Information disclosure

ESCRIN Transfer Ceremony

A new electronic disclosure system for issuers listed on the Ukrainian stock market, the Electronic System of Comprehensive Information Disclosure (ESCRIN), was introduced during a high-profile event held in the presence of Vice Prime Minister Serhiy Tigipko, U.S. Ambassador to Ukraine John F. Tefft, USAID Mission Director Janina Jaruzelski, Securities and Stock Market State Commission (SSMSC) Chairman Dmytro Tevelyev, and Ann Wallace, Chief of Party of the USAID Capital Markets Project at the Hyatt Regency Hotel, in July 15, 2010.

Speaking at the event, Serhiy Tigipko described ESCRIN as playing an important role in the development of the Ukrainian economy. «Attracting capital is an extremely important factor for economic growth of Ukraine. The new [disclosure] system plays a big part in this process, as it will ensure the transparency of the domestic and foreign investment process,” he said. ESCRIN was developed for the market with support from the “Capital Markets Project”, a project funded by the United States Agency for International Development (USAID), and in collaboration with the Ukrainian Securities and Stock Market State Commission (SSMSC).

The highlight of the event was a signing ceremony marking the transfer of the system from USAID to the SSMSC. Taking part were Ambassador John Tefft, SSMSC Chairman Dmytro Tevelyev, and USAID Mission Director Janina Jaruzelski in the presence of Ukrainian officials and the cream of Ukrainian capital markets industry, including Deputy Minister of Finance Tetyana Yefimenko, First Deputy Minister of Economy Anatoliy Maksyuta, people’s deputies Ihor Prasolov and Vladislav Lukianenko, NBU Board of Governors’ member Roman Shpek, heads of Ukrainian stock exchanges, as well as the media.

Speaking at the event, U.S. Ambassador John Tefft noted “the important step that Ukraine is taking to bring greater transparency and openness to its financial markets” by introducing the new disclosure system. He described ESCRIN as “a system that provides business and financial information openly on publicly traded companies to all interested parties free of charge and on a real time basis” as “really vital to the integrity of Ukraine’s capital markets. He added that ESCRIN would help create a business and investment friendly environment that is a key to the economic future of this country.

SSMSC Chairman Dmytro Tevelyev underlined for his part that through ESCRIN Ukraine demonstrated its “commitment to international reporting standards.” CMP COP Ann Wallace emphasized that “ESCRIN means more and better information. And better information means stronger and more stable markets. Information creates confidence, and confidence, in turn, creates growth”.

The signing ceremony and presentation of ESCRIN was followed by a luncheon. In the coming months, issuers of equity and corporate bonds listed on one of Ukraine’s exchanges will be required to communicate quarterly and annual filings according to the new disclosure system. The SSMSC is currently finalizing a regulation to this effect. The implementation of ESCRIN could happen possibly as early as “October 1”, Commissioner Mykola Burmaka told journalists during a press point following the ceremony.

The event was extensively covered by around 40 Ukrainian print and broadcast media, including 18 from regional press.

ESCRIN reflects the filing and information disclosure requirements of two key Ukrainian laws, “On Securities and Stock Market,” and the “Joint Stock Company Law”. The system also implements the Presidential Decree “On Top Priority Actions Regarding the Implementation of Innovative Information Technologies” (No. 1497/2005) requiring that government agencies introduce electronic data flow, including electronic signatures.

Publicly listed and traded companies will use ESCRIN software to prepare their electronic filings and digitally sign them. A company sends its filing to the ESCRIN server over the internet. The filing is then published automatically and in real time on the ESCRIN website for the investor community, and other market participants to consult.

The ESCRIN website will be accessible for all and completely free of charge.

ESCRIN was developed following a comprehensive analysis of disclosure systems implemented by securities market regulators in the United States, European Union, Canada and Russia. Throughout the world, most regulators mandate that information be filed in electronic format to provide a routine and orderly flow of data to the capital market. While the systems vary widely, electronic submission facilitates information to investors, the key element in a vibrant capital market.

After an initial stage where a team of disclosure experts and programming specialists elaborated the operating system, the program was launched as a pilot project in 2007. CMP legal and market experts in coordination with SSMSC took ESCRIN on a “road show” to eleven cities in Ukraine. First twelve, then 27 issuers – from sectors including banking, industry, and energy - committed to disclosing in ESCRIN format.

ESCRIN has already shown its expediency during this pilot phase. Indeed, ESCRIN pilot companies have consistently come out in the top ten in the study of information transparency of leading Ukrainian banks produced every year by the international ratings agency Standard& Poor’s and the Financial Initiatives Agency (FIA). FIA analyst Alexei Kutsenko noted in 2008 that ESCRIN had a “positive impact on the assessment of the level of transparency of issuers by international experts”.

At the signing ceremony and presentation of ESCRIN took part managing partner of Investor Relations Agency Alexander Nikishev.

ESCRIN can be accessed through the SSMSC website at http://eds.ssmsc.gov.ua.

http://www.capitalmarkets.kiev.ua/structure/news_en.php