The council of the Ukrainian Exchange has proposed suspending trading for two hours to protest a controversial law on the creation of a central securities depository and centralized clearing center in the market.
The law, On securities depositary record-keeping system, is currently awaiting the signature of the president. It has already been passed by the parliament.
The market regulator, the National Commission for Securities and Stock Market, has vowed to impose sanctions on the exchange if it goes ahead with its plan to halt trading.
“Based on numerous appeals of securities market players and their concern, the regulator will impose appropriate sanctions if it reveals any fact of suspending trade on stock exchanges not provided by the current law on securities and the rules of stock exchange operation,” the regulator said in a statement to the Ukrainian News Agency.
According to an SEB newsflash, the contention is over a number of supposed inconsistencies in the law. The Professional Association of Registrars and Depositories, according to SEB, has pointed out what it says are the negative consequences of the law:
– It overlaps but is inconsistent with the current law on the national depository system;- It creates additional risks for securities owners by blocking securities for six months while certificates are submitted to the National Depository of Ukraine;- It unfairly blocks on-exchange DVP trades;
– It may cause custodians to refuse to service mutual funds and pension funds because they would have to apply for additional licenses;- It would change the name of custodians to depository institutions;- And it reduces the time for transaction execution from three days to one day.
(CG)