Ukraine's National Securities and Stock Market Commission announced on Dec. 23 that it will prohibit the withdrawal of foreign issuer securities, with the ban taking effect on Jan. 1.
The commission, which reached an agreement with Ukraine's National Bank to implement the changes, said that the changes will "harmonize national currency legislation," and aligns with International Monetary Fund (IMF) requirements.
In an effort to protect Ukraine's economy and to restrict Ukrainian capital from leaving the country, the country's institutions, including the National Bank, implemented strict currency restrictions in the hours after the start of Russia's full-scale invasion.
Despite the restrictions, the latest announcement by the securities commission comes amid efforts to circumvent restrictions using securities schemes.
Since 2022, some investors, through Ukrainian investment companies, have been purchasing U.S. Treasury bonds in hryvnias on the Ukrainian market. These bonds are then transferred to foreign depositories, allowing investors to circumvent Ukraine’s currency restrictions by moving funds abroad after the bonds mature, Economic Pravda reported.
The circumvention scheme would allow investors to converts their hryvnia funds, despite the implemented currency restrictions.
In a letter to Ukrainian financial institutions, the Ukraine's National Bank wrote that the majority of funds from the maturity of U.S. bonds do not return to the country, Economic Pravda reported.
Despite the broad ban, two exceptions were made by the securities commission, including for the "corporate actions of the issuer" as well as "reconciliation of the number of securities in the Central Depository accounts with data from international depository institutions."
"Today’s decision is a compromise, as the issue at hand was a complete ban on the admission and trading of foreign issuer securities in Ukraine," Irakliy Baramiya, a member of the securities commission, said in a statement. "Over the past eight months, the commission has held numerous meetings as part of the negotiation process with the IMF and NBU to find a satisfactory solution for capital markets."
As Ukraine makes efforts to maintain economic stability amid the full-scale invasion, Russia's recent economic woes have plunged the economy into uncertainty in recent months. Russia's ruble has weakened to record lows, as war-related payments continue to rise.