JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 BAKU STOCK EXCHANGE Amin Muradov Chairman 2012 has been the second highly performing year in terms of trading volumes in the history of the Baku Stock Exchange since its inception in 2000. 2012 has been the second highly performing year in terms of trading volumes in the history of the Baku Stock Exchange since its inception in 2000. After a very successful year in 2011, the BSE was able to achieve another 7% increase in total volume of the transactions in 2012. We have been continuously in touch with the local business about the opportunities and benefits of the capital market and developing efficient funding platform for their investments. The year of 2012 is important also in terms of the commencement of the Capital Market Modernization Project funded by the Government of Azerbaijan, World Bank and State Secretariat for Economic Affairs of Switzerland (SECO) and managed by the State Committee for Securities of Azerbaijan Republic. The main objective of this 4-year project is to increase the use of equity and corporate debt as financing and/or investment instruments through the adoption of an effective capital markets regulatory framework and infrastructure. As one of the beneficiaries of the Project, we are working on modernizing our trading platform, increase the number of listed companies and strengthen the institutional capacity of the BSE. Concluding the all above, I have to emphasize that 2013 will be the year of active sales efforts by the stock exchange. We will implementing Listing Advisory Program aimed at increasing the demand for investment capital and/or supply of investment opportunities and securities on the Baku Stock Exchange. The goal is to increase significantly the trading volumes with the corporate securities within the next 3 years. HISTORY AND DEVELOPMENT After gaining it’s independence, and embedding property and ownership rights in the overall legal system, Azerbaijan made it first step toward developing the capital markets by adopting the Law on “Securities market and stock exchanges” on 24 November 1992. On January 13 of 1995 the Law on “Investment activity” became effective. On September 29 of 1995 the government adopted the first State Privatization Program for the next three years which paved the way for the establishment of the necessary capital market institutions. As a result, by the end of 1998 28 thousand small organizations and more than 800 medium and large enterprises were successfully privatized. The need for proper regulation of the capital markets paved the way for the establishment of the State Committee for Securities (SCS) under auspices of the President of Republic of Azerbaijan on December 30, 1998. The vital part of the capital markets development was establishment of the Baku Stock Exchange (BSE) with the help of local and international financial organizations most of which became the shareholders of the company. The first securities to trade on the organized stock exchange were treasury bills which were issued by the Ministry of Finance. The first placement of the stocks and corporate bonds in the organized stock exchange was in 2003 and 2004 respectively. Since 2004 trading in treasury bills has grown 9.7 times, trading in central bank notes has grown 29.2 times, trading in corporate bonds has grown 22.4 times, and trading in stocks has grown by 23.6 times at the end of 2012. Currently Closed Joint Stock Company “Baku Stock Exchange” has 19 shareholders. Throughout the period since inception, the BSE has managed to establish a well-organized securities trading platform effectively linked with other market participants. PAGE 26
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 BAKU STOCK EXCHANGE Milestones in BSE’s history • The Initiative Group for the establishment of the stock exchange gathered - December 25th 1999 • The first BSE’s Shareholders Assembly - February 15th 2000 • State Committee for Securities granted an exchange license to the BSE - July 21st 2000 • The first placement of the short-term government bonds on the BSE - September 1st 2000 • Election of the BSE to the Federation of Eurasian Stock Exchanges - November 2nd 2001 • Introduction of first repo to the market - November 22nd 2001 • The first transaction in corporate bonds on the exchange - January 26th 2004 • The first equity trade conducted via the exchange - April 15th 2004 • The placement of the Central Bank’s Notes for the first time on the BSE - September 14th 2004 • Introduction of the interbank repo instrument to the market - May 24th 2006 • The placement of the bonds of Azerbaijan Mortgage Fund on the BSE - June 16th 2009 FUTURE OUTLOOK The main challenges for the BSE in 2013 are: • to actively implement its Listing Advisory Program aimed at promotion of the corporate sector in the securities market; • to continue modernization of its IT and trading capacities; • influenced by market trends to further optimize the organizational structure of the exchange. Key Information Contacts National Bank www.cbar.az State Committee for Securities www.scs.gov.az Ministry of Finance www.maliyye.gov.az National Depository Center www.mdm.az Ministry of Economic Development www.economy.gov.az CONTACT INFORMATION Contact Name Mr. Kamran Aliyev E-mail k.aliyev@bse.az Website www.bse.az PAGE 27
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JUNE 2013 - FEAS

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