Official statement regarding the dissemination of inaccurate information about the organization oftimber trade

The exchange trading reform introduced in Ukraine on July 1, 2021, has caused significant resistance from those interested in preserving the transparent mechanisms of the markets. In particular, this concerns the functioning of the market for untreated timber, an integral part of which were corruption schemes and the predominance of private interests over the interests of the state.

The shadow timber market ranged from 40 to 50%, which led to a shortfall in the state budget of billions of UAH. The scale of the loss can be estimated by comparing the income of state forestry before the introduction of transparent exchange trading devices and after the launch of the reform.

So, according to the State Forestry Agency, in the period July-November 2021 (after the introduction of the reform), the income of state-owned producers of untreated timber increased by UAH 3.6 billion compared to the same period last year (before the introduction of the reform) and amount to UAH 8.3 billion.

The introduction of equal conditions for all market participants made it possible to open access to the resource for new companies, ensured an increase in competition and, as a result, the recovery and development of the market, which positively affects both the results of the work of state forestry and opens up new prospects for the development of the woodworking industry and related industries.

At the same time, any reform that eliminates opportunities for the development of corruption schemes and the enrichment of third parties at the expense of the state meets significant resistance from the former beneficiaries of the opaque work of the market.

Considering that recently a significant number of publications have appeared in the media on a new model of selling untreated timber through exchange trading, Ukrainian Energy Exchange LLC (hereinafter referred to as UEEX) publishes an official statement, which is as follows.

1. The articles that are distributed in the media and call the new transparent model for the sale of untreated timber an attempt to monopolize the market, UEEX regards as ordered and distributed in order to discredit the exchange trade. The ultimate goal of such actions is the return of opportunities for the sale of timber by non-transparent corruption methods in the interests of individual criminal groups and against the economic and environmental interests of the state.
2. The reform of the organized commodity market, implemented in July this year, was aimed, among other things, at reducing the number of exchanges in excess of 600 organizations. The overwhelming majority of them were created under separate corruption agreements and in the interests of individual market participants, and had nothing to do with the activities of organized exchange trading in the understanding of European regulation. Accordingly, the result of the reform of the Ukrainian exchange market should be the activity of only those entities that meet the regulatory standards at the level that apply to the activities of the stock market and meet the European standards of capital markets and organized commodity markets.
   The activities of the licensed organized commodity market are carried out under the supervision and regulation of the National Securities and Stock Market Commission with appropriate reporting by licensees. The ultimate goal of the reform is to ensure centralized clearing and the implementation of standardized exchange agreements by licensed exchanges, which will be achieved within the framework of projects initiated by the National Securities and Stock Market Commission.
3. The reform of the untreated timber market is aimed at centralizing trade at trade organizers, the list of which is known, and the order of work is controlled by the state. Exactly the exchanges ensure the sale of timber at market prices, not allowing the sale of state resources at low prices in favor of individual private structures and with limited access for other buyers, which took place according to the previous model.
   Obviously, companies and organizers of the auctions, which have lost “worked out schemes” of making money through corruption and theft of a national strategic resource, are resisting the reform, which runs counter to their interests. In particular, this is manifested in the spread of misinformation about the activities of the UEEX and exchanges platforms in general. We regard such statements as defamation, which may entail image losses for the company. Accordingly, we reserve the right to apply legal measures to protect the reputation provided for by the current legislation of Ukraine.
4. Regarding reproaches in the use of UEEX software of the state enterprise Forestry Innovation and Analytical Center and the involvement of agents in the work, we inform you that UEEX has the technical, organizational and technological means to independently organize trade.
   The partner mechanism was deliberately chosen by UEEX, since UEEX became the first licensed exchange after the launch of the exchange market reform. At the same time, there were a number of conscientious trade organizers for untreated timber, ready to comply with the new rules for the sale of timber. And precisely in order to prevent monopolization of the market, UEEX was offered partnership interaction for other organizers of the auction. This system is similar to the model of cooperation between Prozoro and accredited platforms.
   At the same time, we constantly monitor the highest standards of agent work and stop working with companies that do not meet the requirements. So, two unscrupulous companies have already been disconnected from the UEEX partner program.
5. UEEX once again notes that any interested company can obtain a license to carry out professional activities on organized commodity markets, which agrees to work in accordance with the requirements of the current legislation and under state supervision. The National Securities and Stock Market Commission has officially licensed 3 exchanges that meet the technical and legal requirements for organizing exchange trading.

Note that the Ukrainian Energy Exchange works diligently and in good faith, in full compliance with the legislation of Ukraine. Our work is designed to provide benefits and quality service for market participants and the development of the state. Only 3 sq. In 2021, UEEX paid UAH 29 million of taxes to the state budget, and all financial statements of the company were audited by an international auditing company.