The following issues are scheduled for discussion at the Presidium of the Government meeting on December 1, 2008:

1. The draft strategy for developing the financial market of the Russian Federation until 2020

A draft resolution of the Government approving the draft strategy for developing the financial market of the Russian Federation until 2020 was drafted by the Federal Financial Markets Service in execution of the Russian Government's Instruction No. VZ-P13-2525 dated April 24, 2008.

The strategy for developing the financial market of the Russian Federation until 2020 prioritises various aspects of regulating the financial market of the Russian Federation that aim to enhance its competitiveness on the basis of greater capacity and transparency, facilitating the market infrastructure's cost-effective performance, creating a favourable tax climate for market players and streamlining legal regulation.

The strategy contains:

a) a brief description of the main results and problems linked with the implementation of the strategy for developing the financial market of the Russian Federation until 2006-2008, approved by the Government's Executive Order No. 793-r dated June 1, 2006;
b) the goals and tasks of the financial market's development until 2020;
c) planned results of the financial market's development until 2020;
d) state policy guidelines as regards the financial market's development until 2020, including:

* introducing mechanisms facilitating the operations of numerous retail/individual investors on the financial market and the protection of their investment;
* expanding the range of derivative financial instruments and strengthening the derivatives market's legal framework;
* creating opportunities for the securitisation of a broad range of assets;
* providing additional information about savings-investment opportunities on the Russian financial market to private individuals;
* streamlining the legal framework as regards the operation of collective-investment institutions established in the last few years;
* introducing standard regulation of all segments of the organised financial market;
* creating the required legal framework and organisation for the consolidation of the stock exchange and settlements depositary infrastructure;
* providing a clear legal framework for the formation and capitalisation of the Russian financial market's clearing organisation and the functioning of the central partner institution;
* facilitating a switchover to an entirely new level of services as regards the registration of securities and financial instruments property rights, including through the introduction of top-quality standards and requirements as regards the operation of registration institutions;
* creating a favourable tax climate for financial market players; this inter-departmental task must be accomplished by the Finance Ministry and the Federal Service for Financial Markets;
* enhancing the effectiveness of the financial market's state regulation by means of expanded prudential supervision and regulation of financial activity and the introduction of common regulatory principles and standards for financial market players and cooperation with self-regulatory organisations;
* reducing administrative barriers and simplifying state registration of stock-and-bond issues;
* facilitating an effective system for divulging financial market information;
* facilitating the long-term development and improvement of corporate management;
* taking effective action to prevent and thwart unfair financial market activity;
* facilitating more effective supervision of the Federal Service for Financial Markets, monitoring the application of current legislation on a regular basis and streamlining the legal framework of the Russian financial market's development on this basis.

The long-term strategy will be amended and modified whenever necessary.

The project does not require federal budget funding.

2. The draft federal law On Counteracting Improper Use of Insider Information and Market Manipulation

The draft law prioritises efforts to streamline Russian legislation in the sphere of regulating relations linked with the use of insider information and the manipulation of financial, currency and commodity markets. This will be accomplished by introducing the "insider information" concept and the legal regime of using such information.

The draft law is called on to more actively protect investors' interests by requiring a more complete divulging of information influencing the prices of financial instruments and commodities and creating an effective mechanism for exposing and preventing violations of the law through the use of insider information and market manipulation.

The lack of a legally sound "insider information" concept and mechanisms preventing the use of such information, as well as the shortcomings of existing market-manipulation concepts, make it possible to actively use unfair methods on financial and commodity markets. This seriously impairs the interests of private individuals and legal entities, those of the entire society and economy and undermines the trust of investors and traders in organised financial and commodity markets, impairs their investment-and-trading conditions, hinders their effective development and enhanced international competitiveness.

At present, the legal regulation of the improper use of insider information influencing the price of stock and bond issues is confined to several provisions of the Federal Law On the Stock and Bond Market utilising the "official information" concept.

Unlike insider information, the term "official information" has a broader connotation and does not only pertain to the financial market under Article 139 of the Russian Federation's Civil Code. Unlike official information, the divulging of insider information can influence the market value of financial instruments or commodities. Stock-and-bond issuers and other parties must promptly divulge any data classed as insider information.

There is no legal regulation of insider information influencing the prices of other financial instruments, including mutual-fund stakes, futures and forward contracts, financial market instruments and other financial instruments.

Moreover, there is no required legal regulation of market manipulation issues.

This draft law introduces the definitions of insider information, insiders, market manipulation indications, as well as additional requirements to divulging insider information and legal mechanisms for controlling the use of insider information, in order to create the required legal framework for preventing and thwarting violations linked with the use of insider information.

Most importantly, the draft law comprehensively protects the market from insiders and market manipulators. Its legal regulation provisions apply to the entire organised financial market, including the currency market, and the commodity market. At the same time, the draft law's provisions should not apply to relations linked with financial instrument operations for implementing the state monetary policy by the Central Bank of Russia or other authorised state bodies of the Russian Federation and private individuals acting on their behalf.

The draft law largely draws on the experience of regulating the use of insider information and market manipulation, as formalised by the relevant European Union directives.

The draft law stipulates the following provisions regarding the use of insider information:

-- it defines the term insider information;
-- it lists stocks, bonds and other financial instruments and commodities that may be covered by insider information and that may be affected by the unlawful use of such information;
-- it defines the range of insiders, namely, individuals possessing insider information;
-- it bans the use of insider information in market deals, including those involving third persons and recommendations based on such insider information, etc.;
-- it stipulates requirements to the divulging of insider information, compiling lists of insiders and providing information about their deals needed to prevent and expose the relevant violations in this sphere;
-- it defines the prerogatives of the relevant federal executive branch agency overseeing financial markets to expose and prevent violations linked with the use of insider information, including the right to demand documents and information, conduct checks, receive explanations, order the elimination of violations, suspend or revoke licenses to conduct professional activity on the stock and bond market and those pertaining to other licensed activity.

The draft law stipulates provisions allowing the concerned federal executive branch agency in the financial market sphere to effectively exercise its prerogatives. Such provisions set forth the specifics of checks with regard to insiders at institutions of state authority, local self-government bodies and the Central Bank. If necessary, the draft law stipulates a mechanism for involving police divisions in order to expose violations and search for suspects.

The draft law stipulates the following measures to fight market manipulation:

-- it defines actions falling under the market manipulation concept;
-- it bans market manipulation, without limiting this concept to a specific list of the concerned parties;
-- it stipulates the prerogatives of the relevant federal executive branch agency overseeing financial markets, which also has the right to expose market manipulation facts.

The draft law stipulates a number of provisions formalising the foundations of a mechanism for overseeing the actions of insiders and market manipulators.

The draft law stipulates special legal consequences of deals violating its requirements and protects the interests of insiders' partners. For instance, the draft law states expressly that any person closing an illegal deal will have to deduct illegal profits or losses avoided by him as a result of such a deal.

The draft law's approval will facilitate the creation of a system of legal norms aiming to prevent the use of insider information and market manipulation and to oversee the activity of unscrupulous market players posing a danger to society and the entire economy.

The draft law also calls for amending a number of federal laws.

The draft law's implementation will not require any additional material or other expenses.

3. The draft federal law On Introducing Amendments to the Criminal Code of the Russian Federation and Article 151 of the Criminal Procedure Code of the Russian Federation

This draft federal law was elaborated on the basis of a survey of operations of the Federal Security Service's divisions aiming to expose, prevent and investigate crimes punishable under articles 275, 276 and 283 of the Criminal Code. The draft federal law aims to streamline criminal legislation in the sphere of protecting state secrets from criminal encroachment and to more effectively ensure security of the Russian Federation.

An assessment of Article 275 of the Criminal Code and its application shows that espionage and the divulging of state secrets are no longer viewed as forms of high treason, but rather as forms of assisting foreign clients. The relevant evidence was therefore subject to contradictory interpretation during the investigation of espionage cases under articles 275 and 276 of the Criminal Code. This circumstance made it necessary to amend Article 275 of the Criminal Code.

It should be noted that such a form of high treason as "assisting foreign clients in conducting hostile activity to the detriment of the Russian Federation's external security" needs to be modified. Under the current article, it is extremely difficult to prove this form of high treason because the defence counsel takes advantage of the prosecution's failure to prove the allegedly "hostile" activity of suspects and defendants and exonerates them.

Foreign secret services actively use the potential of governmental and non-governmental organisations during intelligence and other operations detrimental to security interests of the Russian Federation. Consequently, it has become necessary to include such organisations and their representatives as clients receiving foreign assistance during activity detrimental to security interests of the Russian Federation.

The term "foreign organisation" currently stipulated by Article 275 makes it impossible to list organisations whose membership and jurisdiction are not confined to the territory of one state but have broad, supra-state and international presence, among clients receiving foreign assistance for activity detrimental to security interests of the Russian Federation.

This implies organisations created by two or more states and those created by private individuals for conducting activity on the territory of several states. Separate international organisations which are full-fledged parties to international relations can act both in their own interests, as well as in the interests of separate foreign secret services.

Under the Russian Federation's Law On State Secrets, such secrets are transferred to international organisations by a decision of the Russian Federation's Government. At the same time, certain international organisations have repeatedly tried to illegally obtain state secrets. In this connection, projected changes aim to stipulate legal grounds for bringing to account those individuals who have divulged state secrets to an international organisation in violation of the established procedure.

An amended Article 275 of the Criminal Code will make it possible to rule out arbitrariness and abuses on the part of law enforcers investigating cases under this article. On the other hand, this will make it possible to fully realise the purpose of criminal court proceedings aiming to protect plaintiffs from criminal encroachment and to protect individuals from illegal and unjustified charges, convictions and limitations of their rights and freedoms.

Due to the fact that Article 276 of the Criminal Code interprets espionage as a form of state treason, an amended Article 275 of the Criminal Code also necessitates amendments to Article 276. Such amendments aim to formulate a standard approach towards defining the objective aspects of espionage, primarily from the point of view of the ultimate-fact context.

The law-enforcement practice of the Federal Security Service's divisions highlights cases when foreign citizens legally acquire state secrets. At the same time, a study of Article 283 of the Russian Federation's Criminal Code stipulating liability for the divulging of state secrets shows that only Russian citizens can be deemed as offenders, and that the divulging of state secrets by foreign citizens is not punishable by law. This circumstance highlights the need to amend Article 283 of the Criminal Code.

The divulging of state secrets along a preset chain is a serious problem confronting the Federal Security Service's divisions. In this connection, it is important to establish the responsibility of individuals who have illegally obtained state secrets, but who are not listed as special offenders under Article 283 of the Criminal Code.

A survey of criminal cases investigated by the Federal Security Service's divisions shows that state secrets are not immune from deliberate actions of individuals who are not authorised to obtain such secrets and who do not know about them in the course of their work and official activity, who attempt to illegally obtain and use state secrets but whose actions cannot be interpreted as high treason and espionage.

Such individuals who are often linked with the underworld are primarily interested in police operations, namely, the methods of law-enforcement agencies' work, police informants, etc.

Other individuals, primarily representatives of commercial companies, are extremely interested in state secrets in such areas as geology, geodesy, mapping, topography and economic activity.

By introducing a provision stipulating liability for illegally obtaining state secrets by individuals who were not authorised to obtain such secrets and who did not know about them in the course of their work and official activity, it will become possible to protect various classified-information categories in a more comprehensive way.

The projected addendum to the Criminal Code of the Russian Federation is motivated by the need to define the investigative jurisdiction of the crime punishable under Article 283.1 of the Criminal Code. It is suggested that such crimes be investigated by the Federal Security Service.

4. The draft Federal Law On Navigation Activity

The draft Federal Law On Navigation Activity was elaborated in execution of decision No. Pr-619-GS of the State Council dated March 29, 2007.

The draft law stipulates the relevant legal grounds for conducting navigation activity in the Russian Federation and aims to create favourable conditions for meeting demand for navigation activity services.

The draft law stipulates the prerogatives of institutions of state authority, federal executive branch agencies, regional institutions of state authority and local self-government bodies, municipal entities and the rights of private individuals and legal entities during navigation activity.

It is proposed to finance the draft law out of budgetary allocations for the current upkeep of federal executive branch agencies overseeing transport and technical means and systems, due to be equipped with navigation equipment, under the Russian Federation's legislation.

The approval of the draft law will make it possible to stipulate the relevant procedure of cooperation between parties to navigation activity and to promote widespread use of navigation systems, including the Global Navigation Satellite System (GLONASS), in the interests of the Russian Federation's defence and security, various economic sectors and international cooperation.

5. The draft Federal Law On Amending the Russian Federation's Legislative Acts Pertaining to the Issue of Permits for Ship and Onboard Radio Stations

The draft law is needed to overcome contradictions between the provisions of the Inland Water Transport Code, the Merchant Marine Code, the Civil Code and the Federal Law On Communications.

The draft law proposes standard provisions regarding the issue of permits for ship and onboard radio stations. For this purpose, Article 22.5 of the Federal Law On Communications should feature an additional provision stating expressly that radio-electronic systems, part of ship and onboard radio stations, are not subject to registration and should be used in line with permits for ship and onboard radio stations.

The same additional provision to Article 22.5 of the Federal Law On Communications also empowers the concerned federal executive branch agency in the sphere of transport to approve the relevant procedure for issuing permits and their form.

It is proposed that the Federal Air Transport Agency, a federal executive branch agency overseeing the transport sphere, will be empowered to issue permits for onboard radio stations.

As the Russian Federation's Tax Code stipulates state duties on all legal actions pertaining to the issue of permits for onboard radio stations, subparagraph 55 of Article 333.1 (33) of the Tax Code will have to be amended accordingly.

The approval of this draft law will require amendments to the Russian Government's Resolution No. 539 On the Procedure for Registering Radio-Electronic and High-Frequency Systems dated October 12, 2004.

The amendments will make it possible to eliminate contradictions and discrepancies in the Russian Federation's legislation, to streamline the procedure for preparing and issuing permits for ship and onboard radio stations and to considerably simplify the relevant procedure and to reduce overall deadlines needed to obtain permits for onboard radio stations.

6. Aspects of the activities of the Ministry of Sport, Tourism and Youth Policy

The Ministry of Sports, Tourism and Youth Policy drafted Government Resolution No. 408 On the Ministry of Sports, Tourism and Youth Policy of the Russian Federation dated May 29, 2008 in execution of the Russian President's Decree No. 1445 The Issues of the Ministry of Sports, Tourism and Youth Policy of the Russian Federation dated October 7, 2008.

The draft resolution includes provisions formalising the Ministry's prerogatives under Federal Law No. 329-FZ On Physical Fitness and Sports in the Russian Federation dated December 4, 2007 (See the text of Federal Law No. 160-FZ dated July 23, 2008).

The Ministry's central staff will employ not more than 160 officials, as stipulated by the tables of organisation of the central staff of the redundant Federal Sports Agency (Rossport). The Ministry has 380 positions minus the tables of organisation of the central staff of the redundant Rossport comprising divisions with identical functions. Such positions will be distributed under Federal Civil Service quotas and the relevant ministerial wage fund stipulated by the 2009-2011 federal budget.

Expenditures linked with the draft resolution's implementation will not require additional budgetary funding.

7. Amendments to the federal targeted programme The Development of the Penitentiary System in 2007-2016

Amendments to the federal targeted programme The Development of the Penitentiary System in 2007-2016 are motivated by the drafting of project design and cost-estimate forms and records in 2007-2008 for the construction of facilities in 2009 and by the specifying of annual programme allocations in 2010-2012.

Moreover, the programme is being amended after the approval of the Government resolutions No. 83 On Approving the Rules for Defining and Providing Technical Conditions for Linking Construction Projects with Engineering-Technical Mains dated February 13, 2006 and No. 145 On the Procedure for Conducting State Expert Examinations of Construction Project Forms and Records and Engineering Survey Results dated March 5, 2007 because this served to increase state capital investment allocations, overlooked during the programme's formulation.

The deadlines for completing 12 of the programme's projects were specified in order to concentrate resources for implementing the programme in 2009-2011 and completing the most important and transitory construction projects.

It is proposed to include design and survey funding in the programme's total allocations in order to avoid frequently amending the programme and because such projects are financed at the expense of state capital investment.

Under Government Resolution No. 299 On Amending the Federal Targeted Programme The Development of the Penitentiary System in 2007-2016 dated May 19, 2007, the programme stipulates construction of an investigation ward for 4,000 inmates in St Petersburg.

Due to the construction of this facility, it is no longer necessary to convert a military cantonment in Borisova Griva town in the Leningrad Region under the programme. This military cantonment will be converted into a maximum-security penitentiary for 1,500 inmates instead.

In this connection, the programme's annual specific targets pertaining to the renovation and construction of investigation wards and penitentiaries whose living conditions match the Russian Federation's legislation have been modified. At the same time, the programme's final targets, except the construction of world-class investigation wards, remain the same.

Under the programme, capital investment volumes have been specified in line with total funding volumes for the corresponding time periods without increasing budgetary allocations.

8. Amendments to Government resolutions No. 203 and No. 330 dated April 8, 2004 and June 30, 2004

The Government Resolution On Amending Government Resolutions No. 203 and No. 330 dated April 8, 2004 and June 30, 2004 was drafted under a programme to streamline the Russian Federation's insurance legislation.

The amended insurance legislation stipulating expanded prerogatives of insurance companies has created new spheres of insurance activity, numerous legal entities subject to supervision and control and has also expanded the prerogatives of the Federal Service for Insurance Supervision (Rosstrakhnadzor).

Rosstrakhnadzor functions are motivated by:

* the obligation of insurance companies and insurance brokers to submit new additional forms and records to the insurance watchdog;
* its obligation to oversee new parties to insurance activity, namely, mutual insurance companies and insurance brokers;
* its obligation to monitor the financial stability and solvency of insurance companies as regards the accumulation of insurance reserves; assets accepted as insurance reserve collateral and their structure; the normative correlation between insurance companies' own assets and their commitments and the structure of assets accepted as collateral for covering insurance companies' own assets.

Under Article 7.9 of Federal Law No 115-FZ On Counteracting the Legalisation (Laundering) of Criminal Incomes and the Financing of Terrorism dated August 7, 2001, Rosstrakhnadzor also exercises control and supervision functions with regard to insurance companies and monitors their compliance with legislative requirements on registering, storing and submitting information on operations subject to mandatory control and facilitating internal control.

Under the Russian Federation's legislation, Rosstrakhnadzor formulates specific materials and submits them to authorised agencies in case of administrative violations.

Moreover, Rosstrakhnadzor is authorised to facilitate cooperation with federal executive branch agencies having extra-departmental supervision rights, including the provision of information by it in line with the established procedure, and with law-enforcement agencies during supervision.

Under Government Resolution No. 203 The Issues of the Federal Service for Insurance Supervision dated April 8, 2004, Rosstrakhnadzor's territorial divisions will employ not more than 119 officials.

Rosstrakhnadzor's territorial divisions must employ an additional 41 officials in order to effectively exercise their functions in full volume.

The implementation of this governmental resolution will be financed out of budgetary allocations.

9. The celebration in 2009 of the 200th anniversary of the Waterways and Land Transport Directorate and the Institute of the Railway Engineering Corps

The first Russian state agencies responsible for managing passenger and freight traffic, including the Yamsky Prikaz, were mentioned in the mid-16th century. In 1782, the Post Office Department was established on the basis of the Yamsky Prikaz, which was abolished in 1711.

In 1733, the Office of the Future Moscow-St Petersburg Road was established and renamed as the State Roads Construction Office in 1755. It became the first state agency responsible for managing the road sector.

In 1798, the Department of Water Communications was established and became the first state agency for managing inland water transport.

On November 20, 1809, Emperor Alexander I issued a manifesto on establishing the Waterways and Land Transport Directorate. The Institute of the Railway Engineering Corps was established that same year and subordinated to the Directorate.

The Russian Federation's Ministry of Transport proposes to consider the date of establishing this Department as the date of establishing a joint state agency of transport supervision and control and as the date of establishing the national system for training transport engineers.

The Russian Federation's Ministry of Transport drafted a plan of the main events dedicated to the 200th anniversary of establishing the Waterways and Land Transport Directorate and the Institute of Railway Engineering Corps. It will take 9,002.75 thousand roubles worth of budgetary allocations to implement the Russian President's Decree.

November 28, 2008
Moscow

* Press releases by the Department of Press Service and Information contain the materials submitted by the executive federal bodies for discussion by the Presidium of the Government of the Russian Federation.