DECISION OF THE NATIONAL COMMISSION ON SECURITIES AND STOCK MARKET OF UKRAINE

of September 25, 2012 No. 1282

About approval of the Regulations on requirements to person which carries out activities for management of the pension assets concerning observance of internal regulations and assessment procedures and risk management connected with investment of pension assets

According to Item 13 of article 8 of the Law of Ukraine "About state regulation of the security market in Ukraine", Item 1-1 of part two of article 38 of the Law of Ukraine "About non-state pension provision" the National commission on securities and the stock market RESHILA:

1. Approve Regulations on requirements to person which carries out activities for management of the pension assets concerning observance of internal regulations and assessment procedures and risk management connected with investment of pension assets it (is applied).

2. To persons who carry out activities for management of pension assets to bring the activities into accord with requirements of this decision within six months from the date of the introduction it in action.

3. (Yu. Zhuly) to provide to department of external and internal communications publication of this decision according to the legislation of Ukraine.

4. Control over the implementation of this decision to assign to the member of the National commission on securities and the stock market O. Tarasenko.

5. This decision becomes effective from the date of its official publication.

Approved by the Decision of the National commission on securities and the stock market of Ukraine of September 25, 2012 No. 1282

Regulations on requirements to person which carries out activities for management of the pension assets concerning observance of internal regulations and assessment procedures and risk management connected with investment of pension assets

I. General provisions

1. This Provision is developed according to the Laws of Ukraine "About non-state pension provision", "About securities and the stock market", "About state regulation of the security market in Ukraine" and establishes requirements to person who carries out activities for management of the pension assets concerning observance of internal regulations and assessment procedures and risk management connected with investment of pension assets.

2. Action of this Provision extends to person who obtained the license for carrying out professional activity in the stock market - activities for asset management of institution investors (activities for asset management), and carries out activities for management of pension assets.

3. Person who carries out activities for management of pension assets (further - Person) shall follow internal regulations and assessment procedures and risk management, connected with investment of pension assets.

4. Set of the rules and procedures directed to implementation of assessment and risk management which Person shall enter makes risk management system (further - the RMS).

5. The RMS main tasks are:

identification and classification of risks;

quantitative and high-quality estimation of these risks;

implementation of monitoring of risks and forming of system of the corresponding reporting under results of monitoring;

accumulating of statistical data for control of risks.

6. Implementation of risks assessment under management of pension assets shall cover the services and processes connected with functioning of system of provision of pensions and to provide high-quality estimation of the corresponding risks and estimation of quantitative parameters of these risks in case of availability of such opportunity.

IІ. Classification of risks

1. Risks which arise in case of investment of pension assets and can be operated by Person, are conditionally divided into two primary groups: financial risks and operational risks.

2. Financial risks are set of the risks connected directly with activities for asset management of non-state pension funds (further - the pension fund) to which belong, including such subgroups of risks:

2.1. Credit is current or future risk of financial losses of the pension fund which can be caused by insolvency of any legal entity who is agreement party with this pension fund, to satisfy conditions of such agreement, including risk of bad faith of the partner which is signed in insolvency of the partner (debtor) to fulfill the undertaken obligations on any agreement.

2.2. Investment (market) is current or future risk of the financial losses of the pension fund connected with the changes in price, interest rates for securities, or other financial instruments in which pension assets are invested.

2.3. The liquidity risk is current or future risk of financial losses of the pension fund which can result from impossibility of use of pension assets as direct instrument of payment or insolvency of their bystry transfer to cash form without essential loss of the current market value.

With risk management objective of liquidity of pension assets Person shall carry out the analysis and assessment of liquidity of assets of the pension fund, creating such structure of assets which would provide accomplishment of the current obligations of the pension fund to participants and the third parties at the scheduled time and without loss of cost of such assets (or with the minimum losses), and also would meet the requirements of the legislation on non-state pension provision concerning the directions and investment objects of pension assets.

Establishment and implementation of the mechanism of calculation and forming of amount and quality of quick assets of the pension fund is performed taking into account forecast planning of expenses of this fund.

3. Operational risks are risks of possible losses of the pension fund in case of investment of pension assets as a result of the inadequate organization of system of accounting, document flow and internal control, absence or inefficiency of rules and the RMS procedures, adoption of wrong decisions by officials, and also negative impact of external factors.

The main measures concerning minimization of operational risks of Person are:

use of systems of identification of workers and restriction of access for strangers to servers, bases to data, software, means of communication and accounting systems;

creation of system of preserving the main and local databases, application programs, archivings of documents and so forth;

availability of properly organized system of managerial accounting and observance of standards on all transactions according to the established requirements;

availability of relevant provisions in internal documents which will promote professional and responsible behavior of workers of Person.

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