Structural-functional deformations of the stock market in Ukraine: macro- and micro-measurements

Abstract

The article highlights the factors of the classification of issuers and their securities (forms of circulation and admission to trading, listing, publicity, type of offering, liquidity, objectivity of pricing) in the context of determining the reasons for the limited number of instruments in Ukraine's regulated market and signs of its unattractiveness for issuers and investors. The author defines peculiarities of the formation and structure of investment portfolios of financial institutions and other investors (in comparison with international indicators) and difficulties of the valuation and diversification of assets. It has been revealed that a sharp reduction in the number of issuers and financial intermediaries (through variable legislation, increased regulatory requirements and controversial enforcement) led to a reduction in liquidity and competition, an increase in transaction costs, and did not contribute to market development, its infrastructure, and the objectivity of pricing. The emphasis is on the conventionalities of market benchmarks (stock indexes of shares, total capitalization) in Ukraine due to the limited financial instruments, lack of public companies, scanty liquidity, high volatility and artificiality of pricing. Indicated various signs of illiquidity of Ukraine's regulated stock market in comparison with world trading platforms (first of all, in relation to shares), as well as reasons of irregularity of the trades, mainly the purpose oriented conclusion of agreements, absence of active market and actual prices (in particular, due to unsatisfactory regulation of exchange pricing). However, it is worth emphasizing the significant role of government bonds that differ from other securities in Ukraine in that they have increased liquidity, strong investor demand, more predictability and price adequacy, which is a sufficiently anticipated factor for an underdeveloped stock market. The author highlights peculiarities and problems of pricing in the underdeveloped stock market, which considerably complicate the task of counteracting market abuse, in particular due to total illiquidity, the absence of contradiction in the implementation of international practice, and subjectivity of the existing regulatory criteria for the detection of manipulation.