NAUFOR Regulatory Entity

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The National Association of Stock Market Participants is an industry-wide, independent self-regulatory organisation. It is a non-profit organisation that is responsible for the regulation of financial markets in Russia.

NAUFOR was previously called the Professional Association of Stock Market Participants- PAUFOR. In 1995 the Russian trading system was created based on PAUFOR. Therefore, June 1996 is considered to be the official date on which this self-regulatory organisation was established.

The professionals of stock and financial markets must be under the authority of NAUFOR.

History of NAUFOR

The history of the National Association of Stock Market Participants dates back to 1994. On May 15th, 1994, fifteen participants in the financial markets decided to unite under common collaboration standards. The association called the Professional Association of Securities Market Participants aimed to introduce unified rules in the industry.

In November 1995, the self-regulatory organisation, NAUFOR, was established. On June 21st, 1996, the association was officially registered.

The National Association of Stock Market Participants has its central office in Moscow, Russia. NAUFOR also has its offices in fourteen of Russia’s major cities.

Aim of NAUFOR

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The main objective of the National Association of Stock Market Participants is to protect the integrity of the financial markets of Russia. In addition to this, NAUFOR aims to regulate and maintain the various activities of its members. Other objectives of the association are:

  • Developing new standards and regulations of the securities and stock market.
  • Establishing necessary rules for the professional participants.
  • Ensuring that members meet the regulatory requirements.
  • Creating a conducive environment for investments in the financial market.

Activities of NAUFOR

The National Association of Stock Market Participants is included in the Register of the Bank of Russia. The registration of NAUFOR as a Regulatory Entity is due to its following activities:

  • Brokerage
  • Dealership
  • Management of securities
  • Depository
  • Activities of the management company
  • Investment consulting
  • Activities of specialised depositories

These activities of NAUFOR are supervised officially by the Bank of Russia.

Responsibilities of NAUFOR as a Regulatory Entity

The National Association of Stock Market Participants plays an important role in regulating the Stock Markets of Russia.

The responsibilities of NAUFOR include regulation, supervision, and enforcement of standards. In addition to that, the work of NAUFOR is aimed at consulting, training, and controlling the stock market participants. The main goal is:

Developing Rules and Regulations

  • To improve the system of regulation in the securities market.
  • To develop new rules and standards that have to be followed by the participants.
  • To control and ensure the compliance of rules and standards.
  • To ensure that all the members and investors meet their regulatory responsibilities.
  • To collect fines from those participants who violate the standards.

Monitoring Activities of Members

  • To attract new clients who haven’t invested before in the securities market in Russia.
  • To maintain the activities of the members and investors of the association.
  • To monitor the activities and work of the members of the association.

Facilitating Members

  • To prevent unfair trade and money laundering in the financial markets by providing information.
  • To advise the members and investors regarding the stock markets.
  • To conduct training and seminars for accountants and managers.
  • To take measures for resolving disputes or conflicts related to the financial market.

Maintaining the Russian Economy

  • To create conditions for the recovery of the Russian economy.
  • To ensure the stability of the Russian economy through compliance functions like trade functions.
  • To maintain the integrity and reputation of the stock market in Russia.

Governance

The association is governed by the main body designated by the General Meeting. The member companies meet once in two years in the General Meeting. The general meeting is led by the President.

The board of directors is elected by the member companies during the general meeting through an election process. In addition to these, NAUFOR has committees and other departments which are responsible for its regulatory functions.

Members

The members of the National Association of Stock Market Participants are participants of the stock market. These include Russian professionals who are providing services in the stock market. These members are:

  • Brokers
  • Dealers
  • Depositories
  • Trustees
  • Investment advisors
  • Specialised depositories
  • Joint-stock companies
  • Management companies of investment funds
  • Companies of mutual funds
  • Companies of non-state pension funds.

NAUFOR unites the professional participants of the financial markets and exercises its regulatory authority over them. Members are required to pay their membership fee annually.

Financing

The National Association of Stock Market Participants is financed by the payments from membership dues and consulting fees.

These payments are made by the professional participants of the stock or financial market. The amount of the dues varies for each company and depends on the following:

  • The number of assets.
  • The number of personal funds.
  • The kind of activity.

The members are also required to pay the entry fee when registering. NAUFOR doesn’t receive any additional funds, not even from the state.

Self-Regulatory Entity

The National Association of Stock Market Participants identifies as a statutory, self-regulatory organisation. As a self-regulatory entity, it exercises authority over the stock or financial markets. NAUFOR regulation also involves developing standards and establishing rules for the professional participants.

Standards Developer

The National Association of Stock Market Participants also works as a standard developer. In fact, one of its key areas of work is the development of standards for the following:

  • Professional participants
  • Management companies
  • Investment advisors
  • Depositories

Groups for which basic and internal standards have been developed include professional participants and investment advisors. For management companies of investment funds and companies of mutual funds, only internal standards have been developed.

Bottom line

To sum it all up, the National Association of Stock Market Participants came into existence to enhance and protect the integrity of the financial markets. The association established rules for the professional participants and ensured compliance with the rules.

In addition, NAUFOR has served as a regulatory body for Russia to prevent unfair trade and enhance the Russian economy.

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