may only take place providing that it is explicitly described in this document and these guarantees and accountability can be demanded from the RAFMM only to the extent to which they are clearly defined (limited) in this document. Regarding the financial market participants, who are not the RAFMM licensees, the RAFMM is not responsible in any shape and in any way and also does not provide any self-evident, implied or other guarantees. Final provisions. This document includes a description of all activities of the RAFMM members concerning the licensing of individual financial markets participants as well as regarding appropriate guarantees which the RAFMM undertakes, giving the license of the definite type to one or another financial markets participants. The document may be amended or revised by rectification after the voting of the RAFMM Executive Board members, in case if more than 75% votes were for the acceptance of amendments. The document can be amended by the RAFMM President. At the initiative of Executive Board or the RAFMM President this document may be amended by work specifications, guidance notes, forms (disposition forms) or other documents of alternative type for the purposes of the present document. In case if due to introduction of alterations or attachments to this document, the requirements to the licensed financial market participants had been changed, then these members should be notified about it. All activity of any of the RAFMM business units regarding the licensing of certain types of financial markets participants is emanated from the decision making by conferences and fundamental analysis of the reviewed objects. Executive Board members or any other RAFMM organization department may renounce with one another by voting as well as by means of negotiations. Executive board sphere
of duties determined by this document is complete to the extent to which
this does not contravene the Basic Regulations. |
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