Information on the thesis

Dissertation is devoted to the complex research of the causes, patterns of CII
development,  processes  of  transformation  in  the  conditions  of  global  financial  in-
stability and the development of practical recommendations for the cultivation of CII
in Ukraine, taking into account the world experience.
The  thesis  analyzes  theoretical  basis  of  the  CII  functioning  especially  the
researches  devoted  to  efficient  market  hypothesis  and  influence  of  these  research
results  on  the  transformation  of  practices  and  forms  of  organization  of  the  CII,
especially in the field of index investing. Spreading of index investment strategies
and possible consequences of popularization of such an investment strategy for CII
and  stock  market  is  estimated.  Particular  attention  is  paid  to  the  relationship  of
pension systems and CII. Specific properties of exchange-traded funds comparing to
traditional funds, organization and development in various regions of the world are
comprehensively analyzed.
The differences between synthetic and traditional exchange-traded funds are
studied  and  classified.  Reasons  of  popularity  of  synthetic  scheme  in  Europe
comparing  to  USA  is  explained  by  regulatory  differences.  It  is  also  empirically
proven, using a sample of 35 equity ETFs traded at the Swiss Stock Exchange and
tracking error estimation in four different ways, that both traditional and synthetic
ETFs have significant tracking errors. The findings also proves that, synthetic ETFs
have higher tracking errors than physical, though this is contrary to popular opinion.
Additionally, such factors as expense ratio, number of securities in the benchmark
and type of replication for all estimation methods are estimated in their influence on
tracking  error.  The  results  suggest  that  tracking  errors  are  influenced  by  expense
ratio, number of securities in the benchmark and type of replication. Average daily
trading volume doesn’t influence dependent variables except for one tracking error
estimation  method.  Risks  of  financial  stability  of  massive  spreading  of  synthetic
ETFs  are  classified  and  the  challenges  posed  by  ETFs  development  on  financial
community are revealed.
Thesis analyzes Ukrainian stock market as a functioning environment of CII,
identifies main problems and assesses the current state of CII in the national market,
proposes framework recommendations aimed to improve the stock market in general
and  conditions  for  CII  in  particular.  These  recommendations  are  combined  and
classified  in  such  way:  –  improvement  of  the  institutional  framework  and  macro-
economic situation: improvement of the protection of property rights, corporatization
of  public  enterprises,  and  further  privatization,  improvement  of  the  financial  edu-
cation  of  citizens,  fiscal  stabilization,  inflation  targeting  and  exchange  rate  libera-
lization;  –  measures to  improve the  stock  market and  CII  in particular: expanding
supply of financial assets by double rotation, enlargement offers of financial assets
through  access  to  foreign  securities,  legislative  introduction  of  the  accumulative
pension  system;  –  areas  of  work  for  the  private  sector:  privatization  lobbying,
participation in privatization, improvement of corporate governance; participation in
the campaigns; involvement in double rotation; facilitating access to the stock market
for investors.
Keywords: collective investment institutions, CII, investment funds, exchan-
ge-traded funds, ETFs, stock market, financial stability risks.