Translation. Region: Russian Federal
Source: Central Bank of Russia –
An important disclaimer is at the bottom of this article.
On the reform of the fight against insider trading and manipulation.
Kirill Pronin, head of the financial market infrastructure department, revealed the outlines of the reform on RBC Radio, which will affect counteracting manipulation and illegal insider trading.
Fine-tuning the regulation in the area of combating insider trading.
— Describe how the sphere of counteracting manipulation and insider trading in the market will change? What areas does the reform prepared by the regulator include?
— Unfortunately, the number of cases of manipulation and transactions with the illegal use of insider information still remains significant. Therefore, the current regulation needs to be fine-tuned.
We have achieved that now there is a very short period between the moment when we detect a violation and the moment when we bring someone to administrative responsibility. In many cases, this is about four months. In cases where we conduct additional checks, this can be a little over six months.
First of all, our reform concerns issuers whose shares and bonds are traded on the stock exchange, it will also affect trading participants (brokers, management companies, etc.). We propose to fine-tune the processes within companies that concern insider information. All insiders, including management, will have to report transactions with instruments for which they have insider information. At the same time, in our design, impersonal aggregated information on insider transactions will be publicly disclosed.
Additional requirements are also planned for periods preceding the disclosure of significant information and during which insiders are not entitled to make transactions with the financial instruments of their companies. In addition, we believe that companies should have the right to request the necessary information and documents from their insiders in order to check how they ensure compliance with all requirements for the prohibition on making transactions during such closed periods. And insiders will be obliged to respond to these requests.
As a result, both the market will be aware of the actions of insiders, and it will be easier for companies to track the transactions of their employees.
— How is this fundamentally different from what we have now?
— There is currently no requirement to disclose information about an insider making a deal with shares or another financial instrument of the company he works for. And it is difficult for the company itself to track whether an insider traded securities when he was not allowed to do so or not.
— Do we understand correctly that all insider transactions will be subject to such regulations?
– Absolutely.
— Will there be any regulatory framework for disclosing these transactions?
— We believe that information about such transactions should be disclosed literally a few days after they are completed, so that the time lag between the date of the transaction and the disclosure of information is small. This is three to five days.
— You also plan to install windows where insiders will not be able to trade their company shares. What kind of windows are these?
— Today, publicly traded companies already have the right to determine periods when, before disclosing important information — for example, the publication of financial statements or M
We want:
(a) companies were required to establish such closed periods;
b) there was a direct ban on insiders making transactions during these closed periods.
We believe that during this period the insider has a non-competitive advantage over other investors and can extract additional income from this position, which is unfair to all other investors.
— What could this period be like?
“I think that each issuer will determine this in detail at its own discretion.
— Will this period be the same for all insiders, regardless of their position in the company and the degree of their knowledge of information?
— I believe that this term should be uniform for all insiders. If gradation is introduced, it will be difficult for the issuer to administer it.
— Will the disclosure apply to both senior and middle management? Will there be any differences between the chairman of the board and the chief financial officer (CFO)?
— We assume that information about the transactions of so-called superinsiders, which will include representatives of the highest management bodies — the head of the company, members of the board of directors, that is, top management, should be publicly disclosed.
Information about the transactions of other, lower-ranking insiders will simply have to be submitted to the company where they work.
— So there will be a conditional division into two categories: ordinary insiders and superinsiders?
– Yes, from the point of view of public disclosure of information, you could say so.
— Just recently you revealed a high-profile case where insider information was improperly used by the former head of IR at one of the companies. Are IR insiders or superinsiders?
— This is, of course, one of the most unpleasant cases for both the regulator and the industry. Rather, people with such a level of access to insider information should fall into the category of superinsiders. That is, information about their transactions should be disclosed.
At the same time, there is no need to create special regulations for persons who interact with investors. Today, there are already requirements that such an employee must be included in the list of insiders, and he also has a clear range of responsibilities that must be fulfilled. It is important that all rules are observed.
— How do you think market participants will perceive the new requirements?
— We understand that additional control functions over insider transactions are certain costs for companies. But the exchange, for its part, is already ready to provide technical tools to track and identify insider transactions with minimal costs. In addition, I think that our public companies lose much more reputationally when their insiders trade illegally.
— Will this regulation apply to companies at all listing levels?
— We believe that any company that has entered the open market must fully ensure control over how its insider information is used and prevent unfair practices. There should be no exceptions. But the largest companies will have a greater burden simply because their circle of insiders is much wider.
— Where will this disclosure technically take place?
— Firstly, the disclosure of information should definitely be on the website of the issuer whose shares are traded on the exchange. But we also admit that, perhaps, some additional tools will be provided by the exchange, which could be a single platform, a single window.
— In terms of legislative activity, at what stage is this reform now?
— A broad public discussion of the reform will begin after it is officially submitted to the State Duma. These are several bills that come as a package. A separate one is about amending Federal Law 224 ("On Combating the Unlawful Use of Insider Information and Market Manipulation." — RBC Investments) and bills about amending the Administrative Code and the Criminal Code.
We are currently at the final stage of interdepartmental coordination. We assume that the bills will definitely be submitted to the State Duma during the autumn session. We would very much like them to be adopted before the end of the autumn session, and as a last resort – this is the spring session. We expect that the changes will come into force in 2026.
— Will this time be enough for both the exchange and the issuers to set up all their systems?
— We proceed from the fact that the exchange has already created certain services, and issuers will have additional opportunities. Companies already have the right to control insider transactions. Another thing is that some have fully implemented this functionality, while others have not. We believe that, on the one hand, the measures provided by law that expand the powers of issuers, and on the other hand, the tools that the exchange will provide, will allow us to implement such a practice fairly quickly.
— What benefit will this bring to a private investor?
— Transparency and integrity. The investor will have greater comfort and confidence that insiders of a particular company are not trading securities when they should not and are not profiting from the improper use of inside information.
Fine-tuning regulation in the area of counteracting manipulation
— Do we understand correctly that you are planning to adjust the approach to defining the concept of “manipulation”?
— Combating the misuse of insider information and market manipulation, as well as ensuring fair pricing in organized trades are among the key functions of the Bank of Russia. In order for these functions to be performed effectively, it is necessary to quickly adapt and flexibly follow market trends.
We have recently restructured our work format, reviewed the process of conducting checks and identifying signs of manipulation and insider trading, and fine-tuned our systems for detecting unfair behavior on the exchange. This has yielded results. For example, the flow of cases of administrative violations for insider trading and manipulation has more than doubled in a year and a half. In the first half of 2025 alone, we already have more than 100 administrative cases and fines.
At the same time, we are encountering new unfair practices.
For example, an influencer first buys a certain number of shares, then spreads information on a Telegram channel that the share will definitely rise in price. As a result, a large number of his subscribers buy this paper, the price rises, and the influencer sells his package at a good price and fixes the profit. In this way, he manipulates the opinions and actions of a large number of subscribers and makes money on it.
Such misrepresentation is not currently covered by the current composition of manipulation. We want the law to prohibit such actions.
Therefore, we propose to clarify the definition of the term “manipulation”, extending it to information that may be misleading.
— Please explain the meaning of the expression “misleading”. How does it differ from an outright lie?
— This is not necessarily the dissemination of outright false information. But it can be an incorrect interpretation of indicators, a distortion of information that was previously officially published, providing an incomplete list of facts, a one-sided presentation of information, when the manipulator only talks about the advantages, but keeps silent about the disadvantages of the asset. And this is always a deliberate action that encourages investors to make certain trading decisions.
— What penalties will be applied to manipulators who mislead investors?
— If the amount of illegally obtained profit does not exceed a certain threshold, an administrative fine will be imposed and a press release of the Bank of Russia will be published, and this is a blow to the business reputation of such a person. Also, the offender will not be able to trade on the stock exchange for a certain period of time. But if the amount of this income exceeds the threshold, then the liability will be criminal.
— It turns out that the key point in this issue will be the income threshold?
— Today, the income threshold for criminal liability is 3.75 million rubles. In the proposed changes, we propose increasing it to 100 million.
But at the same time, the amount of economic liability in administrative cases should be increased many times over. Current practice suggests a fine for individuals at the level of 3,000 to 5,000, for officials – up to 50,000, for legal entities – 500-700 thousand rubles. We propose that the amount of the fine be three to five times greater than the amount of income extracted.
I have already said that in recent years we have learned to quickly uncover cases of manipulation, and this makes it possible to punish quickly. And in combination with large fines, this will be a strong disincentive for unfair practices.
We want to establish a minimum threshold for the volume of transactions, before reaching which administrative liability does not occur. The fact is that now the market is dominated by transactions of private investors, many robotic transactions. Therefore, sometimes we see cases when an investor has transactions for small amounts, for which there is practically no income or damage, these are often erroneous transactions. Such transactions for an amount of up to 1 million rubles should not be covered even by administrative liability. I am not talking here about the income from such transactions, but about their volume.
— How many such transactions are there and in what period should the volume of 1 million be traded?
— Now we proceed from the fact that the volume of such transactions in total for the entire period should not exceed 1 million rubles within the limitation period, and then the case will not fall under administrative liability. It is important that this threshold will be applied only in manipulation cases; cases of illegal use of insider information will not fall under it.
— Will the statute of limitations for administrative cases change in any way in connection with this?
— Now it is only one year, we propose to increase it to three years. That is, if the violation was committed one year and one month ago, then we can no longer hold the person administratively liable.
— Will the statute of limitations for cases subject to criminal liability remain the same?
– Absolutely right.
— Aren’t you afraid that such measures taken together could lead to the complete decriminalization of the article on manipulation?
— No, we are not afraid. Now we have millions of retail investors on the market, robotic algorithms are working, which can trade a very decent volume in seconds. Turnover on the exchange has increased many times over compared to the period when regulation in this area was only being designed. Therefore, today, of course, the previous thresholds for liability need to be reviewed.
A quick fine, a multiple of the offender’s income, seems to be a more effective result than a measure taken after one and a half, two or three years.
Dmitry Polyansky, Gleb Kukharchuk, Radio RBC
Please note: This information is raw content obtained directly from the source of the information. It is an accurate report of what the source claims and does not necessarily reflect the position of MIL-OSI or its clients.
