Basic standard on trust management revised
According to the new version of the standard, a trustee shall inform individuals about the consequences arising for them after they are recognised as qualified investors and notify them at least once a year about their right to request the withdrawal of this status. This is stipulated in the revised version of the basic standard to protect the rights and interests of individuals and legal entities receiving financial services provided by trustees.
The new version of the standard was drafted by the self-regulatory organisations National Finance Association and National Association of Securities Market Participants and approved by the Bank of Russia.
The status of a qualified investor gives access to aggressive trust management strategies which involve acquisition of high-risk financial instruments at a client’s expense. This can both bring profits and cause significant losses. Trustees shall explain to their clients that the latter may at any moment request their removal from the register of qualified investors.
These provisions of the basic standard will become effective on 1 October 2021.
Similar rules were earlier approved within the basic standard to protect the rights and interests of brokers’ clients. Namely, when a person receives the status of a qualified investor, a broker shall notify such individual of elevated risks inherent in securities and derivatives that are accessible to qualified investors.