In light of recent changes in Ukrainian legislation, the National Bank of Ukraine has brought the regulations setting out the rules and terms applicable to trading in foreign exchange into line with these changes. To this end, on April 30, 2014, the Board the National Bank of Ukraine passed Resolution No. 248 amending the previous NBU regulations. The resolution was registered by Ukraine’s Ministry of Justice on May 6, 2014, as No. 479/25256 (hereinafter – Resolution No. 248).

By virtue of Resolution No. 248, amendments have been made to the Regulation on the rules and terms applicable to trading in foreign exchange  and the Rules regulating the functioning of the System of Confirming the Agreements on the interbank foreign exchange market of Ukraine run by the National Bank of Ukraine and the transfer (crediting) of funds for certain foreign exchange transactions and transactions in banking metals  (hereinafter  – the Rules regulating the functioning of the System of Confirming the Agreements).

Amendments made to Regulation No. 281 allow the authorized banks to purchase foreign exchange in the interbank foreign exchange market of Ukraine in order to build up provisions against possible losses arising from asset-side foreign exchange transactions, which would foster a gradual process of alignment of the open foreign exchange position of the banking system with international standards.

In addition, the amended Regulation No. 281 establishes the regulatory framework and mechanics to meet the requirements set forth in the laws obliging banks to the accrue, collect and transfer duty on mandatory state pension insurance levied on transactions involving the purchase of cash foreign exchange.

Commenting on amendments to Regulation No. 281, Ms Olena Shcherbakova, Director of General Department of Monetary Policy, pointed out that they were intended to regulate the activities of forex market players with regard to the implementation of legislative acts and regulations passed earlier rather than represent a shift in the policy pursued by the National Bank of Ukraine.

Amendments to Rules regulating the functioning of the System of Confirming the Agreements establish a regulatory framework allowing the National Bank of Ukraine to apply enforcement measures through restricting access to the System of Confirming the Agreements to the banks engaged in trading in foreign exchange that manipulate the forex trading volumes or the exchange rate. The move has been prompted by recently uncovered cases of fraudulent actions aimed at manipulating foreign exchange rates committed by forex market players.

"Deliberate actions by individual banks leading to swings in the exchange rate have a profound destabilizing effect on the foreign exchange market, create imbalances and allow certain market players to make a speculative profit, making honest market players and their clients sustain losses," noted Ms Olena Shcherbakova, adding that the National Bank of Ukraine stands ready to impose further sanctions against those market players who commit fraudulent actions in an attempt to destabilize the foreign exchange market.

Resolution No. 248 comes into force on the day of its official publication (It is being prepared for publication in the information bulletin "Ofitsiyniy Visnyk Ukrayiny" ("Official Herald of Ukraine") on May 23, 2014.

Approved by NBU Board Resolution No. 281, dated August 10, 2005, and registered by Ukraine’s Ministry of Justice on Auguist 29, 2005, as No. 950/11230) (as amended from time to time).

Approved by NBU Board Resolution No. 281, dated August 10, 2005, and registered by Ukraine’s Ministry of Justice on Auguist 29, 2005, as No. 951/11231) (as amended from time to time).