International cooperation – НКЦПФР|НАЦІОНАЛЬНА КОМІСІЯ З ЦІННИХ ПАПЕРІВ ТА ФОНДОВОГО РИНКУ

European integration is the major foreign policy priority of Ukraine, and the further development and deepening of relations between Ukraine and the EU is carried out on the principles of political association and economic integration. The main strategic documents in this direction are the Association Agreement between Ukraine, of the one part, and the European Union, the European Atomic Energy Community and their Member States, of the other part (the Association Agreement), as well as the EU-Ukraine Association Agenda. On 23 June 2022 , Ukraine was granted the status of a candidate for membership in the European Union by the European Council on the basis of the opinion of the European Commission on Ukraine’s application for membership.

After Ukraine implemented the 7 recommendations of the European Commission, which it received along with the candidate status, on 8 November 2023, the European Commission presented Ukraine’s Progress Report on the 2023 EU Enlargement Package, which notes progress in implementing fundamental reforms and recommends that Ukraine start negotiations on accession to the EU.

On 14 December 2023, the European Council takes a historic decision to open accession negotiations with Ukraine, after which the European Commission begins to develop a negotiating framework for Ukraine.

In January 2024, the European Commission begins the process of conducting an official screening of the compliance of Ukrainian legislation with EU law.

On 09 February 2024, the Cabinet of Ministers of Ukraine approved an action plan to implement the recommendations of the European Commission presented in the Ukraine Progress Report under the EU Enlargement Package 2023. The NSSMC is the responsible executor of the action plan and reports on the status of its implementation on a quarterly basis.

21 June 2024 – EU member states approve a negotiating framework for Ukraine.

From February to May 2024, the NSSMC participated in explanatory sessions between EU representatives and the Ukrainian delegation on the approximation of the candidate country’s national legislation to EU law. During these meetings, experts from the European Commission answered questions from representatives of the Ukrainian authorities on the implementation of EU law within each negotiated section.

On 25 June 2024, the first Intergovernmental Conference between Ukraine and the EU took place in Luxembourg, marking the beginning of actual negotiations on Ukraine’s membership in the European Union.

Since July 2024, the European Commission has launched the next stage of the official screening process and moved to bilateral meetings with candidate countries, during which Ukraine will present the state of approximation of national legislation to that of the European Union in each negotiated chapter.

The NSSMC will lead the Ukrainian delegation during the explanatory meeting on Chapter 6 ‘Company Law’ and participate in the meetings as a member of the Ukrainian delegation on the following chapters: 2 ‘Freedom of movement for workers’, 9 ‘Financial services’, ‘Economic criteria’, 4 ‘Free of movement of capital’, 24 ‘Justice, freedom and security’, 19 ‘Employment and social policy’, 17 ‘Economic and monetary policy’, 31 ‘Foreign, security and defence policy’, 27 ‘Environment, climate, civil protection’.

Since 26 September 1996, the NSSMC has been a permanent member and the sole representative of Ukraine in the International Organisation of Securities Commissions (IOSCO), which gives it the right to vote during the regular meetings, and is a signatory to Annex B of the IOSCO Multilateral Memorandum of Understanding on Consultation and Cooperation and Information Exchange. As a permanent member of the organisation, the NSSMC pays an annual membership fee to IOSCO.

IOSCO has more than 180 regulatory authorities from around the world for the purpose of cooperation, information exchange, joint development of the best standards for regulating securities markets, with their subsequent implementation in the national markets of member countries.

The organisation’s main work is to develop international standards and recommendations for the regulation of securities markets. The documents developed by IOSCO are taken into account by many other international organisations, including the World Bank Group, OECD, regional development banks (including the EBRD), the International Accounting Standards Committee, the Basel Committee on Banking Supervision, etc.

In recent years, the NSSMC has been working hard to harmonise national legislation with international standards and, in particular, the IOSCO Principles, with a view to Ukraine’s accession to Annex A of the IOSCO Multilateral Memorandum of Understanding on Consultation and Cooperation and Information Exchange.

In order to increase the level of interaction with the said organisation, the NSSMC participates in the IOSCO Annual Meeting for the members of the European Regional Committee and other IOSCO events, which confirms the interest and desire of the Ukrainian securities market regulator to work together with other regulatory authorities around the world towards the implementation of the best international standards for capital market regulation.

The most striking result of the cooperation between the NSSMC and IOSCO is the international organisation’s quick response to the Ukrainian regulator’s request to exclude russia from IOSCO membership due to the aggressor country’s full-scale invasion of Ukraine on 24 February 2022.

IOSCO’s response to the war in Ukraine: ‘The IOSCO General Secretariat wishes to confirm to all IOSCO members and external stakeholders that:

ii) on 2 May 2022, the IOSCO Board decided that any future proposal to reinstate the active membership of one or more of these members may only become effective after discussion at an IOSCO Board meeting and following a formal decision of the Board.

In addition, the adoption of the Law of Ukraine on Amendments to the Law of Ukraine on State Regulation of Capital Markets and Organised Commodity Markets and certain other legislative acts of Ukraine on Improving State Regulation and Supervision of Capital Markets and Organised Commodity Markets (No. 3585-IX) enables the NSSMC to become a signatory to the International Organisation of Securities Commissions Multilateral Memorandum of Understanding (IOSCO MMoU).

Despite the full-scale military aggression of the russian federation since 2022, the NSSMC has made significant progress in reforming the system of regulation and supervision of capital markets in Ukraine by adopting Law of Ukraine No. 3585-IX dated 22 February 2024 on Amendments to the Law of Ukraine on State Regulation of Capital Markets and Organised Commodity Markets and Certain Other Legislative Acts of Ukraine on Regulation and Supervision of Capital Markets and Organised Commodity Markets (Law 3585). Law 3585 entered into force on 27 April 2024 and provides for the following provisions:

– increasing the institutional capacity and expanding the powers of the NSSMC as the national regulator of capital markets and organised commodity markets, enshrining in the legislation guarantees of the NSSMC’s independence, including financial independence;

– improving the legal framework for international cooperation of the NSSMC;

– an effective system of supervision over capital markets and organised commodity markets in accordance with the IOSCO principles to ensure the functioning of an effective system for preventing abuse in these markets;

– implementing mechanisms to prevent manipulation, insider trading, illegal use of insider information and other abuses in the capital markets and organised commodity markets, including the prohibition of pyramid schemes and combating attempts to organise them.

The NSSMC also has the ability to post information on suspicious investment projects on the IOSCO website https://www.iosco.org/members_area/v2/investor_protection/index.cfm?subsection=investor_alerts_portal, which allows it to promptly inform the international community and help prevent fraudulent schemes on a global scale.

The International Finance Corporation (IFC) is a member of the World Bank Group and is an international organisation whose mission is to promote sustainable private sector investment in developing countries and to provide assistance to reduce poverty and improve people’s lives.

In January 2020, the NSSMC signed a Cooperation Agreement with the Ukrainian Corporate Governance Academy and the IFC. The purpose of this Agreement was to promote the practice of effective corporate governance, including environmental and social management (‘ESG’) in Ukraine, as well as to implement the process of developing a draft ‘Main Code of Corporate Governance of Ukraine’ with ESG provisions – a set of recommended corporate governance practices for companies listed on the stock exchange in Ukraine.

Based on the results of the joint work, in March 2020, the NSSMC approved the Main Corporate Governance Code of Ukraine with ESG provisions, its key requirements and recommendations by Resolution No. 118. The Code uses the best international practices and developments in corporate governance. It is in line with the Organisation for Economic Co-operation and Development (OECD) Corporate Governance Guidelines, current Ukrainian legislation and generally accepted standards of ethical behaviour.

In August 2020, the NSSMC and IFC signed a Cooperation Agreement on the development of the sustainable finance capital market in Ukraine. Based on the results of the signed agreement, the IFC, together with the NSSMC, began to develop the following documents:

’ Annex to the Corporate Governance Code “Governance and Sustainable Development” to promote the implementation of good ESG practices;
‘ESG Scorecard’, which will allow the NSSMC to monitor compliance with the CG Code, improve the implementation of ESG practices, identify gaps and promote the development of sustainable finance instruments;
“ESG Disclosure Guidelines, which will provide practical guidance to companies on how to disclose financial and ESG information to investors and other stakeholders.

According to the Cooperation Agreement, one of the IFC’s tasks is to support the NSSMC’s cooperation with the Sustainable Banking and Finance Network( SBFN) by acting as a focal point in the country for all SBFN-related activities. The SBFN is a voluntary association of financial sector regulators and banking associations from developing countries. The aim is to improve environmental, social and corporate governance in the banking sector and financial market development. In July 2020, the NSSMC officially joined the SBFN.

As part of the signed agreement, a number of online meetings were held with representatives of the IFC Green Finance and Integrated Environmental, Social and Governance Practices Programme for Investment Promotion in Europe and Central Asia (the ‘ESG Programme’) to continue cooperation. Following the working meetings and joint work, the following guidelines were developed and adopted:

Recommendations for the implementation or financing of environmental projects through the issuance of green bonds( NSSMC Resolution dated 07.07.2021 No. 493);
Appendix to the Recommendations on the Practice of Application of Corporate Governance Legislation( NSSMC Resolution dated 02.12.2021 No. 1182);
Regulations on Disclosure of Information by Issuers of Securities and Persons Providing Security for Such Securities ( NSSMC Resoution dated 06.06.2023 No. 608);
Recommendations for the preparation of environmental impact statements for environmental projects that are fully or partially financed and/or refinanced by funds raised from the placement of green bonds(NSSMC Resolution dated 07.02.2024 No. 157);
Recommendations for the selection of environmental projects for their full or partial financing and/or refinancing with funds raised from the placement of green bonds (NSSMC Resolution dated 10.04.2024 No. 433);
Requirements to the Regulation and Report on Remuneration of Members of the Supervisory Board, Board of Directors and Executive Body of a Joint Stock Company (NSSMC Resolution dated 02.05.2024 No. 549).

On 24 November 2021, a roundtable discussion ‘Green Bonds – New Opportunities for Financing Environmental Projects in Ukraine’ was held jointly with the IFC, with more than 200 participants from the financial (banks), non-financial (companies) and municipal sectors.

On 25 April 2024, the IFC held a webinar ‘Green Bonds in Financing Ukraine’s Economic Recovery: What You Need to Know’. The event was aimed at raising awareness of green bonds among stakeholders and promoting the development of the green bond market in Ukraine.

Currently, the NSSMC, with the support of IFC, is in the process of developing a draft Sustainable Finance Roadmap in line with the SBFN concept and measurement methodology and using the Sustainable Finance Diagnostic Toolkit for developing sustainable finance roadmaps.

In 2024, the NSSMC continues to work on attracting international technical assistance through the following projects:

The Investment for Business Resilience (IBR) Project, funded by the US Government through the United States Agency for International Development (USAID)

The objective of the IBR Project is to support systemic changes in Ukraine’s economy and increase the availability of finance to Ukrainian businesses by (i) transforming the country’s financial sector into a more developed, well-functioning, competitive market that is able to meet the demand for business finance and that meets European Union (EU) standards and is integrated into international financial systems, and (ii) directly providing finance to businesses to ensure sustainable economic growth in Ukraine.

The project consists of five components: 1-2: Market regulation and supervision. Financial infrastructure. 3: Private sector intermediaries and facilitators. 4: Transparency and communications. 5: Facilitating new investment.

The IBR Project will be implemented for five years – from 13 July 2022 to 12 July 2027.

The project ‘Implementation of EU Practices for Accounting, Financial Reporting and Audit in Ukraine’ (EU-FAAR)

EU-FAAR is an EU-funded project providing targeted EU support to strengthen reforms in the areas of accounting, auditing and financial reporting.

The expected outcomes of the Project and its goal are to increase transparency and improve the business climate by facilitating: more reliable and standardised corporate financial reporting data audited by competent auditors; development of rules for financial reporting and auditing for business entities of different types and sizes; EU recognition of the audit oversight regime in Ukraine; disclosure of standardised financial statements in electronic format by all entities.

The EU-FAAR Project will be implemented for five years – from 10 January 2020 to 09 February 2025.

Technical assistance project ‘Energy Security Project’ (ESP), funded by the US Government through the United States Agency for International Development (USAID)

The goal of the ESP Project is to improve Ukraine’s energy security by:

– reforming and developing a competitive energy market, creating a favourable legislative and policy environment, increasing technical capacity, developing human and institutional capacity, developing public-private dialogue and information dissemination, developing energy-related training programmes, and international cooperation between Ukraine and Moldova;

– development of tools, reviews and updates of the energy policy and energy strategy of Ukraine, development of incentive mechanisms for the development of renewable energy sources, development of models of electricity production at the lowest cost, development of policies and strategies for the development of generation with reduced emissions.

The Project implementation period is seven years: from 01 July 2018 to 30 June 2025.

In order to establish cooperation and counteract abuses in the capital markets that have become international in nature, the NSSMC has concluded Memoranda of Understanding with regulators of other countries, in particular:

Memorandum of Understanding between the National Securities and Stock Market Commission of Ukraine and the Central Bank of the Republic of Armenia 06.2012
Memorandum of Cooperation between the National Securities and Stock Market Commission of Ukraine and the National Commission of Financial Market of the Republic of Moldova 05.2012
Memorandum of Cooperation between the National Securities and Stock Market Commission of Ukraine and the State Service for Regulation and Supervision of Financial Market under the Government of the Kyrgyz Republic 10.2012
Memorandum of Understanding on Information Exchange and Supervision of Securities Activities between the National Securities and Stock Market Commission of Ukraine and the National Securities Commission of Romania 09.2012
Memorandum of Understanding between the National Securities and Stock Market Commission of Ukraine and the National Bank of Georgia 09.2012
Memorandum of Understanding on Exchange of Information between the National Securities and Stock Market Commission of Ukraine and the Financial Supervisory Authority of the Arab Republic of Egypt 05.2013
Memorandum of Understanding between the National Securities and Stock Market Commission of Ukraine and the Ministry of Finance of the Republic of Belarus 03.2013
Memorandum of Understanding between the National Securities and Stock Market Commission of Ukraine and the Securities Commission of the Hashemite Kingdom of Jordan 08.2013
Memorandum of Understanding between the National Securities and Stock Market Commission of Ukraine and the China Securities Regulatory Commission on Cooperation in the Field of Securities Regulation2013
Memorandum of Understanding and Exchange of Information between the National Securities and Stock Market Commission of Ukraine and the State Committee for Securities of the Republic of Azerbaijan 09.2013
Memorandum of Understanding between the Malta Financial Services Authority and the National Securities and Stock Market Commission of Ukraine 2014
Memorandum of Understanding and Exchange of Information between the National Securities and Stock Market Commission of Ukraine and the Capital Markets Board of Turkey 03.2015
Memorandum of Understanding between the National Securities and Stock Market Commission (Ukraine) and the Securities and Commodities Authority (United Arab Emirates) on Assistance and Mutual Cooperation 2015
Memorandum of Understanding between the NSSMC and the Committee of the Astana International Financial Centre on Regulation of Financial Services for Securities and Regulatory Cooperation on Futures (AFSA, Kazakhstan) 04.2019
Memorandum of Understanding between the National Securities and Stock Market Commission and the State Commission of Vietnam 01.2021
Memorandum of Understanding on Cooperation and Exchange of Information in the Field of Capital Market Supervision between the National Securities and Stock Market Commission of Ukraine and the Financial Supervisory Authority of Poland 05.2022
Memorandum of Understanding between the National Securities and Stock Market Commission and the National Securities Market Commission (CNMV) of the Kingdom of Spain on Mutual Assistance and Cooperation 2022
Memorandum of Understanding between the National Securities and Stock Market Commission and the Croatian Financial Services Supervisory Authority on Technical Cooperation in the Regulation and Supervision of Relevant Non-Banking Financial Markets 2022
Memorandum of Understanding on Cooperation and Exchange of Information in the Field of Capital Markets Supervision, concluded between the National Securities and Stock Market Commission and the Financial Supervisory Commission of Poland 05.2023
Memorandum providing for the exchange of information and mutual assistance in investigations with the Federal Financial Supervisory Authority (BaFin) 06.2024

The Technical Assistance and Information Exchange Instrument (TAIEX) (https://neighbourhood-enlargement.ec.europa.eu/funding-and-technical-assistance/taiex_en) is a technical assistance and information exchange instrument provided by the European Commission to build institutional capacity, approximation of national legislation to the European Union acquis communautaire, its implementation and further effective application.

The main objectives of TAIEX are:

– providing short-term technical assistance and advice on the transposition of EU legislation into the national legislation of the beneficiary countries and on the further administration, implementation and enforcement of such legislation;

– providing technical training and assistance to partners and stakeholders of the beneficiary countries;

– support to the institutional development of the beneficiary country’s public authorities;

– bringing the beneficiary country closer to the European Union by strengthening economic integration and deepening political cooperation through the exchange of experience.

The following services are provided under the TAIEX instrument:

– organisation of study visits to enable civil servants from the beneficiary country to learn from the experience of a member state in dealing with practical issues related to the implementation and enforcement of the acquis communautaire and interaction with stakeholders;

– organise and conduct seminars and workshops to present and explain aspects of the acquis communautaire to a wide audience.

The use of the European Commission’s external assistance under TAIEX in Ukraine is carried out in accordance with the Procedure for the Preparation, Approval and Implementation of the Plan for Attracting External Assistance of the European Commission under TAIEX, approved by the Resolution of the Cabinet of Ministers of Ukraine No. 813 dated 9 September 2020 (https://zakon.rada.gov.ua/laws/show/813-2020-%D0%BF#Text).

In accordance with the said Procedure, the coordination group for the implementation of the TAIEX instrument approves the plan for attracting external assistance from the European Commission under TAIEX.

The official website of the Centre for Adaptation of the Civil Service to the Standards of the European Union (https://www.center.gov.ua/pres-tsentr/novini?limitstart=0) contains and constantly updates news related to the use of the European Commission’s external assistance under TAIEX in Ukraine.

On 16 – 18 August 2022, TAIEX Workshop on combating abuse on capital markets and organised commodity markets was held. The event was attended by experts from the Polish Financial Supervisory Authority. The purpose of the event was to familiarise participants with the peculiarities of combating abuse in the capital markets and organised commodity markets, as well as the peculiarities of the work of the enforcement units of European stock market regulators in combating manipulation and insider trading in order to improve the current Ukrainian legislation, expand the methods of investigation used, expand the professional experience of the NSSMC staff, increase the institutional capacity to ensure a comprehensive system of combating manipulation and illegal trading in the stock market.

– On 12 – 13 July 2023, TAIEX Workshop on bringing into circulation and circulation of virtual assets secured by financial instruments was held. Experts from the Polish Financial Supervisory Authority were invited to participate in the event. The purpose of the event was to study the peculiarities of professional activities in the management of virtual assets in the capital markets and organised commodity markets and the peculiarities of putting into circulation and circulation of virtual assets; to acquire knowledge of the system of regulation of relations regarding the circulation of virtual assets, transfer of ownership of such assets, determination of their liquidity and their valuation; to study the peculiarities of acquiring rights to virtual assets and establishing restrictions on transactions for the disposal of virtual assets;

– On 7-8 February 2024, TAIEX Workshop on Studying the European experience of financial monitoring was held. The event was attended by experts from the Federal Financial Supervisory Authority and the Croatian National Bank. The purpose of the event was to study the progressive experience of EU regulators in the field of preventing and combating money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction, namely: experience in ensuring a sustainable and progressive system of prevention and counteraction; exchange of information between competent authorities in the field of prevention and counteraction; regulation and supervision of the activities of primary financial monitoring entities.