The NBU improves access for foreign investors to Ukraine's capital market

On 24 July 2024, the amendments approved by Resolution No. 90 of the Board of the National Bank of Ukraine (the NBU) dated 19 July 2024 “On Amendments to the Regulation on Conducting Depository and Clearing Activities and Ensuring Settlements under Securities Transactions by the National Bank of Ukraine” (Resolution No. 90) came into force.

By virtue of Resolution No. 90, the NBU may open and maintain securities accounts for foreign depositors as well as nominee securities accounts for foreign financial institutions that meet the requirements of Ukrainian law. A depositary institution may open and maintain a securities account of a nominee holder for a foreign financial institution, if it complies with the following requirements:

• the amount of own funds of a foreign financial institution is not less than EUR 10 million;
• a foreign financial institution has been providing securities accounting and registration of transfer of ownership of securities to its clients for at least five years;
• the foreign financial institution is a member of the International Securities Services Association (ISSA).

Foreign investors can now engage with the Ukrainian securities market more seamlessly through nominee holders. This structure allows foreign institutions to hold and manage securities on behalf of multiple clients under a single account, simplifying administrative processes and reducing costs. Nominee holders play a crucial role in facilitating transactions by acting as intermediaries, ensuring that the securities and associated rights are accurately recorded and managed. This system enhances the flexibility and efficiency of securities transactions, making it easier for foreign institutions to participate in the market. Foreign investors can now manage various types of securities and related rights, perform corporate operations like voting and receiving dividends, and directly open and service securities accounts with the NBU.

The changes will help to ensure the implementation of the Memorandum of Economic and Financial Policies with the IMF. The creation of mechanisms for direct access of foreign investors to debt securities other than sovereign bonds is a priority of the program with the International Monetary Fund. The first stage of measures aimed at improving the capital markets infrastructure is currently being implemented. The innovations will help fulfil Ukraine's commitments set out in the Memorandum of Economic and Financial Policies of 17 June 2024.

As the NBU itself notes, these changes open up the possibility of implementing the announced plans to expand “the link” with the international central securities depository Clearstream Banking Luxembourg. By expanding “the link”, foreign investors will be able to conduct not only transactions with Ukrainian government securities, but also with other financial instruments of the post-war recovery.