JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 BAHRAIN BOURSE Yusif Humood Chairman Bahrain Bourse continued the development of its trading mechanisms in a way that will attract different segments of investors and clients, and increase their profitability. Despite the signs of relative recovery from the global financial crisis that had an impact on different countries worldwide in 2008 along with the increase in oil prices during the second half of 2009, the response of the market indices in the region to this recovery varied among markets. The reasons for such variation are partly psychological reasons, and the other part goes back to the distinctive characteristics of each market that differentiates one market from another. The performance of Bahrain All Share Index this year and the volume and value of shares traded reflects the psychological state that prevailed among investors at Bahrain Bourse resulting from the consequences of the crisis in spite of the good financial results reported by the majority of companies listed at the Exchange. This has led to a 19.17% drop in the index compared to its closing at the end of 2008. In line with the development strategy approved by the Board of Directors of Bahrain Bourse five years ago, one of the major decisions in the history of the capital markets’ sector was made with the issuance of Resolution No. (57) of 2009 in respect of corporatizing the Exchange and transforming it to a shareholding company, paving the way to major legal, administrative, and technical modifications that would change how the Exchange operates. Bahrain Bourse has completed the major part of its relocation project to Bahrain Financial Harbour in 2009. The new premises have been equipped with advanced technology and systems in a way that will enhance Bahrain Bourse’s competitiveness to provide more services. This will also enable Bahrain Bourse to provide the technical infrastructure that would encourage companies to benefit from these facilities. Bahrain Bourse continued the development of its trading mechanisms in a way that will attract different segments of investors and clients, and increase their profitability when trading in the shares of listed companies at the Exchange. In addition, the bourse widened its scope of cooperation with leading regional and international financial institutions to be able to provide its custodian services at the Exchange with the aim of enabling local and foreign institutional clients to invest at Bahrain Bourse and benefit from the opportunities available. Looking into Bahrain Bourse’s financial performance in 2009, the global crisis had an effect on the financial status of the Exchange where the operating surplus activate revenue reported a deficit of BD 127,180 thousand compared to the surplus in 2008. The accumulated surplus also decreased slightly from BD 3,950,112 to BD 3,822,932, recording a drop of 3.21%. On behalf of the members of Bahrain Bourse’s Board of Directors and staff, I would like to express my thanks and gratitude to His Majesty King Hamad bin Isa bin Salman Al Khalifa, King of the Kingdom of Bahrain and His Royal Highness Prince Khalifa bin Salman Al Khalifa, the Prime Minister, and His Royal Highness Prince Salman bin Hamad Al Khalifa, the Crown Prince and Deputy Supreme Commander for their guidance and continuous support of Bahrain Bourse. I would also like to extend my thanks to the Central Bank of Bahrain’s Chairman and members of the Board of Directors for their support of Bahrain Bourse. I would also like to thank the members of the Board of Directors of Bahrain Bourse for their opinions and contributions to the development of the bourse in the previous years. I would also like to thank Bahrain Bourse’s management and staff for their hard work during the year, hoping that such efforts will continue to further develop the Exchange. PAGE 22
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 BAHRAIN BOURSE HISTORY AND DEVELOPMENT Bahrain Bourse (BHB) was established as a shareholding company according to Law No. 60 for the year 2010 to replace Bahrain Stock Exchange (BSE) that was established in 1987. The first Bahraini Public Shareholding Company was established in 1957. Since then, more local public shareholding companies began to operate, reaching their peak in the beginning of the 1980’s. During this period, shares of public shareholding companies were being actively traded in a non-official market called “Al Jowhara Market”. Such market soon collapsed along with the collapse of the Souk Al-Manakh stock market crash in Kuwait at the beginning of the 80’s of the last century. Following the crash, the Bahraini Government in cooperation with the International Finance Corporation (IFC) prepared a feasibility study to establish an official stock market in Bahrain. As a result of the recommendation of the study, the Bahraini Government established Bahrain Stock Exchange in 1987 according to Amiri Decree No. 4. The Exchange officially commenced operations in June 1989 with 29 Bahraini shareholding companies listed. The only instruments traded at that time were common shares. Since the bourse’s establishment in 1989 (formerly Bahrain Stock Exchange), trading was conducted manually through a system called “Auctional Trading” System. Using this system, the broker had to write the bid and offer orders that they receive from the investor on the trading boards at the trading floor. The transaction takes place when the bid and offer prices match. In 1999, BHB implemented the Automated Trading System (ATS) to carry out all the bourse’s transactions electronically, replacing the old manual system. In 2002, the legislative and regulatory authority and supervision of BHB was transferred from the Ministry of Commerce to the Central Bank of Bahrain (CBB) in which CBB regulates and supervises all the bourse’s activities. With the development of the bourse, government institutions and companies started issuing several investment instruments taking advantage of the legislative and technical infrastructure established by the bourse. Since then, the bourse witnessed the listing and registration of preferred shares, bonds, sukuk, and mutual funds, making it the first bourse to list such instruments in the region. In 2010, Bahrain Bourse moved to its new premises at Bahrain Financial Harbour after preparing the new premises with the latest technological equipment in order to support the bourse’s efforts to provide a variety of advanced services that satisfy issuers, brokers and investors. FUTURE OUTLOOK In the year 2010, Bahrain Bourse will continue its efforts to attract more local, regional, and international mutual funds. The bourse will continue to attract more listed companies, both local and international and will also seek more cooperation with stock exchanges worldwide, with the aim of exchanging information and expertise. In addition, Bahrain Bourse will pursue strategic partnerships in many different areas that we hope to add value to all parties involved. Key Information Contacts Central Bank of Bahrain www.cbb.gov.bh/cmsrule/bmaindex.jsp Ministry of Finance www.mofne.gov.bh/English/eindex.asp Bahrain Government www.bahrain.gov.bh Economic Development Board www.bahrainedb.com CONTACT INFORMATION Contact Name Mr. Ali Mansoor E-mail info@bahrainstock.com Website www.bahrainstock.com PAGE 23
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JUNE 2013 - FEAS

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