The NSSMC is against speculation around legislative initiatives: Ukraine should get civilized rules for capital markets

The National Securities and Stock Market Commission has found itself at the center of a media surge of distorted information and political pressure, so we are issuing an official position.

The NSSMC appealed to the President of Ukraine with a request to use his veto power with amendments to the text of the Law on Regulation and Supervision of Capital Markets and Organized Commodity Markets (No. 3585-IX) adopted by the Verkhovna Rada in February to allow for proper finalization of the Law and make the necessary amendments that will prevent the destruction of the regulator’s work as a state institution.

It should be noted that the inclusion of the Law in the three laws within the framework of the DPL program was deliberately lobbied by a certain group of MPs in an incomplete form to achieve their own objectives, which has an extremely negative and toxic effect on the regulator’s activities.

The NSSMC condemns any attempts by individual MPs to exert political pressure by manipulating the receipt of financial assistance from our international partners. At the same time, they also jeopardize the implementation of important reforms in the capital markets that will attract billions of dollars in investments into the Ukrainian economy.

Among the amendments to the text of the Law, the NSSMC considers it appropriate to clarify its proposals on the issues that are currently being raised in some media.

Regarding the salaries of the NSSMC’s employees. First, to avoid information speculation, the salaries of the Chairman and the Commissioners are set by the Cabinet of Ministers of Ukraine. The adopted version of the Law, as well as the submitted veto proposals, have nothing to do with the salaries of the NSSMC management.
Secondly, and most importantly, our proposals are aimed at employee salaries. The necessary changes have already been voted on in the first reading and did not cause any controversy. Now, in the adopted text of the issue of employees’ salaries, the basis for calculating salaries has been removed due to amendments by a group of deputies. At the same time, the Law on the State Budget refers to this Law to determine salaries, which indicates a deliberate action to undermine the NSSMC’s ability to attract qualified personnel.

That is why our proposals to establish salary grades at the level of the law with a maximum rate limit, which will provide legal certainty in setting salaries, were aimed at this. At the same time, the overall budget of the NSSMC remains at the level of 2022, which sets a higher limit for the use of public funds. This will make it possible to optimize the quantitative indicator of the NSSMC’s employees into a qualitative one, allowing them to compete with market salaries. In other words, without increasing the cost of maintenance, a smaller staff will ensure much greater efficiency due to their qualifications.

On the topic of conflicts of interest, the text of the Law introduces significant additional prohibitions in addition to the Law on Prevention of Corruption, which are not found in international practices, nor in any other financial regulator (the National Bank of Ukraine). And they apply not only to the NSSMC’s employees, but also to a significant number of persons whose perimeter is not clearly defined (Article 12). For example, the employees and their close circle of relatives are not allowed to receive any income from banks (deposits, bonuses, etc.) or to buy government bonds.
It should be noted that the NSSMC’s employee will not be able to ensure monitoring and enforcement of prohibitions against such persons in practice, due to the lack of direct influence on their actions. This, in turn, will lead to the risk of challenging the legality of actions taken within the framework of the NSSMC’s powers. In addition, the existence of such requirements will lead to an outflow of potential candidates for the positions of the NSSMC’s employees. A broad interpretation of this provision would prohibit relatives of such employees from holding any positions not only in professional participants of capital markets and organized commodity markets, but even in the National Bank of Ukraine.

The NSSMC, for its part, proposed an alternative text of this article, which was agreed with the World Bank, met international standards and reflected civilized approaches to this topic.

As for the topic of conflict of interest and personal life of the Chairman of the NSSMC. It is necessary to clearly distinguish between two different essences of conflict of interest and private life. What is currently happening in the information space is a shift to personalities, which in the context of the adoption of important reform initiatives for a country at war looks like a planned IPO.