NSSMC doesn’t endorse the draft Law of Ukraine on greenhouse gas emissions quota trading

The National Securities and Stock Market Commission does not support the Ministry of Economy’s draft law on greenhouse gas emissions quota trading. The reason is that the proposed version does not comply with European Union standards.

The main difference is that in the EU, quotas can be freely bought and sold from day one. In contrast, the document proposes launching full-scale trading only during the second and third phases of the system’s operation. According to the Commission, this is inconsistent with the approaches established under the EU ETS, the largest emissions trading system, and the Markets in Financial Instruments Directive (MiFID II).

The Commission also insists that the operator of the quota market be licensed and supervised by the regulator — just like traditional capital markets. Otherwise, the Commission simply won’t be able to oversee trading.

Finally, there are reservations about too lenient fines: from UAH 17,000 to 51,000 for market manipulation and from UAH 34,000 to 85,000 for insider trading.

By comparison, in standard capital markets, fines for the same violations can reach up to UAH 81 million for individuals and up to UAH 243 million for companies. In the EU, the stakes are even higher. The Commission is convinced that such low penalties simply won’t deter wrongdoers.

Due to all these shortcomings, the document was sent back for revision. If the Ministry addresses all the concerns, the Commission is prepared to support the draft Law of Ukraine.