The NSSMC supports the draft Law #2805-D on the functioning and circulation of agricultural receipts

Agriculture is one of the key sectors of Ukraine’s economy, which amounts to about 13% of GDP, and provides 30% of the country’s foreign exchange earnings from exports and employs more than 20% of the population. From the NSSMC’s (National Securities and Stock Market Commission) point of view, the sector could be the basis for the development of capital markets in Ukraine.

As for the agricultural receipts in this context, the NSSMC sees a significant size of the market (more than 35 billion hryvnias) and its constant dynamic growth. The instrument is transparent and reliable, and the expected legislative changes will turn agricultural receipts into an electronic security, creating the basis for the development of the secondary market. Last year the NSSMC cooperated with the government, the users of agrarian receipts and public institutions within the development of modernized legislation for agricultural receipts, and made the NSSMC’s proposals on the introduction of the instrument in the form of a non-issue security. The draft Law # 2805-D takes into account the NSSMC’s position and is consistent with the legal regulation of nature and securities.

In Brazil, the homeland of agricultural receipts, namely the introduction of agricultural receipts based on securities allowed to increase the volume of financing raised in the industry from 1 to 17 billion US dollars annually through securitization. Ukraine also has preconditions for the introduction of securitization of agricultural receivables, and agricultural receipts due to legislative changes may become its basis.

For its part, the NSSMC defines the development and adoption of a new law on securitization among its 10 priorities. According to the Strategy of Ukrainian Financial Sector Development until 2025, which was approved jointly with financial sector regulators, securitization legislation has to be implemented by December 31, 2021. This Law will create opportunities for refinancing from Ukrainian capital markets, with subsequent expansion and access to international markets.