Improving the investment climate, reforming financial infrastructure, and clarifying the tax regime - these tasks are on Moscow's "to do" list, as it bids to become a global financial center.

Moscow ranked in 60th position on the 2009 City of London Global Financial Centres Index. But, Vladimir Milovidov, head of the Federal Financial Markets Service, says Moscow is aiming to push into the ranks of the upper echelon.

“We have several key issues on the table such as the adoption of laws on insider information, on clearing and on central depositary. This plan will help improve the level and quality of the Russian financial market and provide the inflow of foreign investors, so in 3 or 4 years we will be able to talk of an increased role of Moscow as a financial centre.”

The dramatic sell off in Russian equities which came in the wake of the Lehman Brothers collapse in late summer of 2008 underlined global capital’s general perception of Russia’s largest financial centre. It was a higher risk, and the first place for investors to sell out of when the credit crunch, and near cardiac arrest of the global financial system, saw investors head for safety.

After having been sold off more heavily in late 2008, 2009 saw the Russian markets bounce back more strongly than almost anywhere else. The far more positive sentiment about the Russian financial markets in April 2010 hasn’t blinded the roller coaster ride of the past 18 months to key policy makers. They are acutely aware of the need to reduce the risk associated with Russia in the eyes of investors. MICEX President, Konstantin Korischenko, says this will involve further financial infrastructure reform, a benign taxation approach to investment, and positive macroeconomic settings.

“For further reformation of Russia’s financial market we have to reduce the risks and improve financial infrastructure – things which make up the climate. And climate is connected with stimulating long-term investment and this, in its turn, depends on low inflation and a favorable tax regime”

On Wednesday Russia's Finance Minister introduced Mikhail Mishustin as the new head of the Federal Tax service. He has an extensive background within the government and taxation circles, but more importantly he also has considerable experience in direct investment, share investment funds and trading management. Ivan Ivanchenko, Head of Investment Strategy at VTB Capital, says there is considerable expectation that the new head will be acutely alert to the need to improve Russia’s investment profile

“Anytime somebody from the business side is assigned to do a government job is a very good sign for foreign investors. Usually people from the business side do understand things like problematic taxation and sometimes quite complicated corporate law. So our expectations run really deep and it will facilitate the investment climate in Russia.”

Those aiming to raise Russia’s profile as an international financial centre know that the reforms and the change of perception on the part of investors won’t happen overnight. But with Russia’s economy getting more traction on an economic rebound reforms made now will set Moscow on the course for a better investor reputation, and profile, for the longer term.