Effective August 3, 2009 new Trading Rules of the Ukrainian Exchange come into force

The amendments to the Trading Rules of the Ukrainian Exchange have been approved by a resolution of the Securities and Stock Market State Commission of the Ukraine, which passed on July 14, 2009.

The new version contains several major amendments and comes into effect as of August 3, 2009.

The first amendment introduces repo trades.

A repo transaction consists of two opposite securities trades with different execution dates. Economically a repo trade is a loan of cash collateralized by securities or a loan of securities collateralized by cash.

"Funding instruments are critical for the development of a market that requires 100% advance depositing of securities and cash", says Aleksey Sukhorukov, first deputy CEO of the Ukrainian Exchange. "There are a number of situations when investors need to borrow securities or cash for trading or settlement purposes for a length of time. The repo mechanism provides lending or borrowing securities/cash with minimized risks, since the exchange guarantees DVP settlement on both parts of a repo trade".

The second equally important amendment defines the Quote-Driven Market. It is a perfect market for less liquid securities because the quotes are non-anonymous and do not require advance depositing of assets. This is a necessity for securities trading with wide spreads where there is an obligation to trade at a price, within volume or specific settlement dates.

"Given our experience only 30-40 stocks can effectively trade on the Order-Driven Market", says Aleksey Sukhorukov. "Low liquid stocks are less fit for the anonymous market, because their spreads often make it impossible to execute a trade without further negotiation of the terms".

"Currently there are over 70 stocks on the list of the Ukrainian Exchange, however only around half of them are trading actively. The exchange is interested in extending the range of securities for which it is a reference point in terms of pricing, and the Quote-Driven Market will allow us to further this goal", says Mr. Sukhorukov.

The third amendment to the Trading Rules enables the Ukrainian Exchange to interact with the Central Counterparty.

"The Central Counterparty resolves three major issues at the same time: guarantees the anonymity of settlement, provides a legal opportunity to match orders submitted by one and the same trader based on the commission agreement and makes it possible to optimize the costs of trading participants associated with meeting the financial monitoring requirement", says Aleksey Sukhorukov. "CCP is a global practice implemented on all developed markets, and the reviewed Trading Rules allow CCP trading to be introduced in the Ukraine".

The methodology for calculating the exchange prices has also been updated. The exchange prices will be calculated based on all the trades to be settled no later than on T+4.

Reference information

JSC "Ukrainian Exchange" went live on March 26, 2009 and has been strengthening its technology leadership ever since by pioneering in launching order-driven trading, Internet trading, online index calculation and repo quotations.

For the first four months of trading 420 individual investors were connected to the Ukrainian Exchange gaining access to more than 90 top liquid stocks and bonds.

For further information, please contact the Public Relations Department at (044) 495-7474.