Professional Market Participants Research Articles

Legal management and regulation of the activities of professional participants in the stock market of Ukraine

Purpose. To assess the effectiveness of legal management and regulation of professional participants based on the analysis of legislative, regulatory and legal documents that ensure the formation, regulation and prevention of illegal actions in the domestic stock market, as well as identify areas of cooperation with government agencies in stock market development and mediation. Methodology. In the process of research, general research methods and techniques were used, in particular: analysis and generalization to identify regulations governing the activities of professional stock market participants; analytical method to compare the effectiveness of cooperation of the National Securities and Stock Market Commission with anti-corruption organizations, synthesis to assess the completeness and effectiveness of existing legislation governing the activities of professional participants. Findings. The peculiarity of legal management and regulation of professional participants is determined; the classification mark of professional stock market participants and their activities (types of services) is formed in accordance with the National Commission on Securities and Stock Market, namely: investment firms, trade organizers (stock exchanges), clearing institutions, mortgage managers, depository institutions, companies with asset management. An analysis is performed of the effectiveness of certain laws, including the Law of Ukraine On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Terrorist Financing and Financing the Proliferation of Weapons of Mass Destruction, which reduced corruption and sanctions during 20172020 and the Law of Ukraine On licensing of economic activities, which is a lever in the field of regulation and maintenance of transparency of professional market participants, prevention of illegal actions. The mechanism of cooperation of professional participants with state bodies as a component of legal management on the basis of SMIDA activity is developed. Originality. It consists in defining the areas of legal management and regulation related to the activities of professional participants in the stock market and developing mechanisms for interaction of professional participants with government agencies based on transparency, information and competitiveness. Practical value. The proposed directions of cooperation and interaction of professional participants with government agencies, in particular SMIDA and NSSMC, as part of legal management and legal support, will optimize the standards of exchange activity and development of stock trading, reduce corruption and shadowing.

Stock Market in Uzbekistan: Current Situation and Development Prospects

The article analyzes the development trends of the stock market at the national and international level, the current state of operations in the stock market, and determines the factors influencing the development of the stock market. The stock market is an important tool for economic growth, as it is able to transform savings into investments. Therefore, in the context of globalization, the study of the conditions for the formation and development trends of the stock market is relevant.Objectives. Assessment of the current state of the stock market, identification of key problems hindering its effective development, and development of measures to eliminate them. Methodology. Used logical, statistical and graphical methods of analysis. Results. Problems that impede the effective development of the stock market are identified. First of all, it is the low level of capitalization of the stock market, the lack of developed infrastructure, failure to establish an effective mechanism for issuing and selling securities, the abundance and complexity of legal documents related to the stock market sector and the existence of many restrictions, insufficient improvement of the mechanism of protection of investors' interests and absence of institutional investors and professional market participants. Concrete proposals have been formulated to eliminate the problems of the development of the stock market: attracting domestic and foreign investors, increasing the dividend yield on shares by issuers, improving the legal framework and taxation system, developing a system for insuring transactions in the stock market, and implementing the principle of information openness. Conclusions. Further development of the stock market is possible only with an integrated approach both on the part of the market itself and the state. In order to attract new investors to the domestic stock exchange, it is necessary to regularly carry out activities to improve the financial literacy of the population and develop new tools to involve citizens in investing.

DIRECTIONS OF OFFENSE PREVENTION IN THE STOCK MARKET OF UKRAINE

Abstract. The article considers the legislative and regulatory documents which outline the features of detecting offenses in the stock market of Ukraine. The main offenses in the domestic stock market have been formed, and the subjects, objects and types of sanctions for offenses have been considered. It is determined that the main body in the field of detection and prevention of stock market violations is the National Securities and Stock Market Commission (NSSMC), which considers cases of offenses, regulates the activities of issuers and financial intermediaries, prepares reports on stock market operations, carries out licensing of professional participants and provides cooperation with state institutions, state and local authorities in the field of crime prevention. An analysis of offenses in the stock market of Ukraine during 2017—2019 has been carried out. The main directions of stock market offenses prevention are outlined, namely: imposition of financial sanctions, revocation or suspension of licenses of professional participants, issuance of orders and resolutions, increase of fines in the stock market, prevention of price manipulation. Proposals were made to improve the activities of the Stock market infrastructure development agency, in particular to form a single complete and detailed base of issuers, professional participants, offenses, foreign investors and large securities holders. It is proposed to reduce violations in the stock market through active cooperation with the International Organization of Securities Commissions (IOSCO). In general, we can conclude that there is no critical situation in the field of offenses in the stock market of Ukraine, as evidenced by analytical studies.
 Keywords: offenses, stock market, license, issuer, professional market participants, National Securities and Stock Market Commission.
 JEL Classification G18, K22, K40, K49
 Formulas: 0; fig.: 4; tabl.: 0; bibl.: 16.

The Complex Neural Network Model for Mass Appraisal and Scenario Forecasting of the Urban Real Estate Market Value That Adapts Itself to Space and Time

In the modern scientific literature, there are many reports about the successful application of neural network technologies for solving complex applied problems, in particular, for modeling the urban real estate market. There are neural network models that can perform mass assessment of real estate objects taking into account their construction and operational characteristics. However, these models are static because they do not take into account the changing economic situation over time. Therefore, they quickly become outdated and need frequent updates. In addition, if they are designed for a specific city, they are not suitable for other cities. On the other hand, there are several dynamic models taking into account the overall state of the economy and designed to predict and study the overall price situation in real estate markets. Such dynamic models are not intended for mass real estate appraisals. The aim of this article is to develop a methodology and create a complex model that has the properties of both static and dynamic models. Moreover, our comprehensive model should be suitable for evaluating real estate in many cities at once. This aim is achieved since our model is based on a neural network trained on examples considering both construction and operational characteristics, as well as geographical and environmental characteristics, along with time-changing macroeconomic parameters that describe the economic state of a specific region, country, and the world. A set of examples for training and testing the neural network were formed on the basis of statistical data of real estate markets in a number of Russian cities for the period from 2006 to 2020. Thus, many examples included the data relating to the periods of the economic calm for Russia, along with the periods of crisis, recovery, and growth of the Russian and global economy. Due to this, the model remains relevant with the changes of the international economic situation and it takes into account the specifics of regions. The model proved to be suitable for solving the following tasks: industrial economic analysis, company strategic and operational management, analytical and consulting support of investment, and construction activities of professional market participants. The model can also be used by government agencies authorized to conduct public cadastral assessment for calculating property taxes.

ARTIFICIAL INTELLIGENCE AND ROBOTICS: THEORETICAL AND LEGAL PROBLEMS OF DIFFERENTIATION OF THE CONCEPTUAL APPARATUS

A distinction is made between such concepts as “robotics” and “artificial intelligence”. These categories are not only multi-volume, but also semantically non-falling. After analyzing the conceptual apparatus of these terms, we can conclude that, in contrast to the first, the second is characterized by the presence of “intelligence”, self-development, etc. However, when discussing the legal status of robots and artificial intelligence, most scientists allow confusion of concepts, making attempts to justify the need to confer a legal status on robots, and not artificial intelligence. The question of considering robots and artificial intelligence as subjects of law, in principle, can be considered justified. However, it is premature to consider this issue, but the topic will not lose its relevance in the future. Among the currently available approaches to the consideration of robots and artificial intelligence as subjects of law, the path constructed by analogy with a legal entity from the point of view of the theory of fiction is the most justified. Approaches that offer to justify the legal personality of robots and artificial intelligence, taking into account the essence of animate subjects who have a real, and not just a formal legal will, will be developed only after the development of digital technologies reaches an objectively high level. When implementing these approaches, it is necessary to take into account the existence of legal and economic validity and social conditionality, as well as a possible theoretical and legal problem, the essence of which is as follows: if new legal entities with legal personality are introduced, the level of responsibility of professional market participants may decrease.

Регрессивное состояние системы аттестации рабочих мест по условиям труда в Республике Узбекистан

The stagnation state of the market for the certification of workplaces is analyzed, the latest ideas for this certification are presented. A decrease in the quality of conducting workplace certification and imperfect implementation of the results obtained in the practical activities of the enterprises or institutions are established. Characteristic shortcomings and the ways to eliminate them were identified. The coefficients of preferential rates for employees that directly depend on the class of harm and (or) danger of the certified workplace are given. Diagrams of distribution of the participants in the market of workplace certification in the Republic of Uzbekistan and the Russian Federation for 2020 are shown. When analyzing them, it was found that there are not enough professional market participants in the field of occupational safety in the Republic of Uzbekistan, they are mainly concentrated in the capital region. A hypothesis was developed about the need for a qualitative improvement in the system of workplace certification, according to which it was proposed to create a special commission at the state level to monitor the implementation of prescriptions based on the results of certification. Characteristic shortcomings and omissions in the workplace certification system are considered. Measures are proposed to improve the quality of this procedure. To increase the efficiency of measures taken within the framework of occupational safety, a scheme was developed for conducting the workplace certification in the Republic of Uzbekistan. It reflects the need to conduct a preliminary survey of workers employed at the certified workplaces about their working conditions. To improve the activities in the field of workplace certification for working conditions and equipment injury risk, a mechanism for quantitative and qualitative expansion of participants in the workplace certification market in the Republic of Uzbekistan is proposed, which should facilitate the formation of a full-fledged competitive (market) environment. Increasing the number of market participants in the field of occupational safety in the Republic of Uzbekistan will allow to improve the quality of conducting workplace certification, as well as improve statistical practices and reporting on the state of working conditions in the organizations and industrial enterprises.

Cryptocurrency Market: Overreaction to News and Herd Instincts

We studied the specific properties of the cryptocurrency market. Guided by the concept of implied volatility, we investigated the asymmetric reaction of the market to news. Based on the concept of realized volatility, we verified the hypothesis of herding behavior in the market. To test the properties of the market, we used a combination of methods, starting from the analysis of statistics of search queries, interpreted as proxies of information demand from professional market participants and the “wide crowd”, and ending with advanced Markov-Switching GARCH models and heterogeneous autoregressive models of realized volatility (HAR-RV-J-models). As a result, we found various types of asymmetric reactions of the cryptocurrency market to news related to both the general direction of its dynamics (growth or decrease) and the amplitude of return fluctuations (high or low volatility). During the upward price rally and overheating of the market, investors deliberately avoided the bad news; thereby the asymmetry in the cryptocurrency market was inverse (to the adopted leverage effect). On the contrary, during the downward price rally, market participants exhibited an overreaction to bad news. In addition, the asymmetric reaction to the news observed during the period of low market volatility actually disappeared when the amplitude of cryptocurrency return volatility increased. The behavior of short-term investors was also varied in the study period. While during the growth of the market, small speculators were more likely to follow their own trading strategies, during the hype they borrowed the trading practices of the largest players. We also revealed the effect of training among small investors: over time, they became less prone to provocations from large players, which did not allow the 2019 rally to surpass its counterpart in 2017 in terms of both return oscillations and duration.

FOREIGN EXPERIENCE IN FINANCIAL SERVICES REGULATION AND ITS USE IN UKRAINE

The article deals with the problems of public relations in the sphere of financial services in foreign countries. The foreign experience of regulation of the sphere of financial services is studied and possibilities of its use in Ukraine are determined. An example of a model of legal regulation of the financial services industry in Ukraine may be the model used by the European Union. The European Union in the field of financial services has introduced a system of authorized institutions and bodies of the European Union, based on the principles of the internal market, aimed at consolidating a competitive efficient financial market, ensuring a high degree of financial stability, consumer protection and control. The regulation of financial markets in different countries of the world usually works within two different models. The first model involves regulation by predominantly state bodies, and only a small part of the powers overseeing, controlling, establishing the rules for conducting operations are transferred to associations of professional market participants - self-regulatory organizations. The second involves the transfer of as much authority as possible to self-regulatory organizations. At the same time, the state retains basic control functions and the ability to intervene at any time in the process of self-regulation. An important issue in the implementation of the European Union's financial services policy is the organization of a prudential oversight structure for financial market participants.However, the effectiveness of its operation depends on the specific institutional structure of supervision established in the Member States of the European Union in most countries of the world as a regulator of the banking system entrusted to the central bank. The experience and possibilities of introducing positive experience in regulating public relations in the sphere of financial services of such countries of the European Union as Germany, Great Britain, France, Denmark, Czech Republic, Hungary, Estonia, Latvia, Malta and the experience of the Russian Federation are discussed in detail The study of the financial services market regulation systems makes it possible to conclude the gradual development of common rules, rules and principles that are recognized by most countries. The need for unification is linked to the processes of interstate integration, internationalization and globalization of the financial markets, which initiate the gradual blurring of the identification boundaries between different national models of state regulation of the financial services market.

ОПЕРАЦИИ КОММЕРЧЕСКИХ БАНКОВ НА РЫНКЕ ЦЕННЫХ БУМАГ: ПРОБЛЕМЫ И ТЕНДЕНЦИИ РАЗВИТИЯ

The article analyzes the current position of commercial banks of the Russian Federation on the securities market. The main analysis tool is the use of a method for collecting and processing publicly available statistical information. The sources of information were scientific articles by various authors on the research topic, official materials of the Bank of Russia, reporting data of Sberbank of Russia as a specific example when considering the selected topic. The work is relevant due to the need to determine the importance and role of commercial banks in the securities market and identify growth trends. For the work, the activities of banks were considered from the point of view of their participation in the stock market as issuers, investors and participants. According to the results of the study, it was found that the issue of bonds is the main type of issuing activity of the bank as an issuer. As investors, they tend to invest in debt and Central Bank securities with a low degree of risk. This choice ensures the reliability of banks and forms additional sources for the development of the securities market without significantly increasing risks. Analysis of commercial banks as professional market participants revealed a negative trend in the number of participants as stock market participants. The main result of the work carried out is to identify the need to expand the activity of commercial banks in the securities market, which will increase liquidity and financial stability.

Do investors actually value sustainability indices? Replication, development, and new evidence on CSR visibility

Abstract Research SummaryIn this study, we replicate and expand Hawn et al.’s study (Strategic Management Journal, 2018, 39, 949–976) that used Dow Jones Sustainability World Index (DJSI) events to measure variations in firms' Corporate Social Responsibility (CSR)‐activism and examined their effect on a firm's stock price. We use DJSI events to capture variations in firms' CSR visibility, holding CSR activism constant by restricting our analyses to CSR‐equivalent firms. First, we find similar results on stock price (i.e., no impact) and on trading volumes. Second, because professional market participants pay more attention to CSR‐oriented firms and use visible cues such as DJSI events, we study and find that additions to DJSI lead to more analysts following a firm, and that continuations on the DJSI lead to an increase in equity being held by long‐term investors. Managerial SummaryWe replicate and complement a recent study that showed that the events of a firm's addition, continuation, or deletion in a major sustainability index (DJSI) had little impact on stock market reactions (Hawn et al. Strategic Management Journal, 2018, 39, 949–976). We redefine the comparison set that was previously used and compare across observationally equivalent firms in terms of CSR orientation in order to isolate the visibility effect of DJSI events. We find that these events do not significantly impact stock price and trading volumes. However, we expand the analysis and find that sustainability events attract more attention from financial analysts and lead to an increase in the percentage of shares held by long‐term investors indicative of a trend that professional investors pay more attention to CSR‐visible firms over time.

О влиянии тональности новостей в международных СМИ на рыночный курс российского рубля: текстовый анализ

This paper examines the impact of the Russia-related international news tonality on the market ruble exchange rate (in the US dollar). The dataset features 162 259 news texts from the Thomson Reuters agency, dated from January 10, 2012, to May 30, 2018. The texts are combined into 5 thematic groups: business, market, world, policy and common. To calculate the text tonality, the “bag of words” method and 5 different lexicons were used, as well as the inertia effect of the news impact on the market participants behavior was taken into account. The econometric methodology consisted of two steps: the selection of potentially significant explanatory variables based on the elastic net regression and the estimation of the ARMAX-GARCH model. As a result of modeling, it was confirmed that the dynamics of oil prices significantly affect the market ruble exchange rate, while the Bank of Russia monetary policy tool - the interbank lending rate RUONIA - was not effective in the period studied. The tonality of the news, along with the fundamental economic factors, has a systematic impact on the ruble exchange rate, which nevertheless depends on their subject matter: the most important are business news, while political messages in the media do not statistically influence the market ruble exchange rate. The obtained results are potentially applicable for the ruble exchange rate forecasting by investors, the Bank of Russia, commercial banks, investment funds and other professional market participants.

RESEARCH OF MODELS OF ADVANCE INDICATORS FINANCING CONDITIONS

A feature of financial management is the uncertainty of the time of the onset of a planned event, referred to the future. Financial management (a widely understood monetary policy) is probabilistic. Information and analytical support for hedging proceeds from the requirements of technical and fundamental analysis, based on a series of archival data. A relatively new component of this system is the widespread practice of consensus forecasting of such key indicators as profitability of securities, exchange rates, money in circulation (M0), and central bank refinancing rates. This article describes the results of a study of leading indicator models specifically designed for the financial sector and financial market, taking into account the expectations of professional market participants.

Economic-mathematical model for predicting financial market dynamics

Study purpose.Existing approaches to forecasting dynamics of financial markets, as a rule, reduce to econometric calculations or technical analysis techniques, which in turn is a consequence of preferences among specialists, engaged in theoretical research and professional market participants, respectively. The main study purpose is developing a predictive economic-mathematical model that allows combining both approaches. In other words, this model should be estimated using traditional methods of econometrics and, at the same time, take into account the impact on the pricing process of the effect of clustering participants on behavioral patterns, as the basis of technical analysis. In addition, it is necessary that the created economic-mathematical model should take into account the phenomenon of existing historical trading levels and control the influence they exert on price dynamics, when it falls into local areas of these levels. Such analysis of price behavior patterns in certain areas of historical repeating levels is a popular approach among professional market participants. Besides, an important criterion of developing model’s potential applicability by a wide range of the interested specialists is its general functional form’s simplicity and, in particular, its components.Materials and methods. In the study, the market of the pound sterling exchange rate against the US dollar (GBP/USD) for the whole period of 2017 was chosen as the considered financial series, in order to forecast it. The presented economic-mathematical model was estimated by classical Kalman filter with an embedded neural network. The choice of these assessment tools can be explained by their wide capabilities in dealing with non-stationary, noisy financial market time series. In addition, applying Kalman filter is a popular technique for estimation local-level models, which principle was implemented in the newly model, proposed in article.Results. Using chosen approach of simultaneous applying Kalman filter and artificial neural network, there were obtained statistically significant estimations of all model’s coefficients. The subsequent model application on GBP/USD series from the test dataset allowed demonstrating its high predictive ability comparing with added random walk model, in particular judging by percentage of correct forecast directions. All received results have confirmed that constructed model allows effectively taking into account structural features of considered market and building good forecasts of future price dynamics.Conclusion. The study was focused on developing and improving apparatus of forecasting financial market prices dynamics. In turn, economic-mathematical model presented in that paper can be used both by specialists, carrying out theoretical studies of pricing process in financial markets, and by professional market participants, forecasting the direction of future price movements. High percentage of correct forecast directions makes it possible to use proposed model independently or as a confirmatory tool.

Learning from outsiders: Do managers benefit from communication with market participants?

This paper investigates whether managers learn from communication with professional market participants using a unique dataset of analyst visits to listed firms in China. We find that managerial ability is significantly enhanced by communicating with outsiders. To identify causality, instrument variable and matching method are introduced. Our findings provide significant implications on the role of the information learning from outsiders to firm managers.

TECHNOLOGY BLOKCHEIN IN THE FIELD OF FINANCIAL SERVICES OF THE ENTERPRISE

The article deals with the main approaches to the technology of blockade management of financial flows between enterprises and between the state and enterprises. Ukraine's entry into the global information space and the introduction of �ryptocurrency in the domestic financial market will expand the investment market and provide targeted budget investments to national producers that can provide increased production through the end product, services, net exports or the creation of products that replace the imported. Three important functions of the financial services sector are proposed based on the blockade technology: at the enterprise registration of transactions, confirmation of the identity of the person (legal address) and the conclusion of contracts. The principles of state policy in the sphere of activity of financial institutions in the market of cryptography are described, in accordance with the draft Law of Ukraine "On stimulation of the market of �ryptocurrency and its derivatives in Ukraine" and supplemented with the principles that most fully reveal the peculiarities of public administration with the help of blockade technology. Professional market participants are not responsible for the obligations of the state, and the state - on the obligations of such market participants are crying. All operations on the market of crying are carried out by their participants at their own risk. The state guarantees the observance and protection of property and other rights and legitimate interests of professional market participants in the cryptographic market and other persons who carry out property or transactions with cryptic foreign currency, the conditions of free competition in the provision of financial services in the market of �ryptocurrency. �ryptocurrency have protection in the form of a cryptographic code, which allows them to emit them by any user-operator to bypass the actions and positions of the central bank. All operations on the market of crying are carried out by their participants at their own risk. The state guarantees the observance and protection of property and other rights and legitimate interests of professional market participants in the cryptographic market and other persons who carry out property or transactions with cryptic foreign currency, the conditions of free competition in the provision of financial services in the market of cybercurrencies.

Investor compensation fund: an optimal size for countries with developed stock markets and Ukraine

A compensation fund is an effective mechanism for ensuring the protection of individual investors’ investments on the stock market, which confirms the experience of different countries both with the developed stock market and with the emerging markets (USA, UK, France, Czech Republic, Bulgaria, Ireland, Malta).The formation of a steady interest of individual investors in stock market instruments is stimulated by the implementation of a mechanism for guaranteeing such investments. The stock market of Ukraine faces the problem of attracting additional financing, while individual investors have fairly large amounts of monetary resources that are not involved in the transactions with financial instruments due to the high level of distrust caused by the crisis phenomena on both the global and the national financial markets. The creation of the Ukrainian compensation fund for investment protection involves the development and implementation of a nationwide system for protecting the property interests of investors on the stock market, which requires compensatory payments to the clients of all professional market participants as a result of certain risks.The main condition for effective functioning of the compensation fund of the stock market is determined by its size, which must meet the following conditions of optimality: to ensure the minimum level of the fund’s risks, to take into account the amounts of contributions for the current period, the amount of maintenance costs and to fulfil the requirements for the financial stability of the fund. A modified Markowitz portfolio model was used to build the model.The building of the target function and constraints was carried out by using the Statistica software toolkit. The target function and constraints were presented as polynomials of the third degree and calculated with the help of the multiple nonlinear regression. As a result of calculations, an optimization model was developed for determining the size of the compensation fund taking into account these conditions.The model’s testing was carried out by using the examples of the Deposit Guarantee Fund (DGF) and compensation funds of the United States, Great Britain, France, Czech Republic, Bulgaria, Ireland and Malta. As a result of calculations we determined the size of the compensation fund, which guarantees a minimum level of the fund’s risk taking into account the amount of contributions for the current period, the amount of maintenance costs and requirements to the financial stability of the fund.

ИНФОРМАЦИОННАЯ АСИММЕТРИЯ И “БОЛЬШИЕ ДАННЫЕ”: ГРЯДЕТ ЛИ ПЕРЕСМОТР ПАРАДИГМЫ ФИНАНСОВОГО РЫНКА?

The article deals with the behavioral mechanisms of functioning of modern financial market. Author points out to the formation of a permanent latent information asymmetry as well as fragmentation of information preferences of different investors’ groups. This leads to concentration of “bid data” and related technologies with the professional market participants. However, such intellectualization of financial transactions does not preclude the investors from fallacy in asset selection and financial losses. Laypersons as well as professionals continue to follow their subjective motivations (gut feelings, intuition) and all of them are proving to be irrational. Author cites the results of studies showing that overconfidence of professionals worsens their investment results. Meantime, non-professional retail investors can not only move the market prices, but also outperform the professionals. The likelihood that professionals will outperform laypersons in all financial transactions is doubtful. This behavior increases overall market uncertainty and reduces the accuracy of market forecasts. Author agrees with conclusions of Western researchers that irrational behavior of professional well-informed investors may reduce negative impact of information asymmetry on the non-professional and not informed investors. Under these conditions, the development of “big data” processing and analyzing technologies cannot radically change the behavior of investors and increase the rationality of the financial market. However, penetration of mobile technologies in capital markets can increase the ability of retail investors to monitor the market as well as their ability to select assets. These technologies may help principals in agent–principal relations to protect their interests. As for the professional investors and financial institutions, “big data” helps them to establish more flexible and friendly client relation with retail customers. Still, the author concludes that the basic financial market paradigm is not yet to be revised.

УЧАСТЬ ДЕРЖАВИ У ЗАХИСТІ ДІЛОВОЇ РЕПУТАЦІЇ СУБ`ЄКТА ГОСПОДАРЮВАННЯ

The article explores the concept of protection of a business reputation of economic entities and it`s basis. The legislation, scientific literature and law enforcement practice on this issue are analyzed. it is proposed to clarify the grounds of protection of a business reputation of economic entities. It is concluded that the direct grounds for the protection of the right of a business reputation of an economic entity is a violation of this right, through improper use of business reputation of a economic entity and discredit. Taking this into account, as well as the lack of uniformity of the current legislation, it is appropriate to fix the following provisions in the Civil code of Ukraine: «…an Economic entity has the right to protect the right of a business reputation in case of violation of the right of a business reputation of a economic entity. Violation of the right of a business reputation of economic entity consists in improper use of business reputation of economic entity (illegal use of other people`s designations, advertising materials, packaging, improper use of another manufacturer`s product, copying the appearance of another manufacturer`s product, comparative advertising), and discrediting.» Fixing these provisions at the legislative level will be important to improve the effectiveness of detection and suppression of violations aimed at the right of a business reputation of economic entities, as well as increases the effectiveness of the use of business reputation in the activities of professional market participants. It was also revealed that dignity is inherent only to individuals, since it is based on spiritual, social, moral qualities of behavior, worldview and abilities. In such circumstances, the concept of humiliation from a linguistic point of view is appropriate to use only in relation to individuals. As for business entities, the more successful in the context of violation of the right of a business reputation is the term «discredit»

Risk Valuation for Securities with Limited Liquidity

Professional market participants have to deal with illiquid securities on a constant basis. For such securities traditional risk assessment techniques fail. This can lead to underestimated and distorted results for the entire investment portfolio, and ultimately to inadequate risk management. We present a framework, based on coupled-wave model, that allows to model securities with low liquidity and evaluate impact of various risk sources, associated with liquidity. In addition to risk management, this framework should be helpful to firms and trading desks in evaluating cost of liquidity and selecting liquidation tactics for their oversize positions.

Russian Federation: Report on the Observance of Standards and Codes-IOSCO Objectives and Principles of Securities Regulation

This paper presents an assessment of the level of implementation of the IOSCO (International Organization of Securities Commissions) objectives and principles in the Russian Federation. Some of the most recent regulatory changes in the Russian Federation are clearly based on international standards. In other areas, further initiatives will be required. These include conflicts of interest identification and improving standards of management in professional market participants. It will also require the creation of legal gateways which will enable supervisors with the necessary skills sets to provide guidance as to what the Central Bank of the Russian Federation’s (CBR) reasonable expectations are on a range of issues. CBR also faces a major challenge in enforcing the regulatory regime and will need additional resources.