The use of derivative (forward) financial instruments is regulated by the legislation of Ukraine and serves as an effective mechanism for managing risks associated with price fluctuations, exchange rates, and other economic factors. The application of such instruments enables business entities to minimize price risks or transfer them to another party. One of the key mechanisms is hedging, the essence of which lies in conducting transactions aimed at protecting against adverse changes in the value of the underlying asset.
In accordance with the legislation of Ukraine, in particular the Law of Ukraine “On Capital Markets and Organized Commodity Markets” and the regulatory acts of the National Securities and Stock Market Commission, business entities are entitled to use derivative (forward) contracts as one of the instruments for investing in construction and the realization of property rights. The underlying asset of such contracts may consist of property rights to real estate objects.
By their legal nature, a derivative contract in such legal relations is a forward contract, which may provide for both the obligation to transfer the underlying asset and the possibility of substituting such obligation with cash settlements at the discretion of the parties.
The practical implementation of the mechanism for the transfer of property rights to an apartment in a newly built residential complex is carried out through a sequence of interrelated transactions, in particular: the conclusion of a master agreement between the developer and an investment firm; the conclusion of a derivative contract between the developer (issuer/seller) and an asset management company; the conclusion of an agency agreement with an individual; the conclusion of a financial instrument sale and purchase agreement; the execution of relevant settlements; as well as the conclusion of a property rights sale and purchase agreement followed by payment.
An important advantage of using forward instruments in such legal relations is the fixation of the value of the investment object. Throughout the entire period of implementation of the relevant mechanism, the price of the property rights (apartment) remains unchanged, which ensures predictability of conditions for the investor and minimizes risks associated with changes in market value.
Thus, the use of derivative (forward) contracts in the field of construction is a lawful and effective instrument of structured investment that combines legal certainty, protection of the parties’ interests, and minimization of financial risks.
