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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010MONGOLIAN STOCK EXCHANGEGovernment of Mongolia announced “2010as a year of business environmentrenovation”.Rentson SodkhuuChairman and CEODear readers I would like to express my warmgreetings and best wishes to all of you on the19th anniversary of the securities market andMongolian Stock Exchange in the Year.The securities market and the securities industry,which were new phenomenon and firstintroduced together with democratic transition inthe country, thus has demonstrated successfulperformance during the recent years andcontinues its way ahead to meet the globalstandards.2008-2009 year was the year, where worldfinancial crisis was deepened and hit Mongolianeconomy hard. Consequences of the crisis arealready being felt in the society. It expects tocontinue in 2010. Even though we were greetingthe 2009 with difficulty of crises, we welcomed2010 with positive increases in major indicatorsof our capital market and some affirmative newsabout overcoming crisis.TOP-20 index that was reaching 11000 pointdramatically fell down till 4200 point on March 272008. At present it tends to increase and marketcapitalization of MSE as of 03.15.2010 stood at823.3 billion tugriks or 580 million US$.In 2009, total of 89.9 mln stocks of 131 JointStock Companies (JSC) were traded through255 trading sessions on MSE with totaltransactions worth of 23.2 bln MNT. In 2009, 11.2percent of total trading value was an IPO tradingwhereas 88.8 percent was a secondary markettrading. As of December 2009 the total marketcapitalization of listed companies reached 620.7bln MNT indicating an increase of 20.3% or104.8 bln MNT compared to the same period ofprevious year.A year of 2010 has become a starting point forimplementing objectives to develop Mongoliancapital market as a classical way. By the end of2009, during the “Capital market-key todevelopment” seminar, Prime Minister ofMongolia criticized that foreign joint stockcompanies are raising capitals by usingMongolian deposits as collaterals and why we-Mongolians cannot raise capital like them andhe obliged relevant organizations to pay attentionon this issues and to take an immediate action.I think this action is a start of further developmentof Mongolian capital market.Mongolian capital market was first established,since then contribution and efforts of the nationalprocessionals, who dedicated themselves to thedevelopment of the capital market were notignored and do not become useless. As a resultof our endless efforts, we have seen thatGovernment of Mongolia, which neglected thedevelopment of capital market over 10 years,had begun to know the importance of the capitalmarket and pay attention on it. This is ourachievement and I would like to congratulate andexpress my sincere gratitude to all professionalsand participants of Mongolian capital market.In order to develop Mongolian capital marketand bring it at the international standard, issue ofinfrastructure development has becomesubstantial. We have to do it. Developinginfrastructure of Mongolian capital market meansa combination of the high quality technologies,which connects all participants in capital marketsuch as issuers, buyers and professionalorganizations, and trained staffs, who operatethose technologies.Government of Mongolia announced “2010 as ayear of business environment renovation” andthis year will become the first year where nationallargest shareholding companies will beestablished, stock of those companies will betraded at domestic and international capitalmarkets and financial new sources will becreated and utilized in Mongolia.Let’s strive together for achieving this purpose.We-Mongolian national professionals of capitalmarket will do their best to boost Mongolianeconomy.May Mongolia become a prosperous anddeveloped nation!HISTORY AND DEVELOPMENTMongolian Stock Exchange was firstestablished by the Government Decree of 18thJanuary 1991. MSE is a state-owned JSC thatholds all rights to engage in any legal businessactivities and is a sole provider of the securitiestrade related services in Mongolia.The main duties and functions of MSE are: tolist securities of joint stock companies, tofacilitate securities trading by ensuring technicaland software/hardware safety and reliability, toensure fair and transparent trading as well asefficient dissemination of securities tradinginformation to the public and to protect generalrights and interests of investors.Historical timeline1991.01.18 MSE was established by theGovernment Decree No.22.1992.02.07 Primary market trading started.1994.09.26 Securities law enacted.1994.11.14 Mongolian Securities & ExchangeCommission was established1995.08.28 Secondary market trading started.1996.10.25 Government bond trading firststarted.1998.10.01 MSE joined Federation of Euro-Asian Stock Exchanges (FEAS).2001.06.08 Corporate bond trading started.2002.12.03 MoU on cooperation was signedwith Taiwan Stock Exchange2003.03.26 Mongolian Stock Exchangebecame a Joint Stock Company2004.10.29 First time, a special license ofUnderwriting Service was issued to SecuritiesCompany.2005.01.02 Financial Regulatory Commissionof Mongolia was established.2005.03.30 MSE information center wasestablished.2005.09.12 MoU on cooperation was signedwith Gre Tai Securities Market.2005.10.31 MSE Training Center wasestablished.2006.01.18 Celebrated 15th anniversary ofMSE.2006.06.15 MoU on cooperation was signedwith with Korea Exchange.2006.07.19 MoU on cooperation was signedwith Istanbul Stock Exchange.2008.03.26 Market capitalization has reachedits peak of 893.4 bln MNT.2008.04.10 MSE joined the Asia Ocenian StockExchanges Federation (AOSEF).2008.04.10 The MoU was signed withSingapore Exchange.2008.05.15 MoU was signed with Tokyo StockExchange.2009.03.17 MoU was signed with MoscowInterbank Currency Exchange.PAGE 120