the primary (IPO) and secondary (SPO) public offerings of Ukrainian companies and circulation of their securities should take place fully or partially in Ukraine, this is a guarantee of the development of the domestic capital market; access to this market for non-residents must be ensured through a “link” with the National Depository, Chairman of the National Securities and Stock Market Commission Ruslan Mahomedov believes.
“This approach is critical, and I insist on it in discussions with some of our leaders who propose to issue securities of Ukrainian companies immediately on foreign platforms. This is not acceptable,” he said in an interview with Interfax-Ukraine.
“If our company lists on Nasdaq, WSE [Warsaw Stock Exchange], LSE [London Stock Exchange], etc., we sponsor foreign infrastructure. The business is here, but all the money stays there. And there will be no dual listing,” Mahomedov said.
Commenting on Kyivstar’s plans to go public on the U.S. Nasdaq stock exchange, the Stock Market Commission’s chairman said the company’s chosen placement method – through a U.S.-based Special Purpose Vehicle (SPV), which will own 100% of Kyivstar’s shares, makes it impossible to trade these securities in Ukraine.
“In my ideal vision, Kyivstar withdrew part of its shares from Ukrainian jurisdiction, they would be traded on Nasdaq, but part would remain in Ukraine and be traded here,” the Ukrainian regulator’s chairman believes.
In his view, this will create conditions for arbitrage, allowing market makers to profit from price differences between Kyivstar shares on Nasdaq and in Ukraine, bringing this difference closer to zero.
“If we keep the shares here, start trading here, but make a ‘link’ that allows them to move freely between foreign markets and back, this will be the beginning of the development of the domestic stock market,” Mahomedov said.
According to him, everyone who is interested in investing in this company will buy in Ukraine, if they are non-residents, they will be able to withdraw securities to their accounts in depository institutions in Europe, the United States and other markets through the “link” of these depository institutions with the National Securities Depository, providing work for Ukrainian exchanges, depository institutions, and investment firms.
“If we make the right ‘link,’ then Ukrainian securities can be easily withdrawn through Euroclear, Clearstream or other depositories to foreign markets. Foreign investors will be able to buy them without opening accounts with us. Our market participants will earn on this, because it is cheaper for a foreigner than opening accounts in Ukraine,” the Ukrainian regulator’s chairman believes.
According to him, such a “link” should be in place in 2025.
Mahomedov said there is already a similar “link” between the PFTS stock exchange and the KDPW Polish central depository, that is, Ukrainian securities can be withdrawn to Poland, and also through a similar “link” with the depository of the National Bank, non-residents can buy domestic government loan bonds.
According to the Stock Market Commission’s chairman, Ukraine still has a chance to build such a domestic stock market through an exchange, although it currently lacks the money to make this investment happen and lacks the business of trading domestic securities.
According to Mahomedov, the PFTS exchange, which recently managed to meet the prudential liquidity standard and currently removes the issue of revoking the exchange license, may face it again if they do not come up with some instrument or product on which the exchange’s clients will earn.
For its part, the commission’s chairman said the regulator proposes to adopt bill No. 8111 on investment accounts, because with it “long-term money” will appear in the real sector of the country’s economy. The idea of ​​​​the law is that an individual transfers money to an investment account and invests from it in instruments from the permitted list, and if the funds from this investment account are not withdrawn for three to fice years, the investor will receive a partial or full exemption from their taxation.
In addition to investment accounts, the source of “long-term money” in the real sector of the economy should be the accumulative pension system, Mahomedov said.
“I am absolutely sure that without the stock market we will not ensure proper reconstruction of the country’s economy. Direct investments, selling mining licenses, we will not achieve the necessary result… Therefore, it is necessary to provide portfolio investment instruments that are understandable to European and global investors (shares and other corporate securities),” he said.