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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007
BAKU STOCK EXCHANGE
In 2006, trade volumes have grown on all
instruments on the BSE compared to the
previous year.
Khayal Abdinov
Chairman
The end of 2006 was marked by several
important events in the history of the Baku
Stock Exchange (BSE) as well as the
financial markets of Azerbaijan on the whole.
Particularly, since May of 2006 interbank
repo transactions have been carried out on
the BSE; up to that point, repo transactions
were conducted on the scheme “NBA-bank”
and “bank-NBA” (NBA – National Bank of
Azerbaijan). Regarding this instrument it
should also be noted that since July of 2006
interbank repo operations have been
conducted with t-bills issued by the Ministry
of Finance of Azerbaijan Republic.
In 2006, trade volumes have grown on all
instruments on the BSE compared to the
previous year. For example, while in 2006 the
total turnover on all instruments on the BSE
came to US$ 1.3 billion. The 2005 analogous
indicator was 2.56 times less than the 2006
figure–US$ 0.49 billion. When considering
the total volume on each instrument traded
on the BSE, we have the following picture: in
2006 t-bills US$ 102.1 million, notes
US$ 784.5 million, corporate bonds
US$ 36.2 million, stocks US$ 78.7 million; in
2005 t-bills US$ 63.8 million, notes
US$ 205.9 mililon, corporate bonds
US$ 2.5 million, stocks US$ 43.3 million.
All aforementioned facts show that the Azeri
financial market is developing and the key
importance of the Baku Stock Exchange in
this development is growing from year to
year.
HISTORY AND DEVELOPMENT
The establishment of a stock exchange was
a necessary step in the creation of a
modern stock market in Azerbaijan. Due to
its geopolitical location Azerbaijan is an
important regional center of business
activity. In this respect the availability of a
stable and developed securities market
plays a substantial role in the raising of
investors' confidence in the economy of
Azerbaijan and the region.
The shareholders of the BSE are leading
Azeri and foreign banks and investment
companies. The share of one shareholder in
the capital of the BSE is equal to
US$ 61,250. The supreme decision-making
authority of the BSE is the General
Shareholders Meeting.
The trading floor of the BSE is equipped with
30 computerized trading stations, 18 of
which belong to the shareholders of the
Exchange. The other 12 are available for
new members.
Legal bodies (banks, investment funds,
broker firms) involved in professional
activities in the securities market with special
license from the State Committee for
Securities under the auspices of the
President of the Azerbaijan Republic can
become members of the BSE.
FUTURE OUTLOOK
In 2007, the BSE plans to apply many
innovations to its trading activity. Next year a
new trading-settlement complex is expected
to be applied. Currently the BSE is
conducting negotiations with foreign
companies specializing in this sphere.
The Azeri securities market generally
becomes more and more attractive, and
therefore in 2007 it is envisaged that issuers
from the non-financial sector will enter the
market.
Another important event for the Azeri
government securities market is the
preparation of the program for the
placement of middle- and long-term
government bonds. This program is
currently being discussed with the
government. The expected parameters of
these bonds will be: a turnover period 1-5
years, an issue volume–US$ 100 million, the
type of bonds will be coupon bonds,
discount bonds, deep discount bonds.
Next year transaction volumes on NBA’s
notes and Ministry of Finance’s t-bills are
forecasted to grow. Aiming to increase
liquidity of the government securities market,
the BSE is working on the mechanisms of
partially and completely unsecured
transactions, marginal trading and deferred
settlements.
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