Yurii Boiko, the Commissioner, reports on the results of the UCITS activity and the important in the legislation for the Kyivstar Business Hub

The stock market and collective investments

. . . In 2021 the National Securities and Stock Market Commission liberalized the capital market, allowing citizens to buy shares of foreign companies. Now Ukrainians can invest in shares of Microsoft, Tesla and Apple. However, it is not too easy for them to buy shares of Ukrainian issuers and it is quite risky, because the interests of the minority investors are less protected in Ukraine .

98% of all transactions in the securities market of Ukraine, according to the NSSMC, are carried out with the local loan bonds – the government debt securities with preferential tax treatment.

Yurii Boiko, the Commissioner, comments: “I would like the Ukrainian stock market to be directly “embedded” in the world financial system so that it is influenced by world events. I’d like to tell you about the influence of the US Federal Reserve System interest rate or the rise of world indices. However, these and other factors do not have an impact on the domestic capital market yet, because it is still in an embryonic-like state. The Ukrainian stock market currently has minimal volume due to the lack of financial instruments and, as a result, investors.”

At the same time, according to the NSSMC, there were qualitative and quantitative positive changes on the market in 2021. So, the total volume of trading (excluding the local loan bonds) amounted to 7.43 billion UAH since the beginning of 2021, which is almost 10% more than last year.

“Now we can work with the new instruments: the securities of foreign issuers. There are already 90 of them on the Ukrainian market, and we see a great demand from participants for these instruments,” the Commissioner said.

The UCITS market is also developing. According to Yurii Boiko, one of the achievements of this segment is that the total assets of operating UCITS  amounted to 509 billion UAH at the end of the III quarter of 2021, almost 492 billion UAH of which are assets of venture UCITS and 17.6 billion UAH are assets of non-venture UCITS.

The total assets of all UCITS increased by 21%, mainly due to an increase in the number of venture UCITS. Other quantitative characteristics are also growing: the total value of net assets increased by 20%, to 387.44 billion UAH.

Some qualitative changes can also be called encouraging – the corporate funds are still being created, the structuring of business in Ukraine with the help of Corporate Fund continues. The real sector of the economy, namely construction, green energy, etc., is being financed with participation of UCITS.

“Throughout the year, we see companies structuring business through the stock instruments, and that is incredibly encouraging. We also see an increase in investments in foreign stocks, derivatives, cash, real estate, corporate rights and the real sector during the first nine months of 2021. Now among the sectors of the economy that have been funded from the assets of venture funds, there is not only the construction business, but also the pharmaceutical business and even the production of vaccines. This is a precedent in the market, besides, it is very timely,” Mr. Boiko said.

Some Legislative Innovations of 2021

In 2021 the legislative innovations, that significantly influence financial markets, were introduced.

The key event in the sphere of formation of qualitative investment climate the interviewed experts name the entry into force of the Law of Ukraine on Amendments to Certain Legislative Acts of Ukraine Concerning the Simplification of Investment Attraction and the Introduction of New Financial Instruments.

“The main thing that the Law brought is a fundamentally new approach to the work of professional participants, the legislative regulation of the infrastructure of organized markets, including commodity markets. Now these financial instruments can be traded both in and out the organized capital markets,” Yurii Boiko, the Commissioner, explains.

In his opinion, it is also important that the Law refers to derivative contracts and measures to protect the rights of bondholders. In particular, by introducing the institution of meetings of bondholders and a collective representative of “bonders”.

“The last important changes are the vote of deputies in the first reading of the draft Law №5865. However, it must be finalized somewhat, among other things: including articles on another model of regulatory adoption – with the participation of the market community, which will increase expertise, strengthen the institutional and financial capacity of the NSSMC, in order to prevent the operation of dubious financial projects. If we manage to supplement the document in this way before the second reading, it will be a victory for the entire financial sector, and not only for the collective investments sector,” Yurii Boiko, the Commissioner, said.

The Source: Kyivstar Business Hub