Obtaining a securities trading license

A developed securities market is an indicator of the readiness of businesses and the population for market relations. It is a multifunctional and complex system that mobilizes financial resources in the economic, industrial, and social spheres, promotes structural changes in the economy, and improves the financial situation of citizens through the possession and disposal of securities.

Professional activity on the stock market requires careful preparation, professional knowledge, and a professional approach to solving problems. The company “Prikhodko and Partners” has practical experience and expertise in the securities market, and is ready to consult and provide valuable advice to its clients.

Professional activity on the stock market can be carried out by securities traders (hereinafter referred to as “TCP”) – companies for which transactions with securities are an exclusive type of activity and banks.

A licensee may carry out professional activities on the stock market after obtaining an appropriate license from the National Commission for Securities and the Stock Market (hereinafter referred to as the Commission), subject to membership in at least one professional association of securities market participants and/or self-regulatory organization according to the appropriate type of professional activities and inclusion in the state register of financial institutions that provide financial services on the securities market.

Professional activity on the stock market has such species:

• dealer activity – conclusion of TCP contracts regarding securities on its own behalf and at its own expense for the purpose of resale;
• brokerage activity – conclusion of TSP contracts (in particular, commissions, mandates regarding securities on behalf of one’s own name or on behalf of another person, on behalf of and at the expense of another person).
• underwriting – conclusion of TCP contracts on the alienation of securities and/or performance of actions or provision of services related to such alienation, in the process of issuing these securities on behalf of, on behalf of, and at the expense of the issuer on the basis of the relevant agreement.
• securities management activity – an activity that is carried out by the TSP on its own behalf by reward for defined terms based on a contract about the management of valuable papers and funds intended for investment in securities, as well as received in the process of this management.

Licensees at feasible activity on market valuable papers should answer the following requirements:

• possession or use of non-residential premises of at least 20 square meters. (located at the company’s registered address ), completely separated from the premises of other legal entities, and/or not less than 10 square meters. in the case of conducting dealer activities and for the premises of specialized structural divisions of the TSP;
• compliance with prudential regulations (the Commission assesses credit, market, operational risks, and liquidity risks in the activities of the TSC);
• size statutory capital paid monetary funds: 500 thousand hryvnias for dealer activity;
• 1 million UAH for brokerage activities;
• 7 million UAH, for activity with management valuable papers or underwriting;
• particles statutory capital TCP, what belongs to another TCP and not may exceed 10 %;
• The share of TSP together with related persons in the authorized capital of the Central Securities Depository cannot be more than 5%;
• particles TCP in statutory capital depository institutions not may be more than 5 %.
• certifications of specialists and management officials of the licensee, who must meet the qualification requirements established when obtaining a license;
• the head of the licensee, who must have a certificate for the right to conduct professional activities on the stock market, work experience on the stock market for at least three years, including in managerial positions for at least one year, and cannot simultaneously work for other professional stock market participants;
• compliance of the chief accountant or the person entrusted with the licensee’s accounting with the Professional requirements for chief accountants of professional participants in the securities market, approved by the Commission’s decision;
• the business reputation of the licensee, members of the executive body, the head of the internal audit (control) service, and the chief accountant;
• equipment and software and technical complex;
• compliance with the provisions of the laws regarding the conditions and procedure for concluding contracts and the specifics of transactions with securities and by-laws of the Commission regulating the rules of conducting professional activities on the stock market;
• fulfillment of legislative requirements in the field of prevention of money laundering and financing of terrorism;
• development of provisions: on the implementation of securities trading activities; about separate and/or specialized structural units; about the internal audit (control) service; on the risk management system of professional activity in securities trading;
• creation division with management risks or appointment of responsible employees;

The executive body of the licensee (except the bank) must be located in non-residential premises at the place of registration and keep documents related to professional activities on these premises.

The commission considers the application and the package of documents and makes a decision on issuing or refusing to issue the corresponding license within six months from the date of receipt of the documents from the applicant. If there are no foreign legal entities in the ownership structure of the licensee, the review period is three months.

A fee established by the Commission is charged for issuing a license. The license is valid unlimited The licensee has no right to transfer the license to third parties.

Therefore, licensing of professional activities on the stock market requires time, material, and intellectual costs. It is better to entrust the work of preparing documents and gathering information to practicing and experienced lawyers.

Lawyers companies “Prihodko and Partners” will prepare individual decisions under your needs and opportunities, and will ensure the achievement of your goal in a timely manner and at reasonable prices.