The Lviv Financial Forum, held in Lviv on September 18th and 19th 2014, brought together more than 120 participants from Ukraine, the United States, the United Kingdom, Poland, Slovakia and Georgia.
The event was organized by the Perspektiva Stock Exchange, with the assistance of the Lviv City Council. The general sponsors of the Lviv Financial Forum were the Investment Capital Ukraine (ICU) group and the self-regulatory organization Ukrainian Stock Traders Association (AUFT). The general media partner was Delo.ua, the online broadcast was provided by special media partners TV channel, Espresso.TV, and the FinMaidan portal. The Forum’s television partner was the First National TV Channel. The information partners of the Lviv Financial Forum were also: European Business Association, information platform for professional players of the financial market TRDATA, the specialized Internet portal Cbonds, NGO “ACI – Ukraine” and others.
The Lviv Financial Forum was opened by representatives of the Lviv Regional Administration and the Lviv City Council, who stressed that the support of the regional authorities to this Forum is a continuation of the European integration policy for the region. In his welcoming speech, Stanislav Shishkov, Director of the Perspektiva Stock Exchange, thanked the participants for their readiness to unite, work, and make Ukraine a prosperous and strong European state.
The first discussion panel, on day one, was devoted to the national financial system and prospects for its development. The moderator of the session, Vadym Khramov (Merrill Lynch, Bank of America, UK), noted that the main goal now is not only to identify risks and problems, but also to find ways to overcome and solve them. First of all, it is necessary to overcome the biased perception of Ukraine by foreign investors. Jerome Vacher (IMF Office in Ukraine, USA) noted that while working with Ukraine, the IMF sees a high level of commitment. Therefore, the IMF is ready to adjust its recommendations according to objective realities. Oleksandr Shlapak, Minister of Finance of Ukraine, addressed the participants of the discussion in a teleconference. He assured the Forum participants that Ukraine does not need to restructure its external debt, and will be able to repay its obligations in 2015.
According to Lubomyr Mitov (Institute of International Finance, USA), the IMF program should be seen as an emergency measure to at least avoid default, and stabilizing the economy will take a lot of time and work, and should be tasked not only to Ukrainians but also the international community, and, above all, the EU.
In turn, the well-known expert on Ukraine, who has been dealing with our region and Ukraine in particular for 26 years, Timothy Ash (Standard Bank Great Britain) advised Ukraine to rely only on herself and to seek domestic resources to secure debt obligations.
In general, during the discussion, both Lubomyr Mitov and Timothy Ash agreed that one of the ways out for Ukraine could be the “reprofiling” of external public debt (a soft restructuring option, when the payment date is postponed without reducing the amount). Experts also agreed that investors are ready for such a scenario, although they want to believe the words of the Minister of Finance of Ukraine that Ukraine does not need debt restructuring.
In turn, Andrzej Stopczynski (Central Bank of Poland), shared his country’s experience in reforming the financial sector, and stressed that one of the preconditions for success in reforming the country is maximum transparency and “purity” of the system; all companies operating in the market must have the same rights and obligations without any privileges. Mr. Andrzej said that privatization in Poland took place on a single exchange platform and stressed that the centralization of the exchange market has become one of the factors in the success of the Polish capital market.
Dmytro Tevelev (NSSMC, Ukraine) spoke about the Commission’s readiness for reforms and development of the stock market, and the need to change the paradigm of its perception. Oleg Gavrish (First National TV Channel, host of the First Column, Ukraine) concluded the first part of the Forum, emphasizing the role of transparent and professional media in the process of building an adequate financial market.
Participants of the second panel discussion, on day one, spoke about ways to increase confidence in Ukrainian jurisdiction. Moderator Taras Kyrychenko (Intesa San Paolo Group, Pravex Bank, Ukraine) started the discussion with the hypothesis that trust in jurisdiction is formed, first of all, by an efficient and transparent judicial system of the country. Vladyslav Ostapenko (Ernst & Young, Ukraine) supported Mr. Kyrychenko’s theory and gave an example to support it; most Ukrainian M&A agreements are concluded under English law, which is indisputable evidence that the courts in Ukraine are not trusted. Roland Wisner (Metatron Capital, Slovakia) shared his recommendations on how to attract investors to Ukraine, and why exactly investors are most willing to come to Ukraine in today’s situation. Nikoloz Enukidze (TBCBank, Georgia) said that at one time Georgia did not “invent the bicycle” in matters of increasing jurisdiction, but relied on the legal experience of developed countries – and this was the right decision for the country, which should be followed by Ukraine.
Konstantin Stetsenko (Investment Capital Ukraine) and Vadym Khramov (Bank of America Merrill Lynch, UK) presented their views on institutional investors on the issue of re-privatization and attracting foreign investors in the context of hostilities in the east of the country. Gennady Zhurov (National Depository of Ukraine) told what legal changes in the sector of property rights are expected by both Ukrainian and foreign investors. Serhiy Antonov (AUFT, Ukraine) spoke about the legal prospects for the development of currency hedges and currency derivatives. Dmytro Tevelev (NSSMC, Ukraine) channelled the discussion to fiscal policy and its impact on trust to the jurisdiction. Eugene Zeltser (State Mortgage Institution, Ukraine) drew the attention of the Forum participants to the presence of a range of securities (except government bonds), which are covered by a state guarantee – for example, through State Mortgage Institution.
The first-panel discussion, on the second day, was devoted to the development of the domestic market of debt instruments and their issuers. Oleksiy Petrashko (NSSMC, Ukraine), the moderator of the session, drew the participants’ attention to the sovereign debt sector – equalization of interest rates, variety of instruments and relatively high liquidity of government bonds. Taras Kotovych (Investment Capital Ukraine) supported the participants’ thesis that the development of the public debt sector should be a priority for the Ministry of Finance, and a reference point for the development of municipal, and then corporate bonds. Maksym Blank (Ukrzaliznytsia, Ukraine) said that the state-owned enterprise plans to completely abandon bank loans in favour of bond issuance. Marta Fedkiv (Khlibprom Concern, Ukraine) spoke about the experience of her company – a successful bond issuer. Volodymyr Kuzio (Idea Bank, Ukraine) presented the bank’s point of view as the most universal participant in the debt market – the issuer, trader and investor at the same time. Eugene Zeltser (State Mortgage Institution, Ukraine) spoke about the prospects for the revival of mortgage bonds.
The final session of the first Lviv Financial Forum was devoted to technology of the stock market. Serhiy Antonov (AUFT, Ukraine), moderator of the discussion, suggested looking at the financial market from the point of view of the exchange, exchange trading technologies and opportunities to export technologies to related markets. Stanislav Shishkov (Perspektiva, Ukraine) drew the participants’ attention to the fact that today the volume of exchange trades in government bonds already exceeds OTC trade volumes and is comparable to other segments of the financial market (including FX and currency). Volodymyr Ulyanov (NDU, Ukraine) spoke about the current state and problems of the stock market infrastructure, and ways to solve them. Oleksiy Zugravyi (Avangard Bank, Ukraine) shared recommendations on stimulating the liquidity of stock trading, conditions and restrictions on technology exports to other sectors of the financial market. Denis Dolmatov (DNK Capital, Ukraine) spoke about the expectations of professional participants regarding the development of the foreign exchange derivatives market.
In general, the organizers received positive feedback from participants, and gratitude for the opportunity to communicate with interesting Ukrainian and international experts. The organizers of the event, in turn, are very grateful to the participants of the Forum for their contributions to the event, and hope that this Forum will become a recurring, and insightful phenomenon, in the financial market.
