Annual report 2016

Moscow Exchange corporate governance model and practice in brief

Moscow Exchange’s current corporate governance system reflects its unique position as one of the largest Russian public companies.

The Bank of Russia is a shareholder of Moscow Exchange and the financial markets regulator, while Moscow Exchange, as a market infrastructure operator, establishes binding rules for all other issuers.

Accordingly, the Federal Law on Organised Trading (hereinafter, “the Law”) establishes additional requirements for the management bodies and founders (participants) of the market operator, in particular that:

  • members of the Supervisory Board must meet the requirements for professional experience and business reputation, and should also earn a qualification certificate as a financial market specialist in clearing and trading activities;
  • members of the executive bodies must meet the requirements for professional experience, reputation and expertise, and they must be approved by the regulator, i.e. the Bank of Russia;
  • those founders (participants) who own more than 5 per cent of the authorised capital of Moscow Exchange may not include legal entities whose financial licence has been cancelled (withdrawn) for any violation or who are registered in offshore jurisdictions, or individuals who do not meet the business reputation requirements.

Additional requirements have also been established for the heads of branches, the Chief Accountant, the Head of the Risk Management Department, the Head of the Internal Audit Service, the Head of the Internal Control Service and the Head of the department in charge of trading.

Since the shares in Moscow Exchange are admitted to trading and kept in the quotation list of the first (highest) level, the following actions were taken in 2016 in order to comply with the corporate governance requirements set out in the Listing Rules and the Corporate Governance Code of the Bank of Russia:

  • Five independent directors were elected to the Supervisory Board, and one director received independent director status in the reporting period;
  • Independent directors meet the independence criteria established by the Listing Rules;
  • The Audit Commission and the Nomination and Remuneration Commission consist only of the independent members of the Supervisory Board;
  • A resolution was adopted to determine the requirements for a business unit to be compliant with the Listing Rules so as to act as the Corporate Secretary;
  • The matter of the Senior Independent Director’s appointment and dismissal was left to the Supervisory Board’s areas of competence;
  • A set of issues was determined that must be resolved by a three-fourths majority of votes cast by the members of the Supervisory Board participating in a meeting (strategy approval, treatment of applications for listing, exercise of the rights attached to quasi-treasury shares, submitting the issue of liquidation and restructuring, changes in the authorised capital and delisting).