2018 was rich in legislative events related to the financial sector and, in my opinion, the main ones were adoption of the Laws of Ukraine "On Currency and Foreign Exchange Transactions", "On Amendments to Certain Legal Acts of Ukraine on Resumption of Lending" and the Bankruptcy Procedure Code of Ukraine.
I will not focus on these initiatives, since analysis of each of them requires a separate article. I will only note that the banking community was actively engaged in the development of these laws, and bank lawyers, together with the Independent Association of the Banks of Ukraine, carried out massive work in the process of their preparation, so these laws were adopted and signed by President Poroshenko largely due to their efforts. I want to say a special thank you to colleagues for that!
If we are talking about the general situation in the financial sector, there are few reasons for joy in the eyes of a lawyer. Ukrainian financial legislation provides a very poor set of financial and legal tools compared to those in Western countries and even Eastern European countries. If such tools as securitization, syndicated lending and derivatives are common ones abroad, in our country they are still exotica with clouded prospects.
Certainly, it can be argued that there is also no capital market in Ukraine either and that, subsequently, there is no demand for such tools. It is hard to argue with that. However, on the other hand, it is hoped that in the immediate future the financial and economic situation in the country will improve, as will the demand for these tools.
It is interesting that we have lately received requests for development of fundraising schemes for large projects in real estate from a wide range of investors, so-called crowdfunding. However, as distinct from startups which actively use online platforms of all kinds and Initial Coin Offerings, customers in such projects want to provide maximum security for investors and create very comfortable conditions for entering and withdrawing from a project, as well as for receipt of profit from putting into practice. These requests are supported by the desire of developers to make the project as attractive as possible for investors and show their readiness to be open and reliable partners. Unfortunately, one should reach a certain compromise in the development of these schemes, since legislation does not enable all requests of customers to be satisfied simultaneously. The scheme is not really attractive either in terms of taxation or easy fundraising, or in terms of protecting the rights of investors and management efficiency. However, taking into account modern trends, the demand for such projects will increase, thereby requiring further legislative changes.
Another one trend is the rise in requests at the interface of IT and financial regulation. Moreover, these requests come from both domestic and foreign banks, marketplaces, cryptocurrency exchanges and financial intermediaries. This is a very promising area which allows the broadening of outlook and development both in the area of financial law and IT. For me personally, my work with colleagues in the IT industry always brings me great pleasure and prevents me from becoming a "dinosaur" in the age of global digitization.
We are constantly looking for opportunities to develop and expand the range of services, and for communication with Western colleagues working on developed markets whom we want to cooperate with. It’s very useful for our purpose. In recent conversations with European colleagues we raised the issue of the ratio of transactional and regulatory work in their practice. To be honest, I was surprised to learn that lawyers spend at least half of their time on regulatory work, and it is paid at higher rates than transactional work. This work requires a very high level of expertise and understanding of a client's work and, therefore, senior lawyers and partners are usually involved in such projects. The issue of fees is usually secondary due to the high value of such services. However, this was not always the case. This trend appeared about ten years ago and gained momentum from then onwards. As a matter of course, this situation is largely connected with the development of common European legislation, in particular, banking regulations. I believe we will also have more of this kind of work in the course of transformations in the Ukrainian financial sector and harmonization of domestic legislation with EU regulations.