Conference on the Development of the Depository System in Ukraine: AUSD and MFS Merger

The All-Ukrainian Securities Depository (AUSD) and the Interregional Securities Union (MFS) held a conference April 16 to inform the industry and the public about the AUSD/MFS merger process leading to the establishment of a single central depository in Ukraine.

"The merger is almost completed. A modern depository working in compliance with international standards will make investing and trading on Ukrainian capital markets more secure, and therefore more attractive for investors”, Chairman of the MFS Management Board Mykola Shvetsov said, adding that "today’s meeting shows that the creation of a single central depository is a transparent process".

Participants included the shareholders of MFS, the shareholders of AUSD which includes the National Bank of Ukraine (NBU), the Securities and Stock Market State Commission (SSMSC) and State Commission for Regulation of Financial Services Markets (FSR), as well Ukraine’s main exchanges. Also taking part were USAID experts who have been providing technical assistance to MFS since 1999, as well as experts from the Word Bank.

The All-Ukrainian Securities Depository (AUSD) was established in April 2008 on the National Bank’s initiative supported by SSMSC. Its founders include NBU, PFTS, UICE and commercial banks (22 founders in total). NBU is the AUSD’s largest single shareholder, holding 25% (other shareholders are limited to 5%).In February-March of this year AUSD’s and MFS’ shareholders reached a principal agreement on the merger.

Over the next few weeks the deal will be finalized: AUSD will sign agreements with willing MFS shareholders on purchasing shares, and commit to an additional share offering of approximately UAH 60 million to swap MFS shares for AUSD shares.

"Pursuant to the 1999 Memorandum of Understanding signed by USAID, World Bank and the Ukrainian Government, USAID has provided technical assistance to MFS, assisting it in becoming a world-class clearing and settlement depository. We are proud of MFS’ accomplishments, and stand ready to support it and AUSD as they go forward toward a successful merger”, said USAID representative Natalya Berazhna.

The emergence of a single central securities depository will be a major step for the development of Ukrainian capital markets. Implementation of international best practices in depository, clearing and settlement operations will inspire confidence in domestic and international investors, leading to economic growth.

For more information please contact:

Chairman of the MFS Management Board, Mykola SHVETSOV.

Tel.: +30 (044) 238-61-92/95

7b Vetrova St.

Kyiv, 01032

http://www.mfs.kiev.ua

17.04.2009