PROPOSALS FOR IMPROVING UKRAINIAN DERIVATIVES MARKET REGULATION
DOI:
https://doi.org/10.32070/ec.v3i51.133Keywords:
derivative financial instruments, derivatives, transparency, macroeconomic regulation, regulation of capital markets, systemic riskAbstract
Over the past decades, the use of derivatives as risk hedging instruments has grown in scope due to the strengthening of their role in global financial markets. The market of derivative financial instruments performs a number of functions inherent only to it: hedging, stimulating, informing about future price changes and ensuring the liquidity of the underlying assets. The activity of banking institutions as the largest participants in the derivatives market is exposed to the negative influence of a large number of external threats, which, transforming into risks, reduce the level of their financial stability. The Ukrainian market is inefficient and non-transparent, which causes the risk of information asymmetry, fraud, moral hazard, the use of private information and increases systemic risks – all of these problems are caused by the lack of an effective legal framework and rules for the functioning of the derivatives market, imperfect infrastructure and weak state regulation. It is expedient to manage the individual risks of commercial banks in operations with derivative financial instruments at the level of risk management of the relevant institution. However, considering the probability of macroeconomic shock events, it is necessary to minimize the impact of such risks by improving the macroeconomic regulation of the derivatives market and its participants.
Increasing the level of transparency, liquidity and efficiency of the Ukrainian derivatives market, as well as guaranteeing the safety of its participants, is possible due to the implementation of an appropriate state regulation model and the necessary conditions for the proper performance of its functions by the market. Comparative analysis of the state regulation models by the possibilities of reducing the impact of external threats indicates the need to use a cross-regulation model in Ukraine. Despite the introduction of the reforms developed on the basis of the European legislation, the study of the legal regulation of the Ukrainian derivatives market indicate its fragmentation and imperfection. Owning to this fact, the article presents proposals for improving the regulation of the derivative financial instruments market in Ukraine based on the legislation of the European Union.
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