Converting the Ukrainian PFTS into an Electronic Stock Exchange Will Increase Market Transparency and Speed Up Foreign Capital Flows onto the Ukrainian Stock Market

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Experts predict that the launch of an electronic stock exchange based on the Ukrainian PFTS, will go a long way toward improving market transparency and stimulate the Ukrainian investment climate.

Experts predict that the launch of an electronic stock exchange based on the Ukrainian PFTS, will go a long way toward improving market transparency and stimulate the Ukrainian investment climate.

“Plans to turn the PFTS (http://www.pfts.com) into an electronic exchange by mid-fall will be beneficial for the Ukrainian stock market. It will legitimize the de-facto situation in securities trading and will make trading procedures more transparent for international investors,” said John Suggitt, Chief Operating Officer of Kyiv-based investment bank Concorde Capital (http://www.con-cap.com).

The PFTS is the unofficial leader of the Ukrainian stock trading system, launched in 1997, it controls over 80% of the local stock trading volume. Created by KPMG it was the first to develop organized trading for privatization bonds as well as shares of major privatized enterprises. Currently, this NASDAQ-like system operates as an information system, electronic deals are not allowed, however, the PFTS Board recently decided to launch a full-scale electronic exchange that should be up and running soon.

According to Mr. Suggitt, transforming the PFTS into full-fledged stock exchange will be of key importance for further developing transparency and growth on the Ukrainian stock market. “Real volumes will grow as it will make pricing much more transparent for new investors to enter the market,” Suggitt said. Under the current model, he says, many foreign investors face uncertain stock prices, trading volumes, and share liquidity, which leads to a lack of trust. After the launch of the electronic PFTS Suggitt said he believes, “official trading volume will grow, as currently only about 10% of trade is represented in official PFTS statistics.” The rest is traded over the counter.

Although he supports the new status of the PFTS, Mr. Suggitt would like to see more changes that would extend PFTS services for traders. These changes include developing a more efficient business front-end, with real-time electronic trading, an efficient clearing house and enhanced registry system.

Mr. Suggitt said he believes that for many Ukrainian companies which are going public, a local listing like the PFTS will be a better option than a foreign listing. “People concentrating on developing the Ukrainian market will be a lot better off in the end,” he said. He listed low incentives for foreign brokers to trade Ukrainian equities and the risk of liquidity issues for Ukrainian companies trading on AIM as reasons for his opinion.

Peter Bobrinsky, Concorde Capital's new Director of International Equity Sales, also said he believes in the importance of transparency and trust building among investors. He said the Ukrainian stock market should learn from Russia but follow the European model, especially AIM. “The problems with the stock market, and sorting out the stock market are obviously an essential component of Ukraine's integration into the global economy,” said Bobrinsky.

Mr. Bobrinsky said that there is a need to change the corporate culture of Ukrainian companies willing to get listed on Ukrainian or international exchanges. “Ideally for Ukraine and for the image of Ukraine it would be good to have several high-profile companies listed on AIM to get the headlines,” he said. But in his opinion, as the PFTS increases liquidity and transparency, an investor would be more interested in buying Ukrainian shares on the PFTS.

Prior to joining Concorde Capital, Peter Bobrinsky was Vice President of Equity Sales at Alfa Capital Markets in London. He holds an MBA from Oxford.

Concorde Capital is one on the most dynamic Ukrainian investment banks and a top PFTS trader. According to the June PFTS rating, Concorde placed second, outperforming major international brokers. In December 2004, in the company's first month of operation, Concorde held the highest PFTS trading rating.

For additional information contact:

John Suggitt at Concorde Capital

Tel. +380 (44) 206-83-67

Fax +380 (44) 206-83-66

Web: http://www.con-cap.com

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