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№ 2020/1

Economy under the conditions of modern transformations

SHYSHKOV Stanislav Yevhenijovych¹

¹PJSC Perspectyva Stock Exchange

Resumption of confidence in the Ukrainian stock market: is it enough, for this purpose, to tighten sanctions for market abuse?

Economy and forecasting 2020; 1:57-78

https://doi.org/10.15407/econforecast2020.01.057

ABSTRACT ▼

The article assesses the effectiveness of counteracting abuse on the Ukrainian stock market. It has been revealed that the problem of improper legislative registration of counteraction to abuses in the stock market entails unsystematic and biased enforcement by the regulator (NSSMC). The author highlights that the proposed implementation of the requirements of MAR and MAD to the national legislation is inadequate both in the context of the market’s functional role in the economy and in the context of the unjustified extension of the regulator’s powers. It has been stated that ignoring these issues at the level of prospective legislation will not increase confidence in the stock market and will block incentives for its development, due to the following reasons:
- maintaining uncertainty of abuse criteria and their differences from accepted market practice will complicate regulation of economic relations, and establishment of "rules of the game";
- unreasonable, selective and subjective enforcement will reduce the effectiveness of the regulatory function, because market participants will not understand the causes and unobvious consequences of lawful and unlawful behavior;
- an imbalance in the rights and responsibilities between market participants and the regulator may raise doubts about the adequacy of the regulatory and compensatory functions to ensure effective regulation of legal relations in the market and to compensate for the consequences of unlawful actions of regulator employees.
It has been substantiated that the introduction of strict prohibitive norms into national legislation to counteract abuses in the stock market based on the implementation of the European approach should be as detailed as possible, unambiguous, and consistent with the immature state of the market. At the same time, prohibitive norms should be an integral part of systemic steps aimed at improving the quality of the market, and in its absence - a vector to stimulate development. It is necessary that in the conditions of market immaturity and the actual absence of individual segments, the strict prohibitions for abuse of market participants should be applied carefully and accompanied by the regulator’s symmetrical responsibility in case of insufficient substantiation and subjectivity of law enforcement.

Keywords:stock market, stock exchange, securities, public company, public offering, listing, information asymmetry, market manipulation, market abuse, insider dealing

JEL: G12, G14, G18, K22

Article in English (pp. 57 - 78)

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№ 2020/1

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