Dear shareholders and members, colleagues!

Another year passed by and became a history. Was it successful and fruitful? Someone got the disappointment, crash of prides and expectations. Someone received prospective freedom and hope for democratic future life.

I believe that Ukrainian Stock Exchange could be related to the second ones. 

Ukrainian Stock Exchange activities’ results in 2004 evidenced the significant turnover increase in compare with 2003. Exchange turnover in 2004 increased in 33 times to 207.7 million EUR from 6.1 million EUR in 2003. Number of transactions conducted increased in 1.6 times to 1905 from 1205 in 2003. This situation can be explained by brokers’ activity increase in derivative market that amounted to 98.5% of annual exchange turnover. However, we should admit that activity rates in securities market can not always testify to market’s maturity in general.

A character of today’s Ukrainian securities market is distribution and redistribution of property in privatization and post privatization processes. It is obvious that Ukraine wants to have liquid, reliable, transparent and effective capital market that could secure realization of national interests of Ukraine and promote consolidation of its economic sovereignty.   

Taking into account the stage of development and risks’ rates of Ukrainian market, it is related to emerging markets. It has to compete with other emerging markers in investment resources volumes.

The main aim of securities market functioning and development is attractions of internal and external investment resources to direct them to manufacture revival and its further development.  What is the better way of capital attraction? The answer is capital market, of course, namely stock exchange.

There are 8 stock exchanges and 2 trading& information systems in Ukraine. As investor you can say that it is really various choices. The competition between exchanges resulted to increase of exchanges’ services provided indeed. Every exchange gives close attention to each investor. Exactly in dynamic and emerging markets competition is a ponderable factor provided service quality improvement.     

On the other hand the exist number of exchanges means the follows situation as approximately the same capital should be invested at 10 places at the same time. Capital investments are separated to 10 different trading systems and ruin market liquidity and transparency.

 Let’s apply to other countries’ experience. After privatization process everyone expected for existence of more than thousands enterprises which shares listed at stock exchange, but truly there were 10 – 20 enterprises. And if these shares separate to 10 trading places, it would result to sudden quotations, market opacity. Return to Ukraine we shouldn’t forget about absence of free float market. Companies’ management doesn’t want to have shares listed at stock exchange. The one reason can be biassed meaning of company’s owners to lose control packet of shares while trading. For some companies “obstacle” for entering the market is transparency standards. To be listed at stock exchange company have to disclose information, and for some enterprises it is a real problem.

On the other hand we have good and transparent companies but their owners and management either don’t know nor understand the advantages of entering the market. They should realize that IPO is a profitable way for capital formation for example, to have shares listed is company’s prestige and image. The same situation we have in sphere of corporate governance.          

International standards determine obligation of centralized capital market that secure fair and transparent price formation. There is a united system of exchange trading almost in every European country. One of the last real examples of inter-country integration is trading platform OMX Exchanges.

In spite of all evidences there are 8 stock exchanges, 2 OTC market systems, 2 depositories, great number of registrars and custodians in Ukraine. These entities function guiding by uncoordinated regulations. And it is a real hindrance for national market development. Therefore, in 1995 Ukrainian Stock Exchange worked out the Conception of formation united system of securities trading. USE is positive that we should take a way of civilized integration. Increase of Ukrainian capital market competitiveness should become an object on governmental level. It is a State role to regulate mane functioning processes in capital market. What are the priority aims for today? Ukrainian Stock Exchange sees them as follows:

Ø      Secure of State protectionism of national institutes of securities market infrastructure;

Ø      Realization of encouraging State policy of market’s regulation and tax policy. Procedures of entering the market by foreign investors should be simplify.

Ø      Ensuring the equal possibilities for market’s participants at the conditions of competitiveness; stimulation of infrastructure institutes to implement new financial services, market instruments and technologies;

Ø      Ensuring the real functioning market infrastructure.

The above shown market situation forces Ukrainian Stock Exchange to function efficiency, pliantly and on-the-fly, improve exchange’s services.

Ukrainian Stock Exchange celebrated its 13^th anniversary in 2004. 13 years in historical dimension is only a moment, but in life of human or enterprise it is a substantial way. Ukrainian Stock Exchange within 13 years of activity has demonstrated and proved its importance and necessity both for State and Ukrainian nation. 

 It is common knowledge that stars never deviate from their orbits. USE never moved aside from its path, even when it was hard and thorny.

As a pioneer USE has built up Ukrainian market and all the time kept the idea of centralized securities market. In the USE’s Conception dated 1991, in Conception of USE development dated 1997, in Conception of formation united system of securities trading dated 1995 and 2000, USE stated the only idea of centralized, liquid, transparent and secure securities market in Ukraine that intelligible both for national and foreign investors.

Chairman of the Board

Valentyn Oskolskyy