Why Ukraine is changing the rules of bond trading
28 May 18:21
Ukraine is preparing to change the rules for trading government bonds in dollars and euros. It is planned that they can be bought and sold only through a special settlement system under the control of the National Bank. This is necessary to fulfill an agreement with the International Monetary Fund, "Komersant Ukrainian" reports, citing the National Securities and Stock Market Commission.
Thus, the Commission approved for public discussion a draft decision on the peculiarities of making and executing transactions with domestic government bonds denominated in foreign currency during martial law.
Key provisions of the draft decision
New requirements for trading in foreign currency-denominated domesticgovernment bonds:
– All transactions of purchase and sale of foreign currency-denominated government bonds (except for the initial placement) must be carried out exclusively under the delivery versus payment (DVP) mechanism with the participation of a central counterparty.
– Investment firms will be prohibited from entering into and executing transactions with FX domestic government bonds without complying with the DVP mechanism.
– Depository institutions will be able to carry out accounting transactions for the transfer of foreign currency domestic government bonds only upon the order or notification of the National Bank of Ukraine.
Transitional provisions:
– Investment firms must amend already concluded but not yet executed transactions with foreign currency government bonds (including repurchase agreements) to take into account the new requirements.
– Control over the implementation of the decision is entrusted to Iryna Baramiya, a member of the NSSMC.
Читайте нас у Telegram: головні новини коротко
Why Ukraine is changing the rules of bond trading
Fulfillment of obligations to the IMF
The Commission approved a project to fulfill the obligations specified in the Memorandum between Ukraine and the IMF under the seventh review of the Extended Fund Facility program. The relevant requirement was formed by international partners at the initiative of the National Bank of Ukraine to strengthen control over foreign exchange transactions, the NSSMC says
Strengthening the NBU’s control
According to the NBU’s proposal, non-bank financial institutions will have to conduct transactions with foreign currency government bonds exclusively under the DVP mechanism through the Settlement Center. This will allow the central bank to have full control over all FX transactions with government bonds.
Warnings from the NSSMC
At the same time, the Commission warns that under the current regulation of the NBU and taking into account the relevant rules on its part, it will be impossible to sell foreign currency government bonds by legal entities that already own them today.
In this regard, the NSSMC has asked the NBU to resolve this issue and hopes for a positive decision from the regulator so as not to block the opportunities of current holders of foreign currency bonds.
Minimizing the impact of the war
The amendments are also aimed at minimizing the negative impact of the consequences of Russia’s armed aggression against Ukraine and promoting the stability of capital markets under martial law, which was introduced by the Presidential Decree of February 24, 2022.
The project is under discussion
Within 10 business days – until June 6, 2025 inclusive – market participants and stakeholders can send their comments and suggestions on the draft to [email protected] or to the address: 8 Knyaziv Ostrozkykh St., Bldg. 30, Kyiv, 01010.
The decision is to enter into force on June 30, 2025, except for certain provisions on the adaptation of already concluded agreements, which will enter into force on the date of official publication.
Читайте нас у Telegram: головні новини коротко
