The Board of the National Bank of Ukraine has adopted Resolution No 327 of 3 August 2012, which sets up the legal framework for the provision of services to individuals in the sphere of arbitrage transactions carried out on the margin trading terms.

Ms. Lyudmyla Chepinoga, Deputy Director of the NBU Department of Monetary Policy Methodology and Head of the Office for Methodology of Foreign Exchange Regulation, has explained that the arbitrage transactions carried out on the margin trading terms involve the simultaneous purchase-sale of one foreign exchange currency for another foreign exchange in order to profit from movements in the exchange rates of the targeted currencies in the international foreign exchange market.

According to her, the establishment of a legal framework for the above mentioned transactions not only represents a step forward towards further liberalization of the foreign exchange market but also marks an important step towards strengthening the protection of the rights of consumers of financial services.

“Until recently, these transactions were carried out through the banking sector and certain firms and forex clubs, which did not have the relevant permissions and licences. Practically, this means that they were not accountable to their customers,” noted Ms. Lyudmyla Chepinoga.

Instead, the margin trading transactions will be carried out exclusively through the banking system on legal grounds. They will be transparent and subject to prudential supervision carried out by the National Bank of Ukraine.

According to Ms. Lyudmyla Chepinoga, the decision regarding the provision of these financial services exclusively by banks can be explained by the fact that banks have everything that is required to handle margin trading in the international markets: technical facilities and well-qualified staff. Furthermore, banks are the most transparent institutions in the financial market, which are properly supervised and monitored.

“Henceforth, any customer carrying out a margin trading transaction in the international market will be able to exercise control over the flow of funds though his own bank accounts, thereby avoiding the risks of losing the money due to fraudulent actions of financial intermediaries,” stressed Ms. Lyudmyla Chepinoga.