REGISTRATION OF OFF-EXCHANGE TRANSACTIONS IS UNDER CONTROL

The Government of Russia passed a Decree establishing an obligation to register off-exchange contracts for supplies of coal, oil, oil products, liquefied hydrocarbon gases and grain*

Timely and proper registration of off-exchange contracts is the basis for marketable off-exchange price indices for the goods. FAS has published the guidelines on its web-site for the companies that must register their contracts as to how to provide information about off-exchange contracts.

Through the Exchange Committee, FAS continuously considers on- and off-exchange price indices for the goods and improves the methods to form price indices. The later are used to analyze performance efficiency of procurement by natural monopolies, exercise antimonopoly control, and calculate compensations of shortfall in income of natural monopolies.

Price indices are published on the web-site of St Petersburg International Mercantile Exchange (“SPIMEX” JSC). SPIMEX will also publish recommendations on registration of off-exchange contracts.

Head of FAS Department for regulating the Fuel-and-Energy Complex and the Chemical Industry, Dmitry Makhonin said: “Development of on-exchange trade, marketable on- and off-exchange price indicators facilitates competition on the product and financial markets. In 2019 FAS opened more than 50 administrative cases** due to breaching the deadlines for registering off-exchange contracts or failure to register them. We are also constantly working with oil-and-gas and coal companies to improve the quality of registering off-exchange contracts for supplies of coal, oil, petrochemicals, and liquefied hydrocarbon gases”.

* № 623 Decree of the Government of the Russian Federation “On approving the Regulations on providing information about off-exchange contracts by the parties, that provides for transferring property rights for the goods allowed for exchange trade, and on keeping the Register of such contracts and providing information form the Register” of 23.07.2013

** Under Part 6 Article 14.24 of the Code of the Russian Federation on Administrative Violations, breaching an off-exchange contract by a party, the procedure and (or) deadline for providing information about the contract specified in the regulatory acts of the Government of the Russian Federation, practically providing incomplete and (or) incorrect information as well as failure to provide such information is punished by an administrative fine upon individuals from 1000 RUB to 2500 RUB; upon executives – from 20,000 RUB to 30,000 RUB; upon legal entities – from 300,000 RUB to 500,000 RUB.