International cooperation

Since September 26, 1996, the NSSMC has been a permanent member and the only representative of Ukraine in the International Organization of Securities Commissions (IOSCO), and is entitled to vote at regular meetings, and is a signatory of Appendix B to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (the IOSCO MMoU). As a permanent member of the organization, the NSSMC pays the annual membership contribution to IOSCO.

IOSCO includes more than 180 regulatory bodies of the countries from all over the world for the purpose of cooperation, exchange of information, joint development of the best standards for the securities markets regulation with their further implementation on the national markets of the member states.

The main work of the organization consists in the development of the international standards and recommendations on the regulation of securities markets. The documents developed by IOSCO are taken into account by many other international organizations, including the World Bank Group, the OECD, the regional development banks (including the EBRD), the International Accounting Standards Committee, the Basel Committee on Banking Supervision, and others.

In recent years, the NSSMC has been fruitfully working on the harmonization of the national legislation in accordance with the international standards and, in particular, the IOSCO Principles, with the aim of Ukraine’s joining to Appendix A of the IOSCO MMoU.

In order to increase the level of interaction with the specified organization, the NSSMC participates in the Annual IOSCO meetings for members of the European Regional Committee and other IOSCO events, which is a confirmation of the interest and desire of the Ukrainian securities market regulator to work jointly with other international regulatory bodies in the direction of implementation of the best international standards for the capital market regulation.

In addition, with the active support of IOSCO, the NSSMC organizes workshops and other training programs which involve the employees of the Ukrainian capital market regulator in order to constantly improve their skills and knowledge. In particular, the following events should be mentioned among them:

• the webinar «Critical analysis of the modern crypto-space and related regulatory issues for the securities market regulators»;
• the webinar «Securities and derivatives clearing and the role of the central counterparties»;
• the workshop «How the IOSCO Multilateral Memorandum assists in international cooperation on law enforcement and how to solve general practical issues regarding the use of the IOSCO Multilateral Memorandum»;
• the workshop «Dynamics and regulation of the derivatives markets: why and how»;
• the educational program «Supervision of the market and the use of technologies»;
• the workshop «Development of Law Enforcement Guidelines».

The most striking result of cooperation between the NSSMC and IOSCO is the international organization’s quick response to the appeal of the Ukrainian regulator to exclude russia from the IOSCO membership after the large-scale invasion of the aggressor country on the territory of Ukraine on February 24, 2022.

IOSCO’s response to the war in Ukraine was the following:

«The IOSCO General Secretariat wishes to confirm to all IOSCO members and external stakeholders that:

1. i) in the immediate aftermath of the conflict in Ukraine, arrangements were put in place so that the Central Bank of Russia (ordinary member), the Ministry of Finance of the Republic of Belarus (associate member) and the Russian National Association of Securities Market Participants (affiliate member) would not be able to participate in any respect in any IOSCO processes or fora until further notice, and

ii) on 2nd May 2022 the IOSCO Board resolved that any future proposal for a resumption of active membership by one or more of these members could only come into effect after being discussed at a meeting of the IOSCO Board and following a formal Board decision.»

The IFC, a member of the World Bank Group, is an international organization whose mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives.

In January 2020, Cooperation Agreement was signed between the NSSMC and the Ukrainian Corporate Governance Academy (“UCGA”) and the IFC. The purpose of this Agreement is to promote good corporate governance, including governance of environmental and social matters (”ESG”) in Ukraine, as well as realization of the process of drafting of the Core Corporate Governance Code of Ukraine with ESG provisions – a set of recommended corporate governance practices for listed companies on the stock exchange in Ukraine.

As a result of joint work on March 2020, the Code of Corporate Governance (“Code”), its key requirements and recommendations were approved by the NSSMC`s Resolution №118. The Code uses the best world’s practices and developments in corporate governance. It complies with Corporate Governance Guidelines of the Organization for Economic Co-operation and Development (OECD), current Ukrainian legislation and generally accepted standards of ethical conduct.

In August 2020, the NSSMC and the IFC signed a Cooperation Agreement on developing sustainable finance capital market in Ukraine. According to the existing Cooperation Agreement, one of the IFC’s tasks is to support the NSSMC’s cooperation with the Sustainable Banking Network (SBN), acting as a coordination center in the country for all SBN-related activities. The SBN is a voluntary community of financial sector regulatory agencies and banking associations from emerging markets. The purpose of the activity is to improve environmental, social and corporate governance in banking sector and development of the financial market. In July 2020, the NSSMC officially joined the SBN.

On July 7, 2021, the Resolution of the NSSMC №493 “On Approval of Recommendations on Implementation or Financing of Environmental Projects by Issuing Green Bonds” adopted Recommendations on Implementation or Financing of Environmental Projects by Issuing Green Bonds.

In 2020, the NSSMC has been working with  following projects of the international technical assistance:

1. Project “Implementation of the EU practice in accounting, financial reporting and auditing in Ukraine” (EU-FAAR)

EU-FAAR is the EU-funded project that will last until January 9, 2023, providing targeted EU support to strengthen reforms in the areas of accounting, auditing and financial reporting.

The expected results of the Project and its purpose are to increase transparency and improve the business climate by facilitating: obtaining more reliable and standardized data of corporate financial statements, which have been audited by competent auditors;  developing rules for submitting financial statements and conducting audits for businesses of various types and sizes;  EU recognition of the audit oversight regime in Ukraine;  disclosure of standardized financial statements in electronic format by all business entities required by law.

2. European Union Technical Assistance Project “Strengthening the Regulation and Supervision of the Non-Banking Financial Sector” (EU-FINREG)

The aim of the Project is to create a strong environment for non-banking financial services, to assist the Ukrainian authorities in approximating the legal framework and methods of supervision for securities and investment transactions, insurance, pensions, non-banking credit institutions, non-banking payment institutions and other non-banking financial services to European and international standards and practices.

The term of the Project implementation and expansion of its scope was extended to 16.01.2023 with the inclusion of additional actions that were not directly provided for in the current task, but are relevant to achieving the goals and results of the project,.

3. The Financial Sector Transformation in Ukraine (FST), funded by the US Government through the United States Agency for International Development (USAID)

The aim of the Project is to increase confidence in the financial sector, improve citizens’ understanding and increase the level of use of financial services;  to transform the regulatory environment of the non-banking financial sector;  increase access to finance for small and medium enterprises;  expand access to financial services and promote more active use of digital financial solutions;  maintain the balance and stability of the pension system.

The implementation of the FST Project has been extended until August 27, 2021 according to the Protocol on Cooperation between the NSSMC and the USAID/FST Project implemented by DAI Global LLC, signed on November 18, 2020.

In order to establish cooperation and combat abuses on the capital markets, which have become international in nature, the NSSMC concluded Memorandums of Understanding with the regulators of other countries, in particular:

• The Memorandum of Understanding and Exchange of Information between the NSSMC of Ukraine and the Capital Markets Council of Turkey
• The Memorandum of Understanding on information exchange between the NSSMC of Ukraine and the Financial Supervision Authority of the Arab Republic of Egypt
• The Memorandum of Understanding between the NSSMC of Ukraine and the Securities and Commodities Authority (United Arab Emirates) on assistance and mutual cooperation
• The Memorandum of Understanding between the NSSMC of Ukraine and the Securities Regulatory Commission of the People’s Republic of China on cooperation in the field of securities regulation
• The Memorandum of Understanding between the NSSMC of Ukraine and the Securities Commission of the Hashemite Kingdom of Jordan
• The Memorandum of Understanding between the NSSMC of Ukraine and the National Bank of Georgia
• The Memorandum of Understanding on Information Exchange and Securities Activity Supervision between the NSSMC of Ukraine and the National Securities Commission of Romania
• The Memorandum of Cooperation between the NSSMC of Ukraine and the State Service for Financial Market Regulation and Supervision under the Government of the Kyrgyz Republic
• The Memorandum of Cooperation between the NSSMC of Ukraine and the National Commission of Financial Market of the Republic of Moldova
• The Memorandum of Understanding between the NSSMC of Ukraine and the Central Bank of the Republic of Armenia
• The Memorandum of Understanding and Information Exchange between the NSSMC of Ukraine and the State Securities Committe of the Republic of Azerbaijan
• The Memorandum of Understanding between the NSSMC of Ukraine and the Committee of the Astana International Financial Centre on the regulation of financial services in relation to securities and regulatory cooperation in relation to futures (AFSA) (Kazakhstan)
• The Memorandum of Understanding between the NSSMC of Ukraine and the Financial Regulation and Supervision Authority of Malta
• The Memorandum of Understanding between the NSSMC of Ukraine and the State Securities Commission of Vietnam
• Memorandum of Understanding between the National Securities and Stock Market Commission and the Croation Financial Services Supervisory Agency on technical cooperation regarding the regulation and supervision of their respective non-banking financial markets
• Memorandum of Understanding between the National Securities and Stock Market Commission (NSSMC) and the Securities Market Authority (CNMV) of the Kingdom of Spain on mutual assistance and cooperation.

Technical Assistance and Information Exchange (TAIEX) (https://neighbourhood-enlargement.ec.europa.eu/funding-and-technical-assistance/taiex_en) is the Technical Assistance and Information Exchange instrument, provided by the European Commission with the aim of institutional capacity building, approximation of the national legislation to the legislation of the European Union (acquis communautaire), its implementation and further effective application.

The main tasks of TAIEX are:

• to provide short term technical assistance and consultation on the transposition of EU legislation into the national legislation of beneficiary countries and on the subsequent administration, implementation and enforcement of such legislation;
• to provide technical training and assistance to partners and stakeholders of the beneficiary countries;
• to facilitate institutional development of state authorities of the beneficiary country;
• approximation of the beneficiary country to the European Union by strengthening economic integration and deepening political cooperation through the exchange of experience.

Within TAIEX the following services are provided:

• organization of study visits, which enable civil servants from the beneficiary country to study the experience of the member state in solving practical issues related to the implementation and enforcement of the acquis communautaire and interaction with interested parties;
• organization and holding of workshops and working meetings in order to present and explain the aspects of acquis communautaire to a wide audience.

The use of external assistance of the European Commission within TAIEX in Ukraine is carried out in accordance with the Procedure for preparation, approval and implementation of the plan for attracting external assistance of the European Commission within TAIEX, approved by the Resolution of the Cabinet of Ministers of Ukraine dated September 9, 2020 № 813 (https://zakon.rada .gov.ua/laws/show/813-2020-%D0%BF#Text).

In accordance with the specified Procedure, the coordination group on the implementation of the TAIEX instrument approves the plan for attracting external assistance of the European Commission within TAIEX.

The official website of the Center for Adaptation of the Civil Service to the Standards of the European Union (https://www.center.gov.ua/pres-tsentr/novini?limitstart=0) contains and constantly updates the news related to the use of external assistance from the European Commission within TAIEX in Ukraine.

On August 16-18, 2022, the ТАІЕХ webinar «Combating abuses on capital markets and organized commodity markets» was held. Experts from the Financial Supervision Authority of Poland were involved in the event. The purpose of the webinar was acquaintance with the peculiarities of combating abuse on capital markets and organized commodity markets, as well as with the specifics of the work of the law enforcement units of the European stock market regulators on combating manipulation and insider trading to improve the current Ukrainian legislation, to expand the applied investigation methods, to broaden the professional experience of the employees of the NSSMC, to increase institutional capacity to ensure a comprehensive system of combating manipulation and illegal use of information on capital markets and organized commodity markets.