Public trading of financial instruments in Ukraine is carried out by several stock exchanges, the two main ones being based in Kyiv: the Ukrainian Exchange (index: UAX) and the PFTS Stock Exchange (index: PFTS). Their activities comply with international standards such as the requirements of the International Organisation of Securities Commissions (IOSCO), International Financial Reporting Standards (IFRS), Basel Standards or MiFID II.
Key legislation governing the financial market
The stability, transparency and protection of investors' interests in the Ukrainian financial market are ensured by a number of legal acts, the main ones being:
- Securities and Exchange Act (of 23 February 2006) - the basic piece of legislation that sets out the rules for the issue, registration and trading of securities such as shares, bonds and derivatives,
- Law on state regulation of the securities market (of 30 October 1996) - regulates the structure and powers of supervisory authorities, including the National Securities and Exchange Commission (NCSCFR), and establishes mechanisms to protect the rights of investors and minority shareholders,
- Public Limited Liability Companies Act (of 27 July 2022) - together with the Commercial Code (of 16 January 2003) - sets out the rules for the operation of joint stock companies, the issue of shares, their disposal and disclosure obligations,
- Law on Mutual Investment Institutions (of 5 July 2012) - regulates investment funds, including their creation, licensing and supervision,
- Business Licensing Act (of 2 March 2015) - sets out the procedures for obtaining a licence for professional activities on the stock exchange, such as brokerage or brokerage.
Supervisory authorities
Supervision of the securities market is exercised by National Securities and Exchange Commission (NCSCFR), which monitors compliance with regulations, licenses professional activities, supervises securities issues and handles complaints from market participants. An important role is also played by National Bank of Ukraine (NBU), which oversees the stability of banking institutions involved in securities trading.
Improving standards
In the broadest outline, it can be said that the ongoing legislative reforms aim to:
- strengthening the protection of investors' rights,
- increasing the transparency of market participants,
- improving the safety of trading systems,
- streamlining licensing processes,
- improvements in the digitalisation of stock exchange trading.
The work also includes simplifying securities registration procedures and lowering barriers to entry for new market participants.
Development prospects
The transformation of Ukraine, initiated by the events of the Maidan, is conducive to building a modern financial market. It remains to be convinced that the continuous improvement of regulations and standards, will provide all the more solid conditions for business, attracting foreign investors and supporting the country's economic development, especially after the cessation of hostilities related to the ongoing war.
authors:
Svitlana Nemertsalova – lawyer in Ukraine
Michał Wojtyczek – attorney-at-law, head of the Ukrainian Desk department
This entry contains general information on the legal issue discussed. It does not constitute legal advice or a solution to a specific case or legal problem. Due to the unique nature of each factual situation and the variability of the legal status, we recommend that you seek the assistance of a law firm for legal advice.