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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010NASDAQ OMX ARMENIA2009 was a challenging but still quitesuccessful year for NASDAQ OMX Armenia.Armen MelikyanChief Executive OfficerBringing difficult times to most businesses acrossthe world, 2009 was a challenging but still quitesuccessful year for NASDAQ OMX Armenia. Whiletrading in equities remained low throughout theyear, trading in other exchange markets grewsignificantly. Thus, corporate bonds, the bestperforming market of the year, was up 4.7 timesto US$ 27.6 million. Government bonds tradingwas also active demonstrating growth in valuetraded of 43% and in the number of trades of135%, and the repurchase agreements (repo)market showed an activity exceeding US$ 13million during its first year after launch inDecember 2008. Currency trading remainedtraditionally high at nearly US$ 1.1 billion.Even though fears of uncertainty and reducedinvestor interest did not fade globally throughoutthe year, 2009 nevertheless saw the first ever IPOin Armenia, carried out by Artsakh HydroPowerPlant, which is now listed on NASDAQ OMXArmenia. In addition, during the year theexchange listed four new issues of corporatebonds and expects more to come in 2010. At theyear-end exchange market capitalization stood atthe equivalent of around US$ 140 milliondeclining by only 1.7% since the end of 2008 – arelatively good performance considering thelingering effects of the global financial crisis.Positive were also the developments on NASDAQOMX Armenia membership side: nine newmembers were admitted during the year bringingthe total number of members to 27.In 2009, NASDAQ OMX Armenia was also activein organizing many different kinds of events,including seminars, trainings, and study tours.These were targeted to various stakeholdergroups – investment companies and banks, listedcompanies, journalists – and aimed at sharinginternational expertise and implementing state-ofthe-artstandards of respective activities inArmenia. General public and especially youngeraudiences were also in focus, with initiativespromoting awareness about capital markets andtheir importance in building a strong nationaleconomy.Becoming the full owner of the Central Depositoryof Armenia in June 2009, NASDAQ OMX Armeniakept concentrating on improving the depositoryand clearing services – primarily throughcontinued automation and optimization ofbusiness processes. The Depository also workedclosely with the Government of Armenia to designand prepare the implementation in 2011 of themandatory fully funded pension system, acooperation that will continue this year. Thelaunch of this new second pillar pension systemis expected to boost the activity in the capitalmarket promoting the issue of new financialinstruments and bringing in institutional investors.In 2010, as the recovery gets underway bothglobally and locally, NASDAQ OMX Armenia willcontinue to be proactive in its relations with thecapital market stakeholders. One area of focuswill be to introduce new technology for both theexchange and the central depository business, toput in place the foundation for continued growth.There will also be continuous efforts to increaseawareness of the capital market in Armenia andsupport market participants in meeting theawakening demand for quality financialintermediation and capital market services.Through such processes NASDAQ OMX Armeniarealizes its primary objective – to maintain a fairand effective marketplace where good companiescan raise capital and where investors can makewell-informed decisions while being properlyprotected. Our commitment for 2010 is tocontinuously and consistently strive to achievethis objective.HISTORY AND DEVELOPMENTNASDAQ OMX Armenia (formerly ArmenianStock Exchange, Armex, renamed on 27January 2009) is the only stock exchangecurrently operating in Armenia. Armex was thesuccessor of the Association of SecuritiesMarket Participants, which was established inArmenia in 1997, and was initially registeredthe Securities Commission of the RA on 13February 2001, as a self-regulatoryorganization. In November 2007, according tothe newly adopted “Law on Securities Market”,Armex was reorganized into an open jointstock company.Until 1 January 2006, Securities Commission ofRA was the competent state authority toregulate the activities of capital marketincluding the stock exchange in Armenia.However, with the enactment of a new lawintroducing unified regulatory authority for thefinancial market, the regulatory and supervisorypowers of the Commission were transferred tothe CBA.Since 15 November 2005, foreign currencytrading was introduced on Armex, whichproved to be in demand: volumes of FX tradingto date greatly exceed those of otherinstruments. On 14 December 2005, the firstpublicly traded corporate bonds were listed atArmex, and as of December 2008, 13 bondissues were traded on the stock exchange –most of them having market makers. In early2008 government bonds trading was launched,as well as status of market-maker forgovernment bonds was introduced. By the endof 2008, Armex introduced new market forREPO (repurchase agreements), as well as amechanism for manual trades.NASDAQ OMX Armenia is currently part of theNASDAQ OMX Group. In November 2007members of CDA and Armex transferred theirshares to the CBA, and OMX Group acquired100% thereof. After in late February 2008,NASDAQ completed its combination with OMX,NASDAQ OMX Armenia became an entity fullyowned by NASDAQ OMX. On 5 June 2009,NASDAQ OMX Armenia became the owner ofthe 100% of the shares of the CentralDepository of Armenia.FUTURE OUTLOOKIn 2010, NASDAQ OMX Armenia plans to:• continue improving the technicalinfrastructure of the stock exchange and thecentral depository;• continue expanding the range of servicesprovided to listed companies and tradingmembers;• carry on with efforts to promote initial publicofferings of equities in the Armenian market;• launch T+3 settlement mechanism, whichwill enable exchange trading without predepositionof securities and cash;• establish a Guarantee Fund to increaseinvestor protection;• organize study tours for investmentcompanies and banks to facilitate introductionof international best practices in Armenia;• conduct study tours and seminars forjournalists covering financial market;• continue efforts towards increasing publicawareness of the Armenian securities market.PAGE 132