“Financial Market and Investments 2005”
on June, 25-27, 2005, Odessa
Having considered the modern state and prospects of the home financial market development under the terms of globalization of investment processes, the participants of the Third International Financial Forum mark the following.
The system of adjusting, supervisions and applications of the law in the financial market, arisen today in Ukraine, essentially falls behind from world tendencies, the market practice and is one of the main factors, which restrains reformation of the home financial market.
The primary purpose of the measures, directed to the financial market development of Ukraine, must be its transformation into an effective and powerful mechanism capable to provide mobilization of temporally free financial resources and their transformation into investments. The presence of a wide spectrum of national financial institutes, enjoying confidence of population and business, enough number of financial instruments and technologies of accumulation and allocation of investment resources are necessary pre-conditions of this. The noted constituents in Ukraine are not enough developed and restrain essentially the development of investment processes. All this results in inconsideration neither by the state nor national, nor oversea investors the national financial market as a source of investment attraction and the majority of entrepreneurship structures and population do not have an access to it at all.
For solving of these and other problems it is suggested to implement a number of measures, major from which are the following:
The improvement of the system of adjusting and supervision in the financial market in accordance with the requirements of confessedly world practice, which, in particular, provides for: working out and realization of the Conceptual bases and the Strategy of the financial market development, integrated approach to the state adjusting of all its segments, providing of regulating bodies with necessary plenary powers and resources, publicity and transparency of their activity, organization of public control and mechanisms of responsibility, effective co-operation of the state adjusting and self-regulation in the financial market.
Creation of competitive national financial institutes, that requires:
- to provide economic independence of Ukraine through the legislative solving of the question of the stage-by-stage access of foreign financial institutes to Ukraine under the conditions of creation of equal competition terms for home and foreign institutes;
- rise of capitalization of the banking system;
- rise of liquidity, depth and reliability of stock market;
- improvement of account-payment infrastructure of the financial market, application of new technologies;
- strengthening of the role of trade organizers with financial instruments in the organized market development;
- application of effective systems of risks management of professional participants of the market;
- development of infrastructure of the pension system and institutes of the joint investment;
- development of insurance and mortgage institutes and technologies of their activity.
Creation of the system, in which the agreements are executed on exchange grounds, computations on securities are carried out by a central depositary
and money payments: by the developed system of clearing, must become the eventual result of update of accounting-payment infrastructure of the fund market.
Strengthening of competitiveness of the systems of securities trade organizers will be favorable due to the realization of the following complex of measures :
- improvement of corporate governance by the securities trade organizers with the purpose of a rise of their investment attractiveness for potential investors and providing of transparency of their activity, including for users of services;
- rise of the role of securities trade organizers in the field of control over opening of information by issuers;
- rise of liquidity of the market due to expansion of possibilities of grant of loans in the form of securities with the use of REPO operations;
- providing of just pricing due to equal access of participants of the market and investors to auctions in the organized market, impossibility of monopolistic position of separate participants of market.
In the field of rise of efficiency of risks management of professional participants of financial market the application of the system of prudent supervision is expedient, which will allow to pass from practice of supervision over an activity of separate professional participants to the supervision over the market on the whole and solve questions, related to providing of general stability of the market and realization of control over presence in the stock market of competition environment.
The central place in the system of monitoring and risks estimation must be taken by the set of indices and norms, characterizing both risks of separate participants of market and aggregated risks of the financial market on the whole.
The essential problem of adjusting of activity on investing of pension accumulations is an extremely small spectrum of instruments of investing in pension accumulations.
Development of insurance institutes must foresee the complex solving of package of questions:
- rise of users’ interests protection of insurance services;
- providing of stability of insurance market development;
- rise of capitalization of insurers and competitiveness of the national insurance market;
- prevention of the use of the insurance system for capitals outflow oversea and strengthening of government control and supervision over the reinsurance;
- forming of the adequate system of professional preparation and certification of insurance specialists;
- rise of the level of insurance culture of population.
Creation of the legal base of forming and functioning of new instruments of the financial market, that provides for:
- market development of derivative financial instruments;
- development of securitization instruments of financial assets and market of hypothecary securities;
For stimulation of market development of derivative financial instruments at the legislative level the questions concerning synonymous determination of these instruments and base assets must be well-regulated; determination of right and duties of parties on the agreements of derivative financial instruments; creation of protective mechanisms of interests of market participants;
determination of requirements to the participants of derivative market, risks management of operations with derivatives, account of these instruments etc. For this purpose it is necessary to accelerate the adoption of the Ukrainian Law «Concerning urgent financial instruments».
The market of hypothecary securities and securitization instruments of financial assets in Ukraine is practically undeveloped, although it has considerable potential. In this connection it is necessary to accelerate the consideration of the law „Concerning hypothecary securities” for the most rapid applying of the refunding system of mortgage creditors with the use of sources of fund market.
The coordination between laws, regulating mortgage relations, with the purpose to avoid legal collisions and barriers is also necessary. In particular, to make alterations to the law „concerning mortgage” in that part, which actually does impossible delivery and circulation of hypothecary mortgages.
Improvement of the legislative base of the protection of rights of investors and decline of investment risk in the financial market,
that provides for:
- improvement of corporate legislation and application of principles of corporate governance;
- rise of efficiency of the system of requirements concerning opening of information;
- solving problems of the use of inside information and inside trade;
- settlement of questions of protection of shareholders’ rights in the processes of mergers and acquisitions, and during reorganization of companies;
- development of compensative mechanisms in the financial market;
- reconstruction and introduction of the effectively operating rating system of economic subjects and instruments of debt obligations.
Forming of the rating system in Ukraine must be carried out exceptionally on market bases.
Application of obligatory rating of regions, industries and subjects of entrepreneurial activity, and also fund instruments is inexpedient under the terms of underdevelopment and monopolization of the rating services market.
Government control of rating activity must be carried out only concerning to the producers of services of the given kind and not related to the objects of rating (customers of rating) and users of rating (investors and clients).
Measures on regulation of activity of rating agencies on the given stage of the financial market development of Ukraine must have the maximally limited character and be taken to determination of criteria, which structures must meet, aspiring to carry on rating activity, first of all, from point of their economic feasibility and qualification of personnel.
The rise of efficiency of the information opening system must take place in the following directions:
- subsequent improvement of legislation which sets the legal field of opening the information;
- improvement of control mechanisms and supervision over implementation of requirements of opening the information, setting of responsibility for violation of such requirements;
- use of modern information technologies for the rise of efficiency of collection, data processing, analysis and public opening of information.
Questions of the use of inside information need the clear settlement on the legislative level. In particular, preventions of the offences related to the unfair use of such information. Responsibility must be set for violations in this sphere.
In connection with a spread of processes of mergers and acquisitions in the financial market the current law of Ukraine must be complemented with norms, which regulate these questions, in particular, protection of interests of shareholders during reorganizations of companies.
With the purpose of improvement of corporate governance it is necessary to settle the following questions on the legislative level:
- protection of rights of minority shareholders through applying of the cumulative voting and redemption by a Joint-Stock Company (JSC) of stock of shareholders in the case of their disagreement with the policy of JSC;
- rise of transparency of JSC’s activity, in particular opening of a property structure;
- improvement of holding of common shareholders’ meeting procedure, in particular, decline of quorum during their holding;
- strengthening of responsibility of a Supervisory Board of a JSC and distributing of plenary powers between a Supervisory Board and an Executive body of a JSC according to norms of the European Union;
- application of the system of specialized courts for settlement of disputes in Joint-Stock Companies.
The application of the system of compensative mechanisms in the financial market of Ukraine must meet the following international standards:
- clear determination of legal norms of functioning of compensative institutes;
- effective state control over activities of compensative funds;
- compensative mechanisms spread only on the clients of the licensed financial institutions;
- compensations are paid in the limited case only, such as a loss by the investment company of the possibility to execute such the obligations before the third persons etc.