Vladimir Milovidov, leader of the Federal Financial Markets Service (FFMS), said the legislation would establish a national fund, backed by contributions from brokerages and investment firms, to compensate victims of investment fraud, Reuters reports.
Commenting on the regulations, which took two years to draft, Mr Milovidov said they would create a "legal framework" for the definition of insider trading and share manipulation, while assigning them appropriate punishments.
He added that the legislation will go before Russia's lower house, the State Duma, shortly. Draft regulations on the establishment of the compensation fund should follow by July 1st.
Russia's prime minster, Vladimir Putin, had previously called for action to tackle market abuse in a bid to restore public confidence in the markets. Since May, Russia's stock market has dropped by around 70 per cent.
"A system of compensation must be formed to guarantee that losses sustained by citizens from the malicious actions of market participants be returned," Mr Putin commented.
Mr Milovidov became head of the FFMS in May 2007.