Russian c-bank plans to establish regulatory environment for robo-advisors

The Central Bank of Russia has just published its roadmap for the realization of the main directions of the development of the financial market for 2019-2021. 

The first project on the list concerns robo-advisors. The “mega regulator” plans to create regulatory environment for the operations of robo-advisors.

The Bank of Russia will have to describe and determine the status of robo-advisors and to provide users of such programs with all necessary protection. Furthermore, the regulator aims to expand the opportunities for practical application of robo-advisors when making investment decisions.

There will be a consultation paper about these issues, which is set to be published in 2019. The rest of the normative acts related to this matter are expected in 2021.

The Russian central bank has been trying to be supportive of fintech development. In April 2018, the Bank of Russia launched a regulatory sandbox. It is a mechanism for piloting new financial services and technology that require changes to regulations. The use of innovative financial services, products and technology is modelled in the platform. As a result of the pilot, a financial service or technology can be approved through subsequent changes to the legal framework and can lead to their commercial roll-out. Sometimes, an initiative can be recognised as inviable.

A service developed by Sberbank Rossii PAO (MCX:SBER) is the first to successfully pass the piloting phase of the Bank of Russia’s regulatory sandbox. Sberbank’s service helps remotely control permissions to carry out transactions using corporate client accounts.

The piloting was carried out by professional associations of financial market participants and interested state bodies. The Bank of Russia and expert councils that are created under the regulatory platform have made recommendations and recognised the introduction of the service as viable.