Performance of price centres to be assessed

Price centres are designed to collect and process information on the prices of financial instruments, including low-liquid instruments and illiquid ones, to calculate the fair value of financial instruments and to inform market participants of the results of their findings. The information thus received is used for the purposes of taxation, accounting, revaluation of portfolio, collateral assessment etc.; therefore the reliability of this information will have a direct impact on the sustainability of financial markets.

To mitigate the risk of financial instruments’ price manipulation and to enhance the transparency of financial market the Bank of Russia plans to monitor and assess the performance of price centres.

At the initial stage, the assessment will be conducted on a voluntarily basis, initiated by respective applications of price centres addressed to the Bank of Russia.

After sufficient experience is gained and assessment methodology is refined, main requirements to price centres shall be approved by law.

The core of the assessment framework will be formed by the analysis of a price centre’ internal documents and the deliveries of the independent expert evaluation of methodologies used to calculate the fair value of financial instruments.

Price centres will be assessed according to the following criteria:

• transparency of the price centre’s internal processes designed to collect, process, store information and provide it to customers;
• establishment of a standing expert board by the price centre to elaborate specifications for the assessment methodology for the calculation of the fair value of financial instruments, to draft amendments to this methodology, to maintain cooperation with independent organisations which assess fair value calculation methodology, and to monitor the handling of customers’ claims and proposals by the price centre;
• existence of a positive opinion on the expert evaluation of methodologies used to calculate the fair value of financial instruments; such opinion should be issued by an independent organisation, not linked with the price centre, and signed by the head of this organisation;
• existence of accessible public information on the conditions of services provision by the price centre, on the sources of information and on the members of the expert board;
• maintenance of operational continuity of the price centre;
• accessibility of the price centre’s archives containing data on the calculation of the fair value of financial instruments to the Bank of Russia, customers and other parties concerned.