NPF administrators and real estate fund and Construction financing fund managers will calculate prudential indicators

The National Securities and Stock Market Commission (hereinafter – the NSSMC) approved amendments to the Regulations on prudential standards of professional activity in the stock market and requirements for the risk management system.

First, with regard to the managers of Real Estate Fund and Construction Financing Fund, the order of the the National Commission for State Regulation of Financial Services Markets   currently regulates the supervision of their compliance with the following financial standards and indicators: the ratio of funds, the current liquidity ratio, the solvency ratio, the size of the reserve fund. In order to comply with the principles of consistency and continuity in the issue of state regulation in this area, the Commission implements these requirements to its regulations.

The draft decision proposes to introduce a regular calculation of these indicators: for the ratio of funds, current liquidity ratios and solvency – as of the end of each month, and for the size of the reserve fund – annually, after making contributions to it.

Secondly, with regard to NPF administrators, prudential indicators are currently not established by regulations at all. Therefore, the draft decision proposes to introduce a regular monthly calculation of such prudential indicators for NPF administrators: own funds adequacy ratio, operational risk coverage ratio, current liquidity ratio.

“Prudential supervision is an important part of the system of state supervision and contributes to maintaining the financial stability of financial market participants and minimizing risks. As construction finance funds and NPF administrators come under the supervision of the NSSMC from July, they will be subject to similar requirements as other professional market participants. We are currently in active discussion with the market on the timing of the start of the calculation of prudential indicators by these companies and we are waiting for their comments”, – commented Oleksandr Panchenko, the Commissionerof the NSSMC.

These changes were approved in order to bring the Commission’s legal act in line with the requirements of the Law of Ukraine  September 12, 2019 № 79-IX “On Amendments to Certain Legislative Acts of Ukraine to Improve the Functions of State Regulation of Financial Services Markets” (“split”) . It will be recalled that this law gives the Commission new powers, in particular to regulate property management activities to finance construction and / or real estate transactions, as well as the administration of private pension funds.