Business community seeks to strengthen Ukraine’s market infrastructure


Ukrainian Prime Minister Denys Shmyhal (center) with officials from EBRD, USAID and AmCham Ukraine during the signing on June 8 of the NEXT-AU MoU in Kiev.

After months of preparation and dozens of meetings involving representatives of the Ukrainian government, the European Bank for Reconstruction and Development, the United States Agency for International Development and the American Chamber of Commerce in Ukraine, a memorandum of understanding has was signed on June 8 for the NEXT- AU Initiative, which aims to help strengthen the market infrastructure of Ukraine.

The memorandum sets out the intentions of key stakeholders over the next three years to create an integrated multi-asset infrastructure including trading, clearing and settlement functionality to improve market liquidity and promote capital markets and of raw materials organized in Ukraine.

The development of capital market infrastructure is one of the highest strategic priorities for companies and is among the 10 Steps for Ukraine’s Economic Recovery and Growth 2021 identified by AmCham Ukraine.

For many years, Ukraine sought more advanced capital markets and organized commodity markets, including electricity, gas, oil and agricultural products. Ukrainian commodity markets with transparent and liquid financial instruments are necessary to ensure competitive price formation while reducing risks and transaction costs for producers, traders and end users.

Ukrainian capital markets will be able to provide efficient sources of business finance and hedging mechanisms through transparent markets in energy, agriculture and other sectors. They will operate in accordance with the best standards of corporate governance and in accordance with European Union law. NEXT-UA will also help develop financial services based on global best practices and innovative financial instruments.

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In the words of Warren Buffett, “The risk comes from not knowing what you are doing. “

The Ukrainian private sector has a clear understanding of the promising opportunities created by this initiative, and now also has a well-defined roadmap on how to move forward. As a next step, a project management unit will be established in the near future to implement NEXT-UA, and a detailed implementation plan will be developed.

The mood within Ukraine’s business and investment communities towards this initiative is optimistic, as there is a consensus that modern trade and post-trade infrastructure can enable the country to achieve significant economic growth. . At this point, NEXT-UA is no longer a dream. It may soon become a wealth creation tool for all Ukrainians.

Lenna Koszarny, Chairman of the Board of Directors of AmCham Ukraine, Founding Partner and CEO of Horizon Capital: The development of Ukraine’s organized capital and commodity markets is a strategic priority for the business community and is included in AmCham’s “10 Steps for Ukraine’s Economic Recovery and Growth” initiative. . An inspirational moment last September during a conversation with Ukrainian Prime Minister Denys Shmyhal and AmCham President Andy Hunder on the state of capital markets in Ukraine led to joining forces with the European Bank to Reconstruction and Development (EBRD) and the United States Agency for International Development (USAID) to develop a bold vision on the development of capital markets in Ukraine.

More than 40 meetings and consultations with all stakeholders, including the Ukrainian National Securities and Stock Market Commission and the National Bank of Ukraine as well as the country’s ministries of economy and finance, resulted in the signing of a historic memorandum of understanding to develop the capital and raw materials of Ukraine markets. This will strengthen the country’s trade and post-trade infrastructure.

I am personally passionate about this project because Ukraine deserves modern capital and organized markets to leverage its strength in agriculture, raw materials, technology and much more. Ukrainian companies deserve strong domestic markets to access capital. Ukrainians deserve to invest, earn residual income and save for their future through stocks and financial instruments.

Ukrainians who currently dream of owning Apple or Amazon shares may one day add “made in Ukraine” IPO champions to this list. I have no doubts that in the years to come we will look back and retrace several blockbuster success stories to date. Now the real work begins.

Mattéo Patron, Vice-Chairman of the Board of Directors of AmCham Ukraine, Director General for Eastern Europe and the Caucasus, European Bank for Reconstruction and Development: Our aim is to help Ukraine develop and support the country’s economic growth. We are very ambitious for Ukraine and ambitious goals require bold and decisive actions that all partners will need to take as we move forward in the implementation of the NEXT-AU initiative.

So far, we have focused on foreign direct investment, and after a decade of technical assistance and policy dialogue in support of financial market development in Ukraine, we are now looking for ways to encourage and attract more foreign portfolio investment to Ukraine.

Along with foreign direct investment, foreign portfolio investment is an important source of finance for most economies. Portfolio investment is more accessible to the average investor than direct investment because it requires much less investment and research capital.

More developed and less fragmented capital markets and organized commodity markets can and will attract investors in stocks, bonds, mutual funds, exchange-traded funds and others. At the same time, they will enable Ukrainian businesses and citizens to participate in the economic growth of their country, as national markets become better integrated into the global financial ecosystem.

Alexandre McWhorter, Vice-Chairman of the Board of Directors of AmCham Ukraine, Country Officer and Corporate Banking Head of Citi Ukraine: In talking to investors on a daily basis, we clearly see that they want macroeconomic stability and continued engagement with international financial institutions, as well as a commitment to continue to implement reforms.

We saw a strong demand from international investors for the local market when we started to act as correspondent bank for treasury and local operator of Clearstream account at National Bank of Ukraine. We help to enable them to bring the international community of investors to the Ukrainian market and help to add liquidity to the market. We are keen to continue to make positive change, and I firmly believe that the recent initiative will be an irreplaceable part of this process.

Andy Hunder is President of the American Chamber of Commerce in Ukraine.

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The opinions expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff or its supporters.

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