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Financial Regulators Set Reform Priorities for the Coming 18 Months

5 July 2018

Press Release


The National Bank of Ukraine, the National Securities and Stock Market Commission, and the Deposit Guarantee Fund have presented a report on implementation of the program to reform the financial sector of Ukraine covering H2 2017 and H1 2018, and have set the priorities for the coming 18 months.


Mykhailo Vidiakin, Director of Strategy and Reforming Department, the National Bank of Ukraine, remarked, “The NBU has determined the main projects of the Comprehensive Program to be ‘Split’ project, financial services consumer right protection, and financial inclusion. The projects will require making a great effort and changing the legislation. Moreover, in 2018–2019, the central bank will also focus on fulfilling all goals of the projects that have already gone through important development stages: liberalization of FX controls, development of cashless economy, corporate governance in state-owned banks, and enhancing creditors’ rights protection.”


Tymur Khromaiev, Head of the National Securities and Stock Market Commission, emphasized, “The Commission is actively implementing the Comprehensive Program 2020. Some of its components are 70%–80% complete, which particularly concerns information disclosure by issuers and exercising investors' rights. However, there are also components where the progress is slow – for example, the issue of the regulator’s institutional capacity and its proper financing and introduction of new financial instruments. Unfortunately, the voting on draft law 7055 has shown that there is not enough political will to realize the planned changes on the market. But still, any reform starts with updating the legal framework, while the reorganization of processes and procedures happens at the following stages. Reform is impossible without changing the legislation.”


According to Andrii Olenchyk, Deputy Managing Director of the Deposit Guarantee Fund, the Fund has been constantly working on improving the scope of its functions over the last several years, when it was entrusted management of 90 banks. “We often had to adapt and change on the go, setting up the key processes from scratch. For example, we were the first to start creating the electronic trading system in the country. Today, in collaboration with our partners, we have created ProZorro.Sale system and used it as a basis for another ambitious project – the Dutch auctions. We have launched the Automated Payment System, which allowed us to maximize the repayment network and ensure promptness and continuity of this process. At present, the system accounts for 74% of the repayments. The Fund really has achievements to report about but it has even more plans to implement reforms in future,” said Andrii Olenchyk.


In addition, at a round table attended by financial market players and the media, the regulators indicated the draft laws that are essential for promoting further development in the sector:


draft law No. 2413а on consolidating the regulation of the financial services market


draft law No. 2456-д on financial consumers rights protection


draft law No. 7270 on payment systems and money transfers in Ukraine


draft law No. 6303 on protection of investors from abuse of capital markets.





Comprehensive Program of Ukrainian Financial Sector Development Until 2020


On 15 May 2015, the National Reforms Council upheld and approved the Comprehensive Program of Ukrainian Financial Sector Development Until 2020. The Program was approved by NBU Resolution No. 391 dated 18 June 2015 and by the respective decisions of other financial market regulators (decision of the National Securities and Stock Market Commission No.931 dated 30 June 2015 and ordinance of the National Commission for the State Regulation of Financial Services Markets No.1367 dated 11 June 2015). The first revision of the document by the financial regulators took place in January 2017 and the second in May 2018.


The main objective of the Comprehensive Program is to create a full-fledged, efficient, and effective financial market in Ukraine, develop all the market segments, build its infrastructure, and strengthen its resilience.


The Comprehensive Program was developed by the NBU in cooperation with the National Securities and Stock Market Commission, the National Commission for the State Regulation of Financial Services Markets, the Ministry of Finance of Ukraine, the Deposit Guarantee Fund, professional associations (the Independent Association of Ukrainian Banks, the Ukrainian Insurance Federation, etc.), financial market experts, and heads of parliamentary factions.


The document complies with the Sustainable Development Strategy for Ukraine Until 2020, the Association Agreement between the European Union and Ukraine, the Memorandum of Cooperation with the International Monetary Fund, “European Ukraine” Coalition Agreement of parliamentary factions, and so on.


The Comprehensive Program sets forth the strategic areas of development for the financial sector, the main principles of perceiving the future, and stages of reform implementation. The Comprehensive Program implementation focuses on three key areas:

A. Ensuring the financial stability and dynamic development of the financial sector. 

B. Enhancing the institutional capacity of financial market regulators. 

C. Protecting the rights of financial sector consumers and investors.


Overall, the Comprehensive Program contains more than 60 projects that are realized in line with the international project management rules. Therefore, the implementation of the Comprehensive Program is divided into three stages:

stage I – resolving problems of the past and the financial sector clean-up (2014–2016)

stage II – setting the stage for the system development (2015–2017)

stage III – taking the measures for the development (2017–2020).


As of the start of July 2018, all regulators completed 18% of measures envisaged under the Comprehensive Program, one or several regulators completed 33% of the measures.


The financial regulators plan to implement 31% of the projects in 2019. The NBU estimates that implementation of only 18% of them will continue beyond 2020. In particular, these long-term and comprehensive projects include implementation of the risk-based payment system supervision, transition to the new standard of financial messaging ISO 20022 and account number standard ISO 13616 (IBAN), developing the new infrastructure, and regulation of the financial market.


Over H2 2017 and H1 2018, the NBU successfully completed the main phase of four top-priority projects: simplifying the mechanism for bank mergers, implementing the international financial reporting standard (IFRS 9), Open Data, and the NBU’s credit register.


The Comprehensive Program revised in May 2018 pays attention to such issues as development of Ukraine’s payment market, development and regulation of Fintech companies and crowdfunding, development of the national strategy for promoting financial awareness, etc.


The text of the Comprehensive Program as revised in May 2018 is available here.


The NBU’s presentation from the round table dedicated to updating and implementation status of the Comprehensive Program can be found here.


The video of the round table is available at: https://www.youtube.com/watch?v=RzHFIfmXHtw


Last modification   05.07.2018