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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2005
BAKU INTERBANK CURRENCY EXCHANGE
Farhad Amirbayov
General Manager
During the past year Baku Interbank
Currency Exchange (BBVB) stopped using
”on floor” auctions because of changed
conditions in the market. Further, after the
installation of new software allowing BBVB to
offer an electronic system for trading to all
banks, we were then able to not only give the
results of bargains, but also to support a
screen interface of BEST (BBVB Electronic
Trading System) in our native language.
When speaking in reference to the
development of the currency market in
HISTORY AND DEVELOPMENT
The Central Bank of Azerbaijan and the four
largest state banks of the Azerbaijan
Republic founded the Baku Interbank
Currency Exchange (Baki Banklarasi Valyuta
Birjasi - BBVB) on 26 July 1993. This year
marks a decade since the beginning of
activity in the financial market. Ever since the
onset of the activities of this central financial
institution, the BBVB has become an
innovative symbol of economic reforms for
the business public of Azerbaijan. Using
advanced information technology and
experiencing success in the creation of
universal trading platforms, the BBVB, by
volume of trade and number of financial
tools, has become the biggest exchange in
the Caucasian region.
The purposes of the BBVB are to:
• set up regular exchange trading to carry
out currency operations;
• determine the market exchange rate of
the Azerbaijan currency (manat) to foreign
currencies;
• create a mechanism for inter-state
settlements;
• maintain management and information
services for currency operations;
• settle transactions made at the BBVB
both in national and foreign currencies;
• organize and carry out exchange trading
and auctions with interbank credits; and
• conduct exchange trading with futures.
Main historical dates
• 18 October 1991: Declaration of
Independence of the Azerbaijan Republic
• 15 August 1992: Putting in circulation
national currency, Manat
• 21 June 1993: Establishment of the BBVB
• 26 August 1994: Beginning of regular
exchange trading in the currency market
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We are planning to offer the market this
year a spectrum of tools, created on the
basis of currency SWAP, which will help
banks to operate in short-term liquidity in
various currencies and currency positions.
Azerbaijan, it is necessary to take into
account the steady turnover growth of the
interbank market and exchange segment.
Growth of the currency market is not an
event in and of its own; it is directly
connected with the development of foreign
trade. The major factors which influence
such increases are the reduction of
commissions, development of information
technologies, introduction of new tools and
reliability of calculation systems. BEST has
sufficient technological potential for further
development so as to attract participants,
• 31 March 1995: First credit auction of the
National Bank at the BBVB
• 20 September 1996: First T-bill auction
• 22 January 1997: First exchange trading
in the BBVB Stock Department
• 30 August 1997: Beginning of trading in
the Organized Interbank Currency Market
(OICM)
• 25 September 1997: First trading in the
OICM by means of universal trading enetwork
of the BBVB
• 17 December 1997: Corresponding
emerging market membership status in FIBV
• 6 March 1998: Signing in Baku Protocol
on cooperation of BBVB with Istanbul Stock
Exchange
• 2 October 1998: Full member of FEAS
(Istanbul)
• 24 February 1999: Membership in the
Azerbaijan Commercial Chamber (Baku)
• 14 December 1999: Membership in the
Azerbaijan Commercial Banks Association
(Baku)
• 20 April 2000: Co-founder and
membership in the International Association
of CIS Exchanges (Moscow)
• 3 July 2001: Signing in Moscow
Arrangement on strategic cooperation of
BBVB with MICEX (Moscow Interbank
Currency Exchange)
• 27 March 2002: Start of e-system of
trades on Interbank credits–the Organized
Interbank Currency Market
• 9 July 2002: Start of Bourse E-System of
Trades (BEST)
• 24 November 2003: Signing in Almaty
agreement on mutual cooperation of BBVB
with KASE (Kazakhstan Stock Exchange)
• 16 June 2004: Signing in Baku agreement
on mutual cooperation of BBVB with BSE
(Bulgarian Stock Exchange).
including non-residents in addition to
increasing the number of tools to be used in
conjunction with BEST and also to increase
overall volume.
We are planning to offer the market this year
a spectrum of tools, created on the basis of
currency SWAP, which will help banks to
operate in short-term liquidity in various
currencies and currency positions.
FUTURE OUTLOOK
In 2005 BBVB plans to:
• modernize and reorganize BBVB Website;
• develop settlement and clearing services,
in particular software for management of
bank trading limits on credit and the
currency markets;
• improve risk management system in
realization of clearing operations;
• introduce the tool that will enable currency
swap in Bourse E-system of trade (BEST);
• develop Internet-technologies and
e-commerce;
• increase professional skills of Exchange’s
personnel;
• develop modern corporate governance
principles; and
• introduce the International system of
accounting in the field of GAAP (General
Accepted Accounting Principles).