Governor Date: NATIONAL SECURITIES AND STOCK MARKET COMMISSION: Signature: _____________________________ Name: Tymur Zaurbekovych Khromaiev Chairman Date:

1. MEMORANDUM OF UNDERSTANDING
BETWEEN
THE NATIONAL BANK OF UKRAINE
AND
NATIONAL SECURITIES AND STOCK MARKET COMMISSION
ON
COOPERATION IN CAPITAL MARKETS INFRASTRUCTURE DEVELOPMENT IN
UKRAINE

2. THE MEMORANDUM OF UNDERSTANDING («Memorandum») was executed between the
National Bank of Ukraine («NBU») and the National Securities and Stock Market Commission of
Ukraine («Commission»), hereinafter referred to as the «Party», and jointly as the «Parties»;
WHEREAS, the NBU and Commission acknowledge the importance of capital markets
development in Ukraine and are interested in its analysis and reforms that can increase the potential
of capital markets, laying the groundwork for developing integral and transparent capital markets,
as well as reducing systemic risks;
WHEREAS, the NBU and Commission agree to coordinate their efforts to achieve the above goals
and are interested in maximum intensification of this process;
TAKING INTO ACCOUNT, the Comprehensive Program of the Ukrainian Financial Sector
Development until 2020 and a report by the international management consulting company Oliver
Wyman, prepared within the framework of the EBRD funded project on modernization and
consolidation of the post-trading infrastructure in Ukraine (hereinafter - “Oliver Wyman’s report”)1
,
the Parties have agreed on the following:
Article 1
Objectives
The development of resilient capital markets is crucial for the long-term financial stability as it
fosters capital mobilisation and liquidity in the national currency in a safe way and without creating
an excessive burden on the frequently limited capacity of the financial sector.
The strategy of the financial sector reform should provide for the following:
- support of the Ukrainian capital markets development and operation in the long run;
- implementation of the relevant provisions of European Union laws (namely CSDR2
, MiFID3
) and
international standards, namely ІОSCО principles of capital markets infrastructure operations4
, as
well as the relevant practices of the EU member states;
- support of the capital markets infrastructure transformation and consolidation based on the
principles of “reasonable cost” and “reasonable timeline” of implementation;
- retaining a possibility of ensuring performance of the current functions and servicing the current
clients by the upgraded capital markets infrastructure and at the same time enabling it to introduce
new services and attract new clients in all types of the regulated markets and for all types of
1
Annexed to this Memorandum
2
REGULATION (EU) No 909/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 July 2014
on improving securities settlement in the European Union and on central securities depositories and amending
Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 // http://eur-lex.europa.eu/legal-
content/EN/TXT/HTML/?uri=CELEX:02014R0909-20160701&qid=1495557352824&from=EN
3
DIRECTIVE 2004/39/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 April 2004 on
markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of
the European Parliament and of the Council and repealing Council Directive 93/22/EEC // http://eur-
lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02004L0039-20110104&qid=1496923646559&from=EN
4
Principles for financial market infrastructures issued by the CPSS and IOSCO //
http://www.bis.org/cpmi/publ/d101a.pdf

3. financial instruments and products (namely, establishing full-fledged correspondent relations with
central depositories and central counterparties of the EU states);
- ensuring compliance of the updated information technology that will ensure the capital markets
infrastructure operation with the recent international standards (regarding functionality and
security), thus ensuring uninterrupted operation of the capital markets infrastructure with the
volume of operations growing; and
- development of the upgraded capital markets infrastructure to ensure its breakeven operation.
Article 2
Principles of the Capital Markets Infrastructure Target Operating Model
NBU and Commission confirm that they aim to develop the domestic capital markets in accordance
with the capital markets infrastructure target operating model as reflected in the Oliver Wyman’s
Report. This model shall consist of two elements: clearing, and settlement and depository.
The reform of the clearing element of the capital markets infrastructure shall be carried out based on
the following:
1. Determining a clearing model to be implemented in Ukraine based on the current state of the
capital markets, as well as issues, risks, needs, requirements and opportunities of the market
and market participants (access to services of “regional ССР” and/or “light CCP”) with
gradual implementation of the CSDR5
and EMIR6
requirements.
2. Gradual implementation of the action plan on reforming the clearing element of the
infrastructure based on the long-term model proposed in the Oliver Wyman’s Report.
3. Defining clearing activity as activity on determining obligations subject to fulfilment under
legal deeds and preparing documents and information for settlements. At the same time, the
activity of the Central Counterparty shall include acquisition of mutual rights and duties of
parties to securities trades, obligations under which were admitted to clearing, as well as
creation of a system to guarantee the fulfilment of obligations under the transactions.
4. Discontinuation of the monopoly for cash settlements under securities transactions and that
for clearing activity.
5. Practical implementation of a possibility to settle securities trades according to different
principles (DVP, FOP, FD, etc.), while eliminating the monopoly for such settlements.
6. Defining clearing activity as such, that cannot be combined with other lines of business, in
particular with cash settlements under transactions or banking activity (except when it is
carried out by the Central Depository in certain cases.)
The reform of the settlement and depository element of the capital markets infrastructure shall be
carried out based on the following:
1. Ensuring that the main functional, technological and regulatory preconditions for
consolidation of existing depositories (NBU and NDU) are met.
5
REGULATION (EU) No 909/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 July 2014
on improving securities settlement in the European Union and on central securities depositories and amending
Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 // http://eur-lex.europa.eu/legal-
content/EN/TXT/HTML/?uri=CELEX:02014R0909-20160701&qid=1495557352824&from=EN
6
REGULATION (EU) No 648/2012 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 4 July 2012
on OTC derivatives, central counterparties and trade repositories // http://eur-lex.europa.eu/legal-
content/EN/TXT/HTML/?uri=CELEX:02012R0648-20170103&from=EN

4. 2. Practical implementation of a polyvariant model of Т+0, Т+1, Т+2 … Т+n settlements of
securities transactions based on the «delivery versus payment» principal.
3. Ensuring on a legislative level that the Central Securities Depository has access to the NBU
System of electronic payments to perform cash settlements of securities transactions.
4. Upgrading technologies that will be used by the CSD to keep records of securities and
perform settlements.
The NBU and Commission will also assist in eliminating a conflict of interest by adhering to the
principle of delineation of functions pertaining to regulation of transactions within the capital
markets infrastructure and those pertaining to the management of corporate rights of the central
infrastructure elements, namely with respect to such entities as the Central Securities Depository
and clearing entities.
The NBU and Commission will try to assign priority to these lines of development and take specific
measures based on the key priorities as agreed by the Parties, namely to ensure supervision over the
operation of the capital markets infrastructure in accordance with IOSCO standards and principles7
,
specifically the MMoU IOSCO8
.
The Parties intend to cooperate in coordinating efforts in this important domain within the timeline
indicated in the Oliver Wyman’s Report.
Article 3
Target Operating Model of the Clearing Element of Capital Markets Infrastructure
The clearing element of the capital markets infrastructure shall include the following:
1. Ability to use services of “regional ССР” and/or launch the “light central counterparty” (light
CCP) in accordance with the model proposed in the Oliver Wyman’s Report. At the same time,
the legal requirements established for a light CCP should enable Settlement Centre for
Servicing Contracts in Financial Markets, PJSC to perform its functions.
2. Compulsory engagement of ССР for settlement of trades executed solely in the order-driven
markets of stock exchanges.
3. Securities trades clearing through a central counterparty shall be carried out for direct trades
executed at stock exchanges and for OTC trades; however for the latter it is optional at will of
parties to the trade.
4. Establishment of a mixed clearing model that will envisage a possibility to use different
mechanisms of securing the fulfilment of obligations, including, but not limited to:
a. 100% preliminary depositing to guarantee securities transactions;
b. Partial guarantee of securities transactions through establishing a risk management
and guarantee system;
5. Development of a comprehensive risk management system capable to evaluate counter-party’s
credit risk, including:
a. Initial limits and a guarantee fund establishment and operation;
7
Principles for financial market infrastructures issued by the CPSS and IOSCO //
http://www.bis.org/cpmi/publ/d101a.pdf
8
MULTILATERAL MEMORANDUM OF UNDERSTANDING CONCERNING CONSULTATION AND
COOPERATION AND THE EXCHANGE OF INFORMATION //
https://www.iosco.org/library/pubdocs/pdf/IOSCOPD386.pdf

5. b. Clearing system membership rules and conditions; and
c. Clear and transparent rules and procedures in the event of default of a system
participant.
6. In the long-run, the clearing element of the capital markets infrastructure will further develop in
accordance with international and European standards and ensure access of foreign clearing
institutions to the Ukrainian capital market and a possibility for them to perform clearing
activity in Ukraine.
Article 4
The Target Operating Model of the Settlement and Depository Element of the Capital
Markets Infrastructure
The settlement and depository element of the capital markets infrastructure shall provide for the
following:
1. Keeping a possibility to use the current settlement model based on DVP principle through
100% preliminary depositing of funds/securities as long as there is a significant demand for
this model in the market.
2. Introduction for the market by NBU and NDU of a settlement method based on
informational interaction between the NBU System of Electronic Payments and a depository
as a basic method of settlements based on DVP principle (for all types of securities).
3. The merger of the NBU depositary and the National Depositary of Ukraine shall take place
after implementation of technological prerequisites for flawless operation of the merged
depositary, as well as after meeting other required prerequisites (namely, a possibility to
carry out the whole range of monetary transactions by the National Bank of Ukraine).
4. Provision of services by the Central Securities Depositary that support a wide range of
corporate events in securities issuers (including ensuring information transfer about all
corporate events of issuers through the depositary system of Ukraine, a possibility to hold
general meetings of shareholders and bond holders, as well as information exchange
between an issuer and a security owner through the depositary system of Ukraine) for a
reasonable fee.
5. Modification of the structure of securities accounts that must provide for opening of:
a. nominal holder accounts by foreign financial intermediaries to keep record of their
clients’ rights to securities at both levels of the depositary system;
b. an account at the level of a securities depositary by a depositary institution by order
of a securities account holder.
6. Tender procurements and further implementation of a new stable, secured and flexible
software package for depositary record keeping that must meet all requirements of the
system members and international standards at the Central Securities Depositary.
7. The membership structure of the updated infrastructure shall envisage:
- Maintenance of depository institutions’ securities accounts and other legal types of
securities accounts by the CSD
- Maintenance of cash accounts of solely banks and central counterparties by the
National Bank of Ukraine to perform cash settlements in the NBU currency.
- A possibility for other members to get access to settlement services in the NBU
currency through banks.

6. - A possibility for other members to get access to CSD services through depositary
institutions.
Article 5
Corporate Actions Required to Implement the Target Operating Model of Capital Markets
Infrastructure
The NBU and Commission as the key majority shareholders of National Depositary of Ukraine,
PJSC and Settlement Centre for Servicing Contracts in Financial Markets, PJSC confirm that they
will coordinate and direct their actions as shareholders of the above joint stock companies in the
following way:
1. Settlement Centre for Servicing Contracts in Financial Markets, PJSC will relinquish its
banking license and terminate maintenance of bank accounts of settlement participants,
while ensuring analytical accounting of funds deposited for such settlements, which will be
legally regulated within the scope of business of a CCP.
2. The NBU will resign from shareholders of Settlement Centre for Servicing Contracts in
Financial Markets, PJSC, as the result of a swap of its shares for the shares of an additional
issue of National Depositary of Ukraine, PJSC or otherwise.
3. Best corporate governance standards and practices shall be implemented in National
Depositary of Ukraine, PJSC and Settlement Centre for Servicing Contracts in Financial
Markets, PJSC.
4. The NBU and Commission will facilitate maximum business efficiency of National
Depositary of Ukraine, PJSC and Settlement Centre for Servicing Contracts in Financial
Markets, PJSC to ensure that they break even and to bring a strategic investor into the joint
stock companies.
5. The NBU and Commission intend to transfer management of corporate rights of National
Depositary of Ukraine, PJSC and Settlement Centre for Servicing Contracts in Financial
Markets, PJSC to other state authorities to avoid conflict of interest.
6. Making necessary amendments to legislation to repeal the requirements regarding
participation of the GOU and National Bank of Ukraine in the capital of National
Depositary of Ukraine, PJSC and Settlement Centre for Servicing Contracts in Financial
Markets, PJSC, as well as restrictions on participation of a strategic investor in the capital of
the above legal entities.
Article 6
Notifications
Any notifications or messages hereunder shall be sent to contact persons to the following addresses
or any other addresses as set by the Parties by notifying the other Parties:
For NBU:
Address: 9 Instytutska Street, Kyiv-8, 01601
Attention Mr. Yakiv Vasyl’ovych Smolii
Fax: +38 (044) 230-20-33, 253-77-50
E-mail: Yakiv.Smolii@bank.gov.ua, Oleg.Churiy@bank.gov.ua, Mykola.Selekhman@bank.gov.ua,
Andrii.Suprun@bank.gov.ua

7. For Commission:
Address: 8 Moskovska Street, building 30, Kyiv-610, 01010, Ukraine
Attention Mr. Tymur Zaurbekovych Khromaiev
Fax: +38 (044) 254 25 70, 254 23 31
E-mail: timur.khromaev@nssmc.gov.ua, d.tarabakin@nssmc.gov.ua,
maksym.libanov@nssmc.gov.ua
Article 7
Final Provisions
This Memorandum represents fair views and intentions of the Parties with respect to cooperation on
a non-exclusive basis without creating any legal obligations or assuming any responsibilities by
either of them. In addition, no third party will receive any legal benefits as a result of this
Memorandum.
The Parties understand and agree that no clause of this Memorandum is and may be treated as a
proposal, commitment or obligation of either Party to finance fully or partially any activity or
project specified or envisaged by this Memorandum.
If this possibility appears, the specific mechanisms of this activity or project must be coordinated
between the Parties. Each Party shall solely bear its own costs arising from implementation of this
Memorandum, unless otherwise stated in the respective specific agreements.
No provision of this Memorandum limits rights of the Parties to enter into memoranda or reach
agreements with other parties regarding any events, projects or cooperation areas covered by this
Memorandum.
Any disputes arising from or related to interpretation or application of any provision of this
Memorandum of Understanding shall be settled through amicable consultations.
This Memorandum comes into force on the date of its signing by the last of the Parties and remains
valid until either Party notifies the other Party in writing of its intention to terminate this
Memorandum. In this case, this Memorandum shall be terminated in thirty days after receipt of such
notification by the respective Parties.
Any amendments hereto may be made by mutual written consent of the Parties.
IN WITNESS WHEREOF, the NBU and Commission, each acting through its authorized
representatives, have signed this Memorandum of Understanding in Ukrainian in two copies.
NATIONAL BANK OF UKRAINE:
Signature:
_____________________________
Name: Yakiv Vasyliovych Smolii
Position: Acting NBU Chairman
Date:
NATIONAL SECURITIES AND STOCK
MARKET COMMISSION:
Signature: _____________________________
Name: Tymur Zaurbekovych Khromaiev
Position: Chairman of the National Securities
and Stock Market Commission
Date: