A document has been drafted

In attempting to upgrade the system for protection of investors’ interests and boost attractiveness of the stock market for new investors, as well as with a view to make the Ukrainian legislation compliant with EU’s requirements (the European Union), in particular, Directive97/9/ЕС On Investor Compensation Schemes, the State Commission for Securities & Stock Market (SCSSM), has drafted a document setting forth the relevant protection mechanism.

In addition, a newly created system for securing investments is comprised of two constituent parts the participation in which is voluntary. In particular, this implies creation and functioning of the Individual Deposit Guarantee Fund in the stock market, which objective is to reimburse the investors for losses with the fund’s money, or conclude solidary obligation agreements binding the contractual parties to fulfill the obligations of other party to investors, which lost their money due to inaccessibility.

Maxym Lybanov, Director for Analysis, Strategy and Legislation Advancement at SCSSM, noted: «For quite a number of years the Commission has been tackling the problem of regulatory mechanisms aimed to protect the investors’ interests in the stock market of Ukraine. First of all, the necessity to have this mechanism in place specifying the way for reimbursement of losses incurred by the individual investors in the stock market, will facilitate the growth of trust people put in investing in the stock market and help create preconditions for sustainable development of the securities market. Of course, such a step shows Ukraine is fulfilling its commitments to bring the national legislation in compliance with the EU regulations and enactments».

According to M. Lybanov, the EU zone- and majority of other countries in the world dealing with an issue of working out a protection mechanism for investors have such reimbursement programs in place. The foremost purpose of launching such schemes is to secure the money and financial instruments the investors use in case of insolvency or default of the investment company, which will make the return of funds by the said company to the investors impossible. Thus, the requirements set forth in the EU Directive envisage implementation of one or more investor compensation schemes by each EU member country.