Investment firms

A licensee may engage in professional trading in securities in accordance with a license issued by the State Commission for Securities and Stock Market or the National Securities and Stock Market Commission.

A trader’s activity is possible only if he is a member of at least one association of professional securities market participants and / or a self-regulatory organization that unites professional securities market participants according to the relevant professional activity and incorporates the licensee (except the bank) into the state register of financial institutions , which provide financial services in the securities market.

The Law “On Securities and the Stock Market” establishes the following requirements for the authorized capital of traders:

500 thousand UAH , paid in cash, for dealer activities.

1 million UAH , paid in cash, for brokerage activity.

7 million UAH paid in cash, for securities management or underwriting.

A licensee (other than a bank) for the professional activity in the stock market should own or use non-residential premises, which is completely separated from the premises of other legal entities at the locations indicated in the Unified State Register of Legal Entities and Individual Entrepreneurs and Public Associations.

The area of ​​the licensee’s premises (except for the bank), its separate subdivision must be not less than 20 square meters. m (except for the case of conducting only dealership, where the space may be not less than 10 square meters). The area of ​​premises of the specialized structural divisions of the dealer must be not less than 10 square. m

The head of the securities trader (his separate and / or specialized structural units) can not simultaneously work in other professional stock market participants. The head of the licensee (other than the bank) must have experience in the stock market for at least three years.

The licensee in conducting securities trading activities must also comply with the prudential standards established by the Commission.

A complete list of requirements to licensees can be found at the link.

The National Securities and Stock Market Commission assesses the credit, market, operational and liquidity risks of securities traders. The following indicators are used to measure and measure the risks:

SIZE OF REGULATORY CAPITAL. The minimum size of the regulatory capital of a securities trader should be not less than the minimum size of the authorized capital established by the legislation for the relevant type of securities trading activity, namely, dealership (not less than 500 thousand hryvnias), brokerage activity (not less than 1 million hryvnias) , underwriting and securities management (not less than 7 million hryvnia). If the trader also deals with the activities of the depositary institution, his regulatory capital should be not less than the minimum size of the authorized capital of the depositary institution.

NORMATIVITY OF REGULATORY CAPITAL ADEQUACY. It is calculated as the ratio of the size of the regulatory capital of the institution to the amount of assets weighted by the degree of risk. Normative value – not less than 8%.

NORMATIVE OF FIRST LEVEL CAPITAL ADEQUACY. It is calculated as the ratio of the amount of the capital of the first tier of the institution to the amount of assets weighted by the degree of risk. Normative value – not less than 4,5%.

FINANCIAL LEAFLET COEFFICIENT. Calculated as the ratio of the carrying amount of the total amount of liabilities (long-term and current) securities trader to the amount of its equity. Normative value – from 0 to 3.

COEFFICIENT OF ABSOLUTE LIQUIDITY. It is calculated as the ratio of the cost of highly liquid assets of the institution, which includes cash, their equivalents and current financial investments, to the amount of its current liabilities. Normative value – not less than 0,2.

Details of the prudential standards for securities traders can be found at the link.

A securities trader shall submit to the public information database of the National Commission on Securities and Stock Market information on all off-stock transactions carried out by him or with his participation in issues relating to issues of securities within three working days after the date of execution of the transaction. The following information is released:

• The date on which the information was compiled
• Date of the transaction (fulfillment of the contract of sale)
• Type of transaction (in accordance with Guideline 15)
• Name of the securities issuer under the transaction
• Code under the USREOU of the issuer of securities under the transaction
• Type of financial instrument that is the subject of civil rights under the transaction (in accordance with Guideline 7)
• International Identification Number of the security
• Number of securities by transaction
• The price of securities by transaction

The securities trader lodges with the Commission two types of administrative data: monthly (no later than the last day of the month following the reporting period) and irregular (within 3 business days after the date of the occurrence of irregular data).

Monthly data is comprised of:

1. certificates about securities trader;
2. certificates of non-executed one-time orders and contracts with securities or other financial instruments of a securities trader as of the last day of the reporting month;
3. certificates on financial instruments held by the securities trader as of the last day of the month (other than securities of own issues);
4. certificates of securities and / or funds held in the management of a securities trader as of the last day of the reporting month;
5. certificates of securities trader standards when performing margin operations (except for banks);
6. certificates on the prudential norms of a securities trader (except for banks);
7. reference data for the calculation of the indicator of the size of regulatory capital (except for banks);
8. reference data for the calculation of the regulatory capital adequacy ratio, the first-tier capital adequacy ratio, the ratio of the financial leverage and the absolute liquidity ratio (except for banks);
9. reference data for the calculation of the amount of assets weighted by the degree of risk (except for banks);
10. certificates on the calculation of the operational risk coverage ratio (except for banks);

The data for the month of December include the certificate on the total amount of concluded and executed contracts with securities or other financial instruments of the securities trader for the year.

The data for March, June, and September include interim financial statements (except for banks), the requirements of which are set by the relevant legal act.

The data for the month of February include annual financial statements (except for banks), the requirements of which are set by the relevant regulatory act.

Irregular Data consists of a certificate of executed or terminated contracts with securities or other financial instruments of a securities trader in an unorganized market.

More information about the formation of certificates can be found at the link.