Quality and reliability: the NSSMC has added an asset liquidity standard for professional participants

The NSSMC (National Securities and Stock Market Commission) approved the Resolution on Prudential Standards of Professional Activity in Capital Markets and Organized Commodity Markets.

Unfortunately, during the period of martial law, it is rather problematic, and sometimes impossible, to assess part of the assets that are on the balance sheet of financial companies. This indicates that the assets are not sufficiently liquid to maintain the financial stability of the participants. Therefore, the NSSMC introduced an additional indicator for the work of professional market participants.

The asset liquidity ratio is calculated as the ratio of the difference between the amount of the institution’s assets in the form of cash, government bonds of Ukraine and the institution’s liabilities to the minimum amount of initial capital established by law for the relevant type of professional activity.

The NSSMC established that the regulatory value of asset liquidity will be:

– from January 1, 2023 – at least 0.3;

– from July 1, 2023 – at least 0.5;

– from January 1, 2024 – at least 1.

However, for professional participants who will receive a license from January 1, 2023, this standard will be at least 1.

It is important that for an investment firm that provides additional services to clients, in particular, credits and loans for concluding derivative contracts and carrying out transactions related to financial instruments, the amount of the minimum amount of initial capital for calculating the liquidity ratio of assets is increased by UAH 2.5 million.

The NSSMC`s Resolution enters into force on October 1, 2022. You can get acquainted with the details of the document and the formula for calculating the standard by following the link.