On 1 July 2020, the Law of Ukraine “On Amendments to Certain Legislative Acts to Improve Functions for State Regulation of Financial Services” (“Law”), dated 12 September 2019, became operational. The Law, which is widely known as the “split” law, changes the regulatory framework for local financial services markets.
The Law aims to improve efficiency of the regulatory and oversight functions for the financial services markets through a large-scale modernisation of financial services regulations, led jointly by the National Bank of Ukraine (“NBU”) and the Securities and Stock Market Commission of Ukraine (together, “Regulators”).
The Regulators will regulate and oversee the entirety of banking and non-banking financial services market in Ukraine (hence the “split”), having taken over (in respective parts) functions for non-banking financial services regulation from the Financial Services Commission which existed prior to 1 July 2020 and is now being abolished.
Despite its broad implications, the reform is being implemented consistently and transparently, causing minimal disruption for business. For example, licences, issued by the Financial Services Commission in the past, continue (or, in certain cases, are reissued automatically) without additional formalities. The NBU has also rolled out a massive public information effort, discussing in detail its regulatory agenda for the coming months, which it developed in consultation with the regulated institutions.
It remains largely to be seen what the upcoming regulations and policies will look like. However, the strong proactive message that is currently being relayed by the Regulators instils a very forward-looking attitude towards the future of the financial services market in Ukraine.