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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2007BAKU INTERBANK CURRENCY EXCHANGEFarkhad AmirbekovGeneral Manager of BBVBOne more important mission, which hashad a long preparation is the gradualtransformation of Baku as the financialcenter of region. In my opinion, for thispurpose there are many preconditions.The BBVB work is directed toward becomingan integrated part of a market economy andin particular the development of the financialmarket of Azerbaijan. Today, the BBVB isfocused on the development of internationallinks for the accelerated development of theAzerbaijan financial market.One of the most important directions of thisdevelopment is through the BEST tradingsystem which allows for electronic trade forthe monetary needs of the market.The introduction of “a currency swap”operation has given banks the new toolof management for working with currentliquidity. The BBVB aspires to increase, firstof all, the number of participants in trading,the quantity of trading financial tools all thewhile trying to develop technicalopportunities in trading and clearingsystems.The BBVB gives special importance torealize the complex strategy of corporatemanagement in conditions of the impressiveeconomic growth of Azerbaijan and furtherthe increase in demand for financial services.One more important mission, which hashad a long preparation is the gradualtransformation of Baku as the financial centerof region. In my opinion, for this purposethere are many preconditions.HISTORY AND DEVELOPMENTThe Central Bank of Azerbaijan and the fourbiggest state banks of Azerbaijan Republicfounded the Baku Interbank CurrencyExchange (Baki Banklarasi Valyuta Birjasi-BBVB) on 26 July 1993 and this year itmarks a decade from the moment of thestart of activity in the financial market. Fromthe beginning of the activity one of thecentral financial institutions of the country,the BBVB is today for the business public ofAzerbaijan an original symbol of economicreforms. Using the advanced informationtechnologies and being based onsuccessful experience in the creation of theuniversal trading platforms, the BBVB has,based on volumes of trades and number offinancial tools become the largest exchangeinstitute in the Caucasian region.The purposes of the BBVB are as follows:• to set up regular exchange trading to carryout currency operations;• to determine the market exchange rate ofthe Azerbaijan currency (manat) to foreigncurrencies;• to create a mechanism for inter-statesettlements;• to maintain management and informationservices for currency operations;• to settle transactions made at the BBVBboth in national and foreign currencies;• to organize and carry out exchangetrading and auctions with interbank credits;• to conduct exchange trading with futures.MAJOR HISTORICAL DATES18 October 1991Declaration of Independence of theAzerbaijan Republic15 August 1992Putting in circulation nationalcurrency–Manat21 June 1993Establishment of the BBVBPAGE 4226 August 1994Beginning of regular exchange trading in thecurrency market31 March 1995First credit auction of the National Bank atthe BBVB20 September 1996First t-bill auction22 January 1997First exchange trading in the BBVB StockDepartment30 August 1997Beginning of trading in the OrganizedInterbank Currency Market (OICM)25 September 1997First trading in the OICM by means ofuniversal trading e-network of the BBVB17 December 1997Corresponding emerging marketmembership status in FIBV6 March 1998Signing in Baku Protocol on cooperation ofBBVB with Istanbul Stock Exchange2 October 1998Full member of FEAS (Istanbul)24 February 1999Membership in the Azerbaijan CommercialChamber (Baku)14 December 1999Membership in the Azerbaijan CommercialBanks Association (Baku)20 April 2000Co-founder and membership in theInternational Association of CIS Exchanges(Moscow)3 July 2001Signing in Moscow Arrangement onstrategic cooperation of BBVB with theMICEX (Moscow Interbank CurrencyExchange)27 March 2002Start of e-system of trades on Interbankcredits-the Organized Interbank CurrencyMarket9 July 2002Start of Bourse E-System of Trades (BEST)24 November 2003Signing in Almati agreement on mutualcooperation of the BBVB with theKazakhstan Stock Exchange16 June 2004Signing in Baku agreement on mutualcooperation of the BBVB with the BulgarianStock Exchange16 June 2005Start of the tool-currency swap in BEST1 January 2006Technical transition of BEST system forusing denominated manatFUTURE OUTLOOKIn 2007, the BBVB plans include:• Modernization and reorganization of theBBVB website;• Development of settlement and clearingservices, in particularly software formanagement of banks trading limits oncredit and the currency markets;• Improvement of the risk managementsystem in realization of clearing operations;• Further increasing professional skills of theExchange’s personnel;• Development of modern corporategovernance principles;• Introduction of the International system infield of GAAP (General Accepted AccountingPrinciples);• Implementation of a new trading system;and• Expansion of external contacts withinternational and regional organizations.