Kyiv, Ukraine (September 28, 2021) – The USAID Financial Sector Transformation Project, together with the American Chamber of Commerce in Ukraine, and the Independent Association of Banks of Ukraine, announced the launch of the Ukrainian master agreement for over-the-counter derivative contracts which is based on the ISDA Master Agreement. This document will make financial and commodity derivative transactions safer, more efficient, and less costly. Kinstellar law firm advised on adapting the original ISDA documents taking into account specifics of Ukrainian regulation and local market.
The new documentation for Ukraine is based on the ISDA Master Agreement, which is the internationally agreed standardized document published by ISDA (the International Swaps and Derivatives Association, Inc.).
“Market participants around the world use the ISDA Master Agreement because of the two important benefits that it brings to their contractual relationships, namely certainty and consistency. ISDA welcomes Ukraine among countries that implement documentation based on best international standards enabling higher transparency and liquidity on the over-the-counter derivatives market,” stated Peter Werner, ISDA Senior Counsel.
Law # 738 on Capital Markets and Organized Commodity Markets, effective since July 1, 2021, gave the green light to document transactions under the ISDA Master Agreement with counterparties in Ukraine. According to FST experts' calculations, the estimated potential over-the-counter derivatives trading market in Ukraine is USD 15 billion per year, with some 6,000 participants in FX and agro derivatives.
“The creation of Ukrainian standard documents for derivatives was eagerly awaited by banks and investment firms (to hedge their own risks and risks for their clients), as well as by agricultural traders and producers. Leading private sector associations, banks, investment firms, law firms, and the government were engaged in the drafting process,“ said Robert Bond, Chief of Party of the USAID Financial Sector Transformation Project.
The documentation was developed in cooperation with market participants and associations, specifically the American Chamber of Commerce in Ukraine, and the Independent Association of Banks of Ukraine.
“AmCham Ukraine member companies’ experts from the financial, energy, and agriculture sectors, as well as law firms, took an active part in the development of the localized version of the ISDA Master Agreement. We are delighted to join the launch of Ukrainian standard documentation for derivatives as a partner to make Ukraine a more attractive place for investors and modern doing business destination“, said Andy Hunder, President of the American Chamber of Commerce in Ukraine.
At present, the Ukrainian derivatives market is at its nascent stage of development. The availability of standardized documentation will contribute to promoting the popularity of derivative contracts.
“We are glad that the Independent Association of Banks of Ukraine has become the primary, basic platform that has managed to engage businesses, standardize documentation, and adapt it to Ukrainian realities. This step will simplify derivative contracts execution and settlement, in particular for new users, and this will significantly expand the market and give it an impetus for growth,” stated Olena Korobkova, Executive Director of the Independent Association of Banks of Ukraine.
The documentation, which includes a Ukrainian master agreement for over-the-counter derivative contracts, a margin agreement, and standard terms for currency, commodity, and interest rates derivatives, is available online at:
- https://nabu.ua/ua/generalna-ugoda-shchodo-derivativiv.html
- https://chamber.ua/news/standardized-documentation-for-over-the-counter-derivative-contracts/
The documentation will be available to all market participants free-of-charge.
USAID has partnered with Ukraine since 1992 and over this time USAID has provided over $3 billion worth of assistance. USAID’s current strategic priorities include strengthening democracy and good governance, promoting economic development and energy security, improving health care systems, and mitigating the effects of the conflict in the east. For additional information about USAID in Ukraine, please visit its website: http://www.usaid.gov/ukraine or its Facebook page at https://www.facebook.com/USAIDUkraine.
About the USAID Financial Sector Transformation Project
The USAID Financial Sector Transformation Project supports financial sector reform in Ukraine and provides assistance in the following focus areas: consumer lending, legal and regulatory reform, increasing access to finance in the non-bank financial sector; expanding digital finance solutions; and promoting better involvement of the people in financial markets and financial consumer protection. For more information about the USAID Financial Sector Transformation Project and its activities, please visit FST’s information page at: http://www.fst-ua.info/en/ and its Facebook page at: https://www.facebook.com/FSTProject.
