The National Bank of Ukraine urges Ukrainian parliament to back Draft Law No.2413-а On Amendments to Certain Legal Acts of Ukraine on the Consolidation of the State Regulation of Financial Markets Functions and Draft Law No.2414-а On Amendments to the State Code of Ukraine on the Consolidation of the State Regulation of Financial Markets Functions.
These draft laws provide for the winding up of the National Commission for State Regulation of Financial Services Markets and splitting its functions between the NBU and the National Securities and the Stock Market Commission.
The shortcomings of the legal framework governing the regulation of certain types of nonbanking financial activities hinder the robust development of non-banking financial services markets, undermines their investment attractiveness, and diminishes the role they play in the process of the country's economic development.
Under these draft law, the NBU shall take charge of the supervision and regulation of insurance, leasing and factoring companies, credit unions, credit history bureaus, pawn-shops and other financial companies. The regulation of non-state pension funds, construction financing funds and real estate investment funds shall rest with the National Securities and the Stock Market Commission
Such distribution of functions will contribute to greater transparency of financial market regulation and help streamline regulatory efforts, thereby bringing regulatory practices closer to commonly agreed banking standards consistent with international best practices.
“The NBU has the ability to exercise efficient supervision over banking and non-banking financial services market. The transfer of the prudential supervisory function to the central bank will contribute to the consolidation of the State regulation of financial services markets, align instruments and approaches, and enhance the effectiveness of supervision over these markets. This move will increase the protection of financial services consumers and strengthen their confidence in the market,” said Head of the NBU Office for Banking System Strategy and Reform, Mr Mykhailo Vidiakin.
The transfer of the regulatory function of non-banking financial institutions to the NBU will enable it to do the following:
- cut the number of public regulatory authorities responsible for supervision of non-banking financial services market
- clear the market of fraudulent market players
- create an even and transparent playing field for all market players
- facilitate robust market development
- make non-banking financial institutions more attractive to investors
- reduce transaction costs for financial services consumers
- enhance the protection of financial services consumers.
Amendments introduced by Draft Laws No. 2413-а and No.2414-а will help streamline managerial decision-making in this area, improve doing-business conditions while increasing the responsibility of market players.
Additionally, these draft laws are intended to repeal the Law of Ukraine On Mortgage Lending, Transactions with Consolidated Mortgage Debt, and Mortgage Notes and Decree of the Cabinet of Ministers of Ukraine On Trust Companies to reduce the excessive regulatory burden.
Twenty-six draft laws required for advancing financial sector reforms are pending approval by parliament. These include strategically important draft laws pertaining to the protection of creditors and financial services consumers' rights, financial restructuring of corporate debts, consolidation of the state regulation of financial services markets functions, as well as anti-money laundering draft laws.