Does Ukraine Have a Stock Market?
Gain insight into the current status and operational reality of Ukraine's financial market, from its fundamental structure to present-day accessibility.
Ukraine possesses an operational stock market, established decades ago. This market serves as a platform for financial transactions, facilitating capital formation and investment. Despite navigating periods of growth and significant challenges, the Ukrainian stock market continues to function as a component of the nation’s financial infrastructure. It allows for the trading of financial instruments, connecting investors with companies and government entities seeking capital.
Overview of the Ukrainian Stock Market Structure
The regulatory oversight of Ukraine’s stock market falls primarily under the National Securities and Stock Market Commission (NSSMC). This state collegiate body operates under the President of Ukraine and is accountable to the Parliament. Its mission is to ensure market stability, foster competitiveness, and protect investor interests. The NSSMC is responsible for the state regulation and supervision of capital markets.
The market infrastructure includes a dual depository system. The National Depository of Ukraine (NDU) functions as the central depository for corporate securities, handling their depository accounting and servicing. Concurrently, the National Bank of Ukraine (NBU) performs depository functions specifically for government and municipal bonds, managing their circulation and related corporate actions.
A dedicated Settlement Center exists to facilitate the cash settlements of securities transactions. This institution aims to process transactions efficiently, including same-day settlements for exchange and over-the-counter trades. Participation in the market is open to various entities, including brokers, investors, issuers, and licensed depository and clearing institutions.
Primary Exchanges and Traded Securities
The Ukrainian stock market features several organized trading venues, with the PFTS Stock Exchange and the Ukrainian Exchange (UX) being two prominent platforms. The PFTS Stock Exchange, established in 1996, is a leading bourse that operates electronically on weekdays during Kyiv time. It calculates the PFTS index, which serves as a key benchmark for the Ukrainian stock market.
The Ukrainian Exchange, founded in 2008, also stands as a significant market operator for equities and derivatives. It launched the UX Index, recognized as a primary benchmark for Ukrainian equities. Besides these, the Perspective exchange also concentrates a notable volume of contracts.
A range of securities are traded on these exchanges, including equities and debt instruments. Equities encompass shares and investment certificates. Debt securities include corporate bonds, sovereign government bonds, municipal bonds, and treasury bills. Bonds issued by international financial organizations are also present.
The Ukrainian Exchange supports trading in derivatives, such as futures contracts based on indices, foreign currencies, and commodities. Foreign company shares and depositary receipts can also be admitted for trading on the UX, provided they meet regulatory requirements and are listed on approved foreign exchanges.
Current Operational Landscape
Following the comprehensive suspension of trading activities in February 2022, the National Securities and Stock Market Commission (NSSMC) progressively lifted most restrictions by August 2022, allowing for the resumption of trading in all securities. This decision aimed to revitalize the financial sector and facilitate market operations. Specific limitations persist for entities connected to sanctioned individuals or those associated with Russia and Belarus.
The market’s overall trading volume has historically been modest compared to larger global markets. A significant proportion of trading activity has been concentrated in government bonds. For instance, in 2021, government debt accounted for 98% of the trade volume on Ukrainian exchanges.
The NSSMC is working towards launching the stock market for retail investors, which is seen as a way to secure capital for Ukraine’s post-war recovery. Foreign companies can have their securities admitted to trading on Ukrainian exchanges, contingent on obtaining necessary permits from the NSSMC and meeting listing requirements on approved international exchanges.