Does the presence of a new, private clearing depository spell the end for the old state-run facility? Not if certain state officials have their way
gency for International Development, was officially opened.
Analysts quickly dubbed it the “depository the West can trust” and said that it was destined to become the centralized repository through which all Ukrainian securities trading would be recorded and finalized.
The National Depository of Ukraine, a non-functional depository set up by the Ukrainian government back in 1997, was all but set to wither and die, they said.
Unlike the AUCD, which meets all international standards required of such institutions by being centralized, independent and equipped with hi-tech computer systems, experts say that the NDU remains a non-functional, excessively bureaucratic government body.
But analysts also say that despite the criticism, the NDU is proving to be one government bureaucracy that won't go down without a fight.
In the May 22 issue of Biznes, a Kyiv-based Russian-language business journal, the NDU was accused of corruption and wasteful spending. The article said that in its three years of existence, the NDU has achieved nothing more than a Hr 2.6 million spending spree on cars, computers and offices.
The NDU has responded to the media reports with a bold new plan destined to give it control over the entire sector.
“[The NDU] sees its future as the central depository regulating the other depositories in the industry,” Oleksandr Sharov, chairman of the board of the NDU said at a recent press conference. “In such a role, it would function much like the National bank functions within the banking sector … records from all depositories would be collected.”
Ukraine boasts three major depositories: the AUCD, the NDU and the depository of the National Bank of Ukraine. The latter serves solely as a depository for securities bought and sold by the NBU.
Sharov said that parliament is currently looking over several drafts of a law that would expand the NDU's role.
“[Such a central depository] is the idea of international experts,” he said.
But Western organizations and Ukrainian analysts told the Post that such a body is not needed.
“The market does not need this monster,” says Victor Stetsenko, Capital Markets Projects Manager at USAID. “Ukraine only needs one depository. 90 percent of the experts in the field support the concept of a private industry depository over that of a bureaucratic institution that both regulates and competes commercially in the market. The market should be regulated by the Securities Commission only.”
Stetsenko said that a depository functions like a large computer system that records all securities transactions and assists in closing them.
“[But] a few ambitious bureaucrats see an opportunity to create a role for a government-controlled depository,” he said. “This goes against reform.”
Stetsenko said that USAID agreed to finance the AUCD only following a compromise with the government whereby the role of the national depository would be limited. A memorandum of understanding was signed between the Ukrainian and U.S. governments along with the World Bank limiting the functions of the national depository, he said.
“Probably the best thing to do with it is to liquidate it and move its holding to legitimate bodies such as the State Securities Commission and the National Bank,” he said.
Valery Antonov, director of Alfa Capital's research and analysis department, says that the fight for control is also about money.
“Now we have two depositories, and all these problems are rooted in the question of how or who should use the Western money,” he said. “I think they should use the money more to the benefit of the market but not in the creation of new government agencies.”
Antonov said that the market should concentrate on further developing the existing depositories.
“Today, the [AUCD] is doing only one hundredth of what it is capable,” he said.
