ethical lobbying and regulation of capital and commodity markets

Act regulating the capital and commodity markets, +2 points

Law 3585-IX this is a new version law on state regulation of the securities market in Ukraine, which has been in force since 1996. The adoption of the law was among the conditions for Ukraine to receive a loan from the World Bank in March 2024 in the amount of $1.5 billion.

The novelties introduced by the Act are consistent with the Rules of the International Organization of Securities Commissions (IOSCO). The most important changes include strengthening the institutional capacity of the National Securities and Exchange Commission (NSSMC) by giving it powers to investigate violations in capital markets, new rules for appointing the chairman and members of the commission taking into account their business reputation and based on open competitive selection and increasing the independence of its employees through higher salaries. The Act also stipulates that professional participants of capital markets and organized commodity markets are obliged to avoid conflicts of interest and implement a mechanism to regulate conflicts of interest in the event of their occurrence.

Lobbying Act, -0.5 points

Ukraine waited a long time for the creation of a lobbying law because it was necessary to bring this area out of the shadows and establish common rules. Additionally, the adoption of a law regulating lobbying activities in Ukraine was one of the conditions for starting negotiations on Ukraine’s accession to the EU (fourth evaluation round; Counteracting corruption among parliamentarians, judges and prosecutors). However, the law on lobbying proposed by the Council of Ministers (3606-IX) instead of obtaining comprehensive support, it sparked a broad public discussion. The main criticisms of the Act include:

• There is no clear distinction between lobbying and advocacy, hence the ambiguity in the application of the law on civil society organizations.
• Narrowing the scope of the Act’s regulations. Thus, a “lobbying subject” is defined as a regulatory legal act on which an interested party influences the persons or bodies that may adopt it. However, general policies or specific administrative decisions, the implementation of which may also be in the interest of stakeholders, are not covered by the regulation.
• Poorly defined incentives for lobbyists to register in the Transparency Register (free public access to up-to-date and reliable information on lobbying entities and their reporting).

As a result, the act received a negative assessment from experts of -0.5 points (-0 points in the “Fight against corruption” subcategory, -0.5 points in the “Business regulations” category). It was the first anti-reform initiative in a long time.