USAID Financial Sector Reform Activity - Year 2 Work Plan

Component 1, Market Regulation and Supervision, focuses on aligning Ukrainian legislation with the EU acquis, removing legal and regulatory obstacles for financing businesses, and creating financing instruments. The main objectives of Component 1 include aligning legislation with the EU acquis, particularly in the area of financial services, as outlined in the European Commission's analytical report dated February 1, 2023. This report provides a list of recommendations to align banks and conglomerates, financial markets infrastructure, and security markets and investment services with EU requirements. Component 1 Workplan activities aim to implement these recommendations. Key activities under Component 1 include reviewing the legal and regulatory obstacles for financing businesses via financial intermediaries, developing a concept for political risk insurance, and developing framework legislation on virtual assets, taxation, and supervision approaches for transactions with virtual assets. The FSR has also supported the development of capital markets instruments, including individual investment accounts, and has contributed to the finalization of the law on trade factoring reform. In addition to these activities, the FSR has also supported the passage of a strong law that will allow an independent market regulator to join the International Organization of Securities Commissions (IOSCO). The FSR intends to provide all necessary assistance to allow the National Securities and Stock Market Commission (NSSMC) to become a signatory to the IOSCO Memorandum before the end of 2024. The FSR has also shifted forward several activities, including the development of a draft law regulating the winding down of defunct joint-stock companies and the legislation on investment funds. These activities will be completed in the second quarter of Year 2. Several activities have been cancelled or postponed due to changing priorities or the completion of similar initiatives. These include relief measures for borrowers, framework for NPL resolution, amendments to the legislative framework regulating warehouse receipts, and housing financing. The FSR has also postponed legislation on capital and commodity markets and alignment with the EU acquis, as the European Bank for Reconstruction and Development (EBRD) will assist the NSSMC with alignment of Ukrainian capital and securities markets with EU and regulations.