Ukrainian Exchange suspends trading due to license annulment
MOSCOW. July 9 (Interfax) - JSC Ukrainian Exchange (UX), one of Ukraine's three largest exchanges, cancelled trading on Monday pending information about its court appeal against the National Securities and Stock Market Commission (NSSMC) decision to annul its license.
"As of the morning of July 8, we do not know the result of the court's consideration of the motion for an injunction, so trading will not be held today, July 8," Ukrainian media reported, citing a statement UX issued Monday.
The UX recalled that it filed a lawsuit in the Kiev District Court of Kiev to have the NSSMC's June 5, 2024 resolution to annul the exchange's license unlawful and a motion for an injunction to suspend this resolution.
The NSSMC said on July 6 that the resolution on the annulment of the UX's license had gone into effect. The regulator recalled that the license was annulled because parties subject to Ukrainian sanctions were found to have a substantial ownership stake in the exchange.
The UX filed an appeal in the Kiev District Administrative Court to overturn the NSSMC resolution, but having considered the company's appeal the court refused to take injunctive measures, the regulator said.
The exchange's largest shareholder at the end of April 2024, with a stake of 24.265088%, was Freedom Holding Corp, whose founder and principal owner (71.079%) Timur Turlov was included in Ukraine's sanctions list in the fall of 2022. UX earlier appealed to Freedom Holding to gift its stake to Ukraine in order to avoid the annulment of the exchange's license.
As of April, UX CEO Artemy Yershov owned about 8.007038% of shares in the exchange; business development director Alexei Sukhorukov held 5.919289%; former Ukrainian Finance Minister Yury Kolobov owned 8.99892%; Taras Kozak owned 9.892812% directly or through investment group Univer; Igor Mazepa owned 2.033755% directly or through Concord Capital; and Russia's Sberbank held 2.4997%.
The companies of Tomas Fiala's Dragon Capital were also large shareholders of the exchange, but they divested 11.502618% of shares at the end of April.
UX was founded on May 15, 2008 by leading participants of Ukraine's securities market and Russia's RTS stock exchange, which later merged with the Moscow Exchange . UX was the first to launch an order-driven market, Internet trading, a repo market, settlements through a central counterparty and a derivatives market.
However, in July 2018 the UX suspended public bid trading of all securities due to a ban on using Moscow Exchange software in its operations. The exchange announced the resumption of trading on the order-driven market on a new platform in March 2019.
The NSSMC warned market participants at the end of March that two of Ukraine's three stock exchanges, UX and PFTS, might lose their licenses due to violations of license conditions and proposed to consider possible solutions, including the creation of a new exchange, as well as the voluntary surrender of the exchange licenses.
Materials from the International Monetary Fund's Extended Fund Facility program for Ukraine that was updated at the end of June said that the Ukrainian authorities are considering creating a new stock exchange to ensure the continued uninterrupted operation of the secondary market for government bonds, because the country's largest and oldest exchange, the PFTS is undercapitalized and its owner confirmed that they will not inject new capital into it.
State banks will provide 30% of the capital of about $0.5 million and the rest will come from private sources, including international financial institutions, the document posted on the IMF website said.