The NSSMC is working on a draft Concept of a new model of settlement of securities transactions in Ukraine

In June 2020, the Verkhovna Rada of Ukraine adopted the Law #38738-IX, aimed at reforming, creating capital markets and commodity markets in Ukraine, which will enter into force in July 2021. In particular, the law provides for the transition from cash settlements for transactions in securities on accounts in a commercial bank (PJSC “Settlement Center for servicing contracts in financial markets”) to the model of cash settlements with funds of the NBU (National Bank of Ukraine) in the “Delivery versus Payment”.

The NSSMC and the NBU have approached the USAID Financial Sector Transformation Project to perform a systematic research of global “Delivery versus Payment” practices and to understand practical cases in this area. This analysis is designed to identify several options for the relationship between the Central Securities Depository (CD) and EPS (electronic payment system, which is a real-time gross settlement system, i.e RTGS).

The research was performed by the international company SWIFT (Society for Worldwide Interbank Financial Telecommunications), which actively assists in the implementation of global standards of monetary settlements and payments in Ukraine. The first part of the research “As-Is” analyzes and evaluates the existing system of calculations “supply against payment” in Ukraine. The second part – “To-Be” emphasizes what exactly needs to be changed in the current system and offers six calculation models used in international practice.

The oversight of the functioning of capital markets infrastructure in accordance with EU standards and the principles of the International Organization of Securities Commissions (IOSCO) will be carried out by the NBU in cooperation with the NSSMC.

“Obviously, the system of settlements under securities agreements used by Ukraine today does not meet international standards and deprives the possibility of effective development. Therefore, having studied the international experience, we must choose our development scenario in this direction, which will take into account the realities of the current market situation in our country. We plan to create an optimal and effective model of settlements on securities transactions in Ukraine”, – Timur Khromaev, Chairman of the NSSMC said.

As a result of such research, international consultants proposed a model of settlement for securities transactions relevant for Ukraine, which the Commission hired and began drafting a new Concept.

The text of the research from SWIFT can be found at: https://www.nssmc.gov.ua/wp-content/uploads/2020/11/ukraine_dvp_study_eng_1.pdf