Ukraine's Central Bank to Launch Stock Exchange with Foreign Partner

New Stock Exchange Planned for Ukraine

According to НБУ: The National Bank of Ukraine (NBU) has initiated the creation of a new stock exchange in partnership with a foreign investor, a move aimed at modernizing the country's capital market. Deputy Governor Yurii Heletii announced the plan on February 12 at an investor conference organized by the Ministry of Economy, the KSE Institute, and the European Bank for Reconstruction and Development (EBRD), with support from the UK Government. Heletii emphasized that attracting private foreign investment is crucial for funding Ukraine's reconstruction projects. This development is part of broader efforts to integrate Ukraine's financial system with international markets.

Initial Steps and Strategic Goals

The first preparatory actions have already been taken, including:

• Transferring the state's share in the statutory capital of the National Depository of Ukraine to the NBU's management;
• Drafting the necessary enabling legislation.

Once this legislation is passed, a tender will be held to select a strategic foreign investor. The chosen partner will help establish an infrastructure holding company. This vertically integrated holding will comprise the newly created stock exchange, a central counterparty (Clearing House), and a minority stake in a unified central depository.

The core objective is to enhance the efficiency of Ukraine's capital market trading and post-trade infrastructure by involving a leading global operator. This upgraded framework is designed to attract foreign investment through capital market instruments, thereby helping to finance the nation's reconstruction. For international investors, this represents a significant step toward creating a more transparent and accessible market.

Heletii also noted that the current account deficit stems from the need to import goods for defense and recovery. However, the NBU expects this deficit to shrink over time as security risks diminish and domestic production capacity is restored.

It is important to understand that currency devaluation is not a sustainable solution for reducing this deficit, as demand for defense and energy sector goods will remain high regardless of the exchange rate. The NBU points out that substantial external financing inflows are positively impacting the basic balance, as they represent partners' investment in pan-European security. For now, there are no critical risks to Ukraine's external position.

The establishment of this stock exchange is a pivotal step in rebuilding and modernizing Ukraine's capital market, which could significantly improve the country's investment climate. Attracting foreign partners and developing robust market infrastructure will be vital for funding key post-war projects, underscoring the need for a strategic approach to economic recovery. Successful implementation could also serve as a strong signal to the global investment community about the stability and potential of the Ukrainian market.