The Chairman of the National Securities and Stock Market Commission of Ukraine (NSSMC), Ruslan Magomedov, discussed with Francis Malige, Director of the Financial Institutions Department at the European Bank for Reconstruction and Development (EBRD), the creation of a consolidated structure to unify all elements of the capital market under EBRD auspices.

"Such an approach will enable the capital markets to function as an effective source of financing and attract more foreign and domestic investments, which will be particularly relevant during Ukraine's recovery," Magomedov wrote on his Telegram channel.

The NSSMC chairman expressed confidence that cooperation with the EBRD in this area would yield positive results and facilitate Ukraine's integration into European and international markets.

Magomedov also noted that the Commission had actively worked in recent months on several tasks under the Extended Fund Facility (EFF) with the International Monetary Fund (IMF). These included developing a reorganization and operational strategy for the Commission, updating the Commission's Code of Ethics, and initiating an independent evaluation of Commission members.

"The Commission has already prepared and agreed with the IMF on the terms of reference for assessing compliance with the code of ethics by the Commission's leadership. We have submitted necessary documents on other points in a timely manner, considering preliminary corrections from the IMF representatives, and are now awaiting final approval from our partners," Magomedov wrote.

He expressed hope that this would happen soon, as the Commission aims to integrate international partners' requirements swiftly and implement transparent capital market regulatory mechanisms.

In the updated memorandum on economic and financial policies under the EFF program in June 2024, Ukraine outlined priority measures to improve capital market infrastructure in consultation with the IMF and other international financial institutions (IFIs).

In the first stage, the NSSMC approved an NBU resolution, enabling the central bank to expand its existing link with Clearstream to facilitate access to municipal bonds and other debt instruments connected to Ukraine's recovery.

The second stage, planned for July 2025, aims to establish a direct link between the state-controlled National Depository of Ukraine (NDU) and foreign central securities depositories, thereby expanding foreign investors' access to a wider range of instruments. By August 2024, the NBU, NSSMC, and Ministry of Finance were expected to propose additional measures to enhance capital market infrastructure.

Authorities also considered establishing a new stock exchange to ensure the smooth operation of the secondary market for government bonds, as the PFTS exchange (Kyiv) was undercapitalized, and its owner confirmed no plans for additional investment.

The memorandum noted that around $0.5 million in capital would come partly from state banks (30%) and private sources, including IFIs. Plans to establish the new exchange were initially expected to be announced in August 2024. However, this did not materialize, and the NSSMC extended the liquidity compliance deadline for PFTS until February 28, 2025. Despite this, PFTS met the liquidity requirement, and the new exchange was not established.

Following a December 2024 program update with the IMF, the NBU, NSSMC, and Ministry of Finance planned to develop a target capital market infrastructure model by the end of December 2024 to attract foreign investors. Efforts to establish a direct link between the NDU and foreign central depositories were expected to continue through July 2025.

"To reduce risks for the secondary bond market, the NBU and NSSMC coordinated efforts to enable the Settlement Center (the central counterparty, majority-owned by the NBU) to provide services for contract conclusion and clearing of OTC operations involving government bonds," the memorandum stated.

In addition to PFTS, the Ukrainian capital market also has another licensed exchange, Perspektiva (Dnipro). Unlike the NDU and the Settlement Center (both Kyiv-based), the two exchanges are privately owned.