Greener Ukraine and profits for the State: the NSSMC and the SFRAU signed a memorandum on cooperation

Today, November 25, 2021, the NSSMC (National Securities and Stock Market Commission) and the SFRAU (State Forest Resources Agency of Ukraine) signed a memorandum on cooperation. This means that now there will be more transparency and cohesion in the timber market, the trading mechanisms in the commodity market will be properly regulated, and the State will receive more budget revenues and new hectares of green spaces.

“Currently, the timber market as a commodity market is at the initial stage of its work. But we already have our first wins: an increase in the forest trade and, as a result, the additional revenue for the State. For that matter, we consider commodity markets in line with other markets regulated by us. After all, the spot market will help create new derivative financial instruments and hedge the risks. By the way, we are already considering the possibility of launching indices for timber and “carbon certificates”, says Ruslan Magomedov, the Chairman of the NSSMC. “Therefore, we are delighted to partner with the SAFRU, support our initiatives and look forward to working together for the development of the industry.”

For example, according to the results of work from July to November, during the period of timber trading on the licensed exchange platforms, the State received 1.1 billion UAH of the additional income from unprocessed timber set for an auction.

The memorandum between the NSSMC and the SFRAU aims to consolidate the efforts of governmental institutions targeted to create preconditions for the effective development, functioning of the timber market, organized commodity markets and capital markets, ensuring transparency of the participants’ activities in the appropriate markets. The document provides for mutual advice, information exchange, common approaches to the mechanisms and instruments for quality regulation of the timber market, organized commodity markets and capital markets, etc.

“We expect the adoption of the law on the timber market, which will regulate all the issues. Today we are already observing the qualitative changes in the timber trade on licensed exchanges. During the 10 months of 2021 the enterprises of the industry have received 6.5 billion UAH more revenue than in the same period last year. We are glad that the Regulator of the capital market and commodity markets share our approach to the protection and sustainable development of forest sector in Ukraine”, says Yurii Bolokhovets, the Chairman of the State Forest Resources Agency of Ukraine.

We remind that from July 1, 2021, the trading in standardized commodities (grain, timber, fuel, etc.) moved to licensed exchange platforms. The National Securities and Stock Market Commission, the Regulator of the capital markets and organized commodity markets in Ukraine are responsible for their licensing. The State Forest Resources Agency of Ukraine as the central executive body implements the State Forest and Hunting Sector Policy. The development of commodity markets, including the timber market, is one of the goals of the Ukraine’s Memorandum with the IMF.