NBU depository resumes transactions with sovereign bonds, revives secondary market
MOSCOW. Aug 8 (Interfax) - The depository of the National Bank of Ukraine (NBU) has resumed operations with sovereign bonds following a similar decision taken by the regulator of capital markets - the National Securities and Stock Market Commission (NSSMC).
"The resumption of sovereign bond circulation as the main investment instrument by participants of the capital markets will provide an additional resource for economic recovery. The resumption of operations with these securities will also allow financial institutions to determine their market value," Ukrainian media reported, citing a press release by the National Bank on Sunday.
The NBU clarified that despite the absence of restrictions on transactions with sovereign bonds, it deferred fees on depository services until December 22, 2022.
"This step will allow capital market participants to gradually adapt their business processes to the new conditions in financial markets. Still, the depositary of the National Bank encourages its clients to minimize and, if possible, cancel fees for depositary services for its clients for the period of absence of NBU depositary fees in order to attract additional investments in support of the country's financial front," the regulator said.
The changes were approved by NBU board resolution No. 173 from August 6, 2022 "On Non-Application of Fees for Depository Services Performed by the NBU, as well as on Services for Accounting and Circulation of NBU Certificates of Deposit and on Annulment of Some Regulatory Acts of the NBU," which entered into force on August 7.
On August 4, the NSSMC adopted decision No. 1053, which cancelled almost all restrictions on operations on the capital and commodity markets imposed after February 24.
"The step to unblock the capital and commodity markets is timely and balanced, because market participants have confirmed their willingness to develop the financial sector," Prime Minister Denys Shmyhal was quoted as saying in a NSSMC statement.
Leading stock exchanges have already reported the resumption of trading in all securities starting on August 8.
According to NSSMC, the bans remain on transactions related to individuals and legal entities of Russia and Belarus. Furthermore, settlements on the second part of repo operations under repo agreements concluded before February 24, as well as requests for redemption from participants of open and interval type joint investment institutions are allowed only from August 22, while earlier operations need permission from the Commission.
At the same time, according to market participants, activation of the secondary sovereign bond market could lead to an increase in bond rates, which will create some problems for the Finance Ministry, which has so far refused to raise them significantly following the National Bank's decision in early June to raise the discount rate by 10% to 25%. The Finance Ministry has raised the yields on bonds maturing in a year or two to 14-16% per annum only in the last few auctions.