NSSMC: New requirements for securities traders will give them more opportunities and better protect investors

The National Securities and Stock Market Commission (hereinafter referred to as NSSMC) will establish new requirements for the implementation of securities trading activities and contracts concluded during such activities.

The NSSMC approved the drafts of two regulations defining the procedure for securities traders to conduct professional activities in the stock market and adapting them to international standards, in particular : “Requirements for contracts concluded during the conduct of professional activity in the stock market (securities market) – securities trading activities: brokerage, dealer activity, underwriting, securities management” and “Requirements (rules) for trading activities securities: brokerage, dealership, underwriting, securities management”.

The new regulations provide for the following innovations in the activities of securities traders:

• the emergence of a new type of contract – a general agreement that is intended to replace the contract for brokerage and is more versatile and can be concluded with both the client and the contractor of the trader. It remains possible to conclude a commission agreement, a power of attorney agreement and a dealer agreement;
• regulation of the procedure of making personal agreements, providing investment advice or recommendations, conducting investment research, etc .;
• changing the approach to identifying suspicious transactions;
• the ability to arrange transactions electronically through electronic messaging, which eliminates the need to use paper contracts;
• mandatory evaluation by the merchant of its customers to provide services in order to classify them in one of the following categories: professional client, non-professional client, acceptable counterparty. Different categories of customers are supposed to provide merchants with different levels of protection when ordering;
• the merchant assesses the appropriateness and appropriateness of the services and financial instruments provided or offered to clients;
• defining the requirements for merchant actions to get the best possible result for their customers;
• defining the requirements for information provided to the client or prospective client before the service is provided, during and after the service is provided.

“For us, this is a revolutionary document that brings Ukraine closer to the level of the civilized world in securities trading. It, on the one hand, provides great opportunities for merchants, including greater flexibility, electronic conclusion of transactions, and, on the other hand, enhances the merchant’s responsibility for servicing their customers and providing them with an adequate level of protection”, – explained Dmytro Tarabakin, a member of the NSSMC.

The Commission awaits comments  on the draft regulations within 30 days from the date of their approval at the Commission  address or e-mail: [email protected].