October 1, 2002

   BRUGES (Belgium), 1 October 2002 — The integration of financial markets is the obvious prerequisite for economic progress in the European Union and a good example for Russia and other CIS countries. This conclusion was made by the participants of the international conference "The EU's experience and the prospects of integration of the CIS currency and financial markets", held 27-29 September 2002 in Bruges on the initiative of the International Association of Exchanges of the CIS Countries (IAE CIS), the RF Chamber of Commerce and Industry (CCI), the Moscow Interbank Currency Exchange (MICEX), the Union of Lawyers of Russia, Brussels International Bank Club and the National Stock Association.

   The conference was attended by the heads of leading Russian and foreign banks, the New York Stock Exchange, the Brussels Stock Exchange, 20 currency and stock exchanges from 9  CIS countries as well as international financial organizations. The participants of the conference discussed the prospects of the formation of an integrated CIS capital market and the use of the EU experience in the sphere of currency and financial integration.

   It was not incidental that the ancient center of international trade, Bruges, was chosen as the place of the conference. A good number of years ago here, in front of the house of the Van Der Berse's family, merchants gathered to strike deals, exchange money and discuss news. It was here that the word "exchange" appeared.

   The main topic of the conference was financial integration in Europe, the symbol of which is the common European currency, the euro.

   In his speech Alexander Zakharov, Chairman of the Council of the IAE CIS and the MICEX CEO, said that "the economy of the CIS countries has reached a new stage of development, which is proved by the emergence of positive tendencies in the main macroeconomic parameters in the last two years". In the first half of 2002, the average growth of the GDP in the CIS countries was 4%. The stabilization of the economic situation allows us to think about securing long-term sustainable development. It is not incidental, A.Zakharov noted, that in the recent time we have seen efforts aimed at the consolidation of the CIS financial area, which will help to solve a number of practical tasks.

   Here the European experience is invaluable for us, that is why it would be very important to pursue financial integration within the CIS in close contact with EU experts. The more so that the idea of the CIS unified currency area belongs to the Nobel Prize winner for economics Robert Mandell, who is often called "father of the euro".

   On the whole, he noted, the integration of financial markets must catalyze economic cooperation between the CIS countries, promote the development of trade between them and their overall economic growth, and, in future, prepare them for entering the international financial market.

   Sergei Anisimov, Executive Director of Brussels International Bank Club, emphasized the necessity of constant cooperation between European financiers and their colleagues from the CIS. It would even be possible to launch a regular joint publication.

   This idea was supported by one of the organizers of the conference Alexander Altunin, Head of Securities market Department of Sberbank and Chairman of the Council of the National Stock Association.

   Director of the Directorate General for Economic and Financial Affairs of the European Commission Sotirios Kollias stressed "with the introduction of the euro means that financial integration in Europe has reached a high level, which is a necessary condition for making progress in other spheres, in particular, in the uniting of financial markets". Even today, he said, some positive results can be observed, such as the reduction of bank rates and fees, the emergence of new financial instruments, the flow of investment resources to less developed regions of the EU, which stimulates employment and stable economic growth.

   The success of the euro, which is the key element in the provision of economic stability and prosperity in Europe, boosted the integration of financial markets in the euro zone. Integration process on the European financial markets coincided with the tendency towards globalization. The increase of effectiveness, which integration brings to financial markets of the euro zone, is beneficial not only for residents of the euro zone, but also for borrowers and investors-nonresidents, who can have access to the markets of the euro zone. The integration of stock markets on the euro zone level means that issuers from all euro zone countries get privileged access to a large number of investors in a large and open market area.

   Speaking about the problems of development and integration of financial markets of the CIS countries, Chairman of the Supervisory Board of the Armenian Stock Exchange (ASE), former Minister of Finance and Economy of Republic of Armenia Edward Sandoyan said that West Europe's integration experience was in the focus of attention in the CIS countries. Besides changes in the demand for certain currencies, the introduction of the euro has exerted a lot of influence on the integration of capital markets. E.Sandonyan noted that the integration of the CIS capital markets, achieved with the use of the European experience, will give enterprises access to a much larger source of the capital. At the same time, it will widen the scope of financial instruments for investors.

   According to Vincent Van Dessel, Director of the Brussels Stock Exchange, the integration of Europe's financial markets is in agreement with the general plan of actions in the sphere of financial services, which contains a number of provisions and instructions, including instructions dealing with investment services, abusive practice on the market and licensing. The launching of the ero accelerated the unification of financial instruments and raised the question of the necessity of deepening the integration and establishing unified exchange infrastructure and introducing standard rules of conducting exchange operations. The experience, accumulated in the course of cooperation between the national exchanges of Great Britain, Germany, France, the Netherlands, Switzerland, Italy, Spain and Belgium, has allowed these countries to harmonize operations with shares and introduce the mechanism of centralized registration. The next step was the creation of the first common European exchange, Euronext, which helped to move further. The main principle of this movement is «unification empowers».

   The elaboration of common standards of work on financial markets is a very important component of integration processes, noted Executive Vice-president of the New York Stock Exchange Richard Bernard. Exchanges play a very important role in this process, elaborating listing standards and requirements to the rules of corporate management and accounting. Investors' trust will depend on the quality of common standards in the integrated zone. The New York Stock Exchange sets standards of corporate management for companies, which have traded on it for over 100 years. Today, the NYSE is leading in the development of new standards of corporate behavior. The management of exchanges themselves should not be confused with the corporate management of large corporations, issuing a great number of stocks. The corporate management of exchanges implies, first of all, requirements to the corporate management of companies whose stocks are admitted to trade on the exchange.

   General Secretary of Euroshareholders Jean-Pierre Paelinck said that "the expansion of the European stock markets requires special attention to the rights of shareholders. Management of corporations, which issue stock for mass distribution on the stock market, should never be opaque. The rules of corporate management should be strict for issuers, since exchanges, where these stock are traded, can not check the financial stability of companies whose stocks are sold on these exchanges".

   According to Marko Fantini, Desk Officer for Russia of the Directorate General for Economic and Financial Affaires of the European Commission, the EU can give the CIS and other countries a good example of how to promote integration and secure free capital flow. There can be three models of transition to a common financial area: individual (each country works out its own approach to the entry of the union), collective (common approaches are established, which are accepted by the majority of the participants, and those "falling behind" are given assistance) and, finally, the intermediate model (implies the adoption of criteria and rules which are then accepted in full by new candidate members). M.Fantini expressed his high opinion of the proposals to form optimal currency areas in the CIS as being in full agreement with today's challenges.

   According to Igor Matsouev, the regional representative of RF CCI in European Union, the RF Chamber of Commerce and Industry regards the economic and financial integration the CIS countries an important sphere of its work. In July 2002, the Committee for the CIS economic integration was established within the RF CCI, which is headed by A.Zakharov. The Committee's aim is to promote the economic integration of the CIS, including the formation of a unified currency area, the increase of the share of settlements in national currencies, and the consolidation of stock and currency markets of the Commonwealth. The Committee is composed of representatives of entrepreneurial associations, chambers of commerce, government bodies, academic and business circles of Russia, and the CIS inter-state organs. The Committee has adopted its 2002-2003 plan of work, which includes the development of the legal framework of the integration, the formation of the CIS integrated currency and stock markets and the development of payment and settlement relations.

   The conference round table was devoted the harmonization of the legislation. Vladimir Radchenko, First Deputy of the Chairman of the RF Supreme Court, emphasized the convergence of the criminal and procedural law of Russia and Europe, which is favorable for the protection of individual rights. Chairman of the Arbitration Court of Moscow Alla Bolshova and Head of the Secretariat of the RF High Arbitration Court Boris Polonsky talked about the new Arbitration procedural code of the RF, which will help to raise the quality of the disposal of disputes between entrepreneurs. According to Peter Barenboim, Vice President of the Union of Lawyers of Russia, harmonization of laws regulating financial markets implies, in particular, the introduction of unified standards of work on the CIS financial markets. It is important to take into consideration the standards of work on the financial markets of the EU and other countries. He suggested organizing expert groups, which would discuss the problems of financial integration, and involving foreign experts.

IAE CIS Secretariat
Telephone: +7 (095) 705-9699