Monumental New Stock Market Law Passes Second Reading

Yesterday the Rada passed a new law on securities and capital markets aimed at putting Ukraine’s market in line with EU standards. The law includes sections on better disclosure, regulates insider issues and introduces procedures for IPOs. The law also introduces more sophisticated financial tools: convertible bonds and real estate certificates. If properly implemented, this will provide a tool for equity investors to get exposure to the booming RE market, and for corporations to offer more diverse options for those who they borrow from. The fixed income segment will receive a boost: the maximum limit on bond emissions is increased from 25% to 100% of the statutory fund, bond issues can be registered in foreign currency, and zero-coupon bonds are introduced. Importantly, investment banks are allowed to open cash accounts for their clients. Though according to the draft, the number of clients is limited to 150 accounts this makes a big difference, as currently only commercial banks can accumulate money. The sweeping changes this law brings with it look great on paper however, it will be crucial that the government put adequate enforcement to implement them.