Ukraine is preparing a large-scale reform of the stock market, which includes the launch of personal investment accounts and the ability to purchase shares of profitable state companies directly through the state application “Diia”. The initiative, dubbed “Stock Market 2.0”, aims to attract up to 5 million citizens to invest and provide a new impetus for the development of the Ukrainian securities market.
This is reported by Finway
Problems and Prospects of Ukraine’s Stock Market
The head of the National Securities and Stock Market Commission, Ruslan Magomedov, emphasized that for a long time, the securities market in Ukraine had only a formal character. A significant portion of financial instruments lacked real economic substance and was mostly used for tax avoidance schemes. According to him, the Ukrainian economy remains bank-centric: most funds are placed in banks, which dictate the terms of lending, limiting opportunities for investment and the development of the stock market infrastructure.
Magomedov noted that the bank-centric model does not create conditions for a broad redistribution of capital through the securities market. Stock exchanges could not function fully due to the lack of appropriate instruments. Considering international experience, the Commission proposed to view the capital market as an effective mechanism for attracting long-term investments into the country’s economy.
Mechanism for Launching Personal Investment Accounts and Selling Shares through “Diia”
According to the concept, personal investment accounts will be opened at specialized investment firms. Through them, citizens will be able to invest in domestic securities — municipal and corporate bonds, as well as shares of Ukrainian companies. An important condition will be the preservation of invested funds in the economy for at least five years. In this case, the investor will gain the right to a tax benefit, as well as the opportunity to reinvest profits, buy and sell assets without capital withdrawal from the country.
A separate mechanism for selling shares of state companies through “Diia” has been outlined. The National Securities and Stock Market Commission, together with Member of Parliament Taras Tarasenko, presented the concept of draft law No. 14296, which provides for the sale of about 7% of shares of profitable state enterprises through the “Diia” application. According to Ruslan Magomedov, this is not about classical privatization, but about the opportunity for citizens to purchase a portion of shares in stable state companies that generate profits and pay dividends.
“Our strategic goal is not just to sell shares. We want 5 million retail investors to emerge in Ukraine, to activate the secondary market, for exchanges to gain trading volumes, and for the state to receive a fair value for the shares it owns,” emphasized the head of the Commission.
Magomedov is convinced that such instruments can launch a full-fledged stock market, provide the economy with long-term investments, and make the cumulative pension system more effective and secure.