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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010BAKU STOCK EXCHANGEKhayal AbdinovChairmanThe efforts described above all are beingdone with the belief into the recovery soonto come and positioning ourselves tobenefit from it.Till the middle of 2008 the world economy wasin a growing mode the effects of which werealso felt at Baku Stock Exchange, by that timeour turnover grew multiple times. But startingwith 2009 we sharply felt the effects of theglobal financial crisis. If in the past the growthwas providing substantial quantity of supply,with the crisis both buy and sell sides loweredtheir appetites, and new risks becameapparent. Reaction of the exchange was toreconsider its strategy, and now we morefocus on the quality of the issuers andinvestors than quantity, and reevaluating therisks of the market.The unveiling events around the world forcedus to review our strategy and risks. We startedby improving the listing rules; tightening on therequirements on corporate governance andproviding more safety mechanisms for minorityshareholders. Also in 2009 with the help ofmajor market participants we started theprocess of reshaping of the local capitalmarket architecture. We will continue this effortthis year and possible in 2011. As a part of thesame effort, the BSE will further strengthen itscorporate structure, continue to modernize IT,and of course will be developing newproducts. The globalization does not pass usby, and as a result, we are investigating theopportunities of cross and dual listing with theexchanges.The efforts described above all are being donewith the belief into the recovery soon to comeand positioning ourselves to benefit from it.Taking the opportunity, I would like to thank themanagement and members of FEAS for thecontinuous support to our exchange andbeing responsive to the various queriescoming from our side.HISTORY AND DEVELOPMENTThe establishment of a stock exchange was anecessary step in the creation of a modernstock market in Azerbaijan. Due to itsgeopolitical location Azerbaijan is an importantregional center of business activity. In thisrespect the availability of a stable anddeveloped securities market plays a substantialrole in the raising of investors' confidence in theeconomy of Azerbaijan and the region.The shareholders of the BSE are leading Azeriand foreign banks and investment companies.The supreme decision-making authority of theBaku Stock Exchange is the GeneralShareholders Meeting.The trading floor of the BSE is equipped with30 computerized trading stations, 18 of whichbelong to the shareholders of the Exchange.The other 12 are available for new members.Legal bodies (banks, investment funds, brokerfirms) involved in professional activities in thesecurities market with special license from theState Committee for Securities under theauspices of the President of the AzerbaijanRepublic can become members of the BSE.FUTURE OUTLOOKThe BSE plans for 2010:• to strengthen the internal corporate structure;• to modernize its IT sphere;• to improve internal risk managementmechanisms• to continue promotion of listing.PAGE 56