JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013BELARUSIAN CURRENCY AND STOCK EXCHANGEPavel TsekhanovichChairman of the BoardThe mission of the BCSE is to become themain power on the way of reforming theBelarusian organized financial market andto make it the basic source of investmentsfor Belarusian enterprises.Established in 1993, the Belarusian Currencyand Stock Exchange (BCSE) is a uniquetrading platform in the country that serves thefinancial market of Belarus. Today, the BCSE isa stable working organization with constantlygrowing trade turnovers.Main objective - formation of the highly efficientorganized financial market in Belarus to meetthe requirements of banks, professionalparticipants of the securities market, investorsand the state.Up-to-date technologies, client orientation,outreach services are the defining factors toachieve this purpose.HISTORY AND DEVELOPMENTThe Interbank Currency Exchange wasestablished 4 March 1993 by 18 leadingbusiness banks as a closed-type joint-stockcompany. Its main task was organizing tradingin foreign currencies. On 24 March 1993, firsttrades in the Russian ruble were held in theelectronic trading system. In 1995, the NationalBank of Belarus granted the Interbank CurrencyExchange the right to organize the purchaseand sale of futures on foreign currency andother financial assets.On 24 September 1996 the Interbank CurrencyExchange was made a subdivision of theNational Bank, in which capacity it organizedtrading in foreign currencies for 2 years. In 1997,the Interbank Currency Exchange was grantedthe right to organize the secondary market ofgovernment securities (except for registeredprivatization vouchers) and the securities of theNational Bank.The BCSE was established on the basis ofthe state-run Interbank Currency Exchangein December 29, 1998 as a non-profit, publiccompany with administrative and financialautonomy. Having obtained the license topursue exchange activities and the depositorylicense, the exchange began to organize tradingin the main segments of the financial market ofBelarus (the currency market, the governmentsecurities market, the market of the NationalBank’s bonds, the corporate securities market,the market of bonds of local loans and themarket of bills of exchange)First electronic government securities tradeswere carried out at the Interbank CurrencyExchange on 16 January 1998.Since 1999, BSCE has been carrying outdepositary functions in the non-governmentmarket and clearing upon all concludedtransactions.In 2007, the futures market sector waslaunched. Futures on US$ and EUR rate werethe first instruments in this market.Functions of the BCSE• Organization of exchange trading in foreigncurrencies, futures and securities• Clearing Center in Belarusian settlementclearing system• Depository functions for corporate securities• Registration of OTC transactions withcorporate securities• Information Center functionsBCSE aims to:• Minimize risks and transaction charges fromcapital formation in the organized market;• Provide transparency of transactions;• Protect investors’ legal rights and theirinterests;• Implement programs on financial resourcesformation necessary for their development;• Develop state monetary and credit policymarket mechanisms;• Create necessary conditions for effectivecontrolling functioning of the State;FUTURE OUTLOOK• Improving legal documents on exchangeactivity• Functional and technological development ofthe exchange market• Functional development of the clearing andsettlement system• Development of listing mechanisms• Introducing new stock indexes• Expanding the range of exchange financialinstruments• Creating conditions for liquidity increase inthe exchange securities market• Development of information and analyticalinfrastructure of the exchange securitiesmarket, expanding the range of analyticalservices• Increasing the level of information safetyCAPITAL MARKET DEVELOPMENTAND ECONOMIC OUTLOOKKEY SOLUTIONS OF THE GOVERNMENT ONTHE SECURITIES MARKET DEVELOPMENTTax liberalization for operations in bonds;Simplification of bond issue procedure;Introduction of on-exchange bonds as aseparate type of bonds;Cancellation of the moratorium on freecirculation of stocks;Transition to exchange market circulation for allstocks of open joint-stock companies;Municipal bond market formationBCSE ACTIVITY TODAYSince the first days of its formation (December1998), the Belarusian Currency and StockExchange has been participating in thetechnological development of the stock market,improving its regulatory framework and involvinga wide range of financial assets in the exchangeturnover.Today the BCSE is the only trading floor in therepublic serving as a basis for a nationwidetrade system in all major segments of thefinancial market: currency, stock and futures.Except for the organization of trading, the BCSEfunctions as the settlement and clearing systemoperator, provides information and depositoryservices, electronic document services,registration of OTC transactions in securities.Currently, the trading floor is widely used not onlyby banks and broker and dealer companies,but also by the government in performing itsessential economic functions, including:• privatization transactions carried out by theState Property Committee;• establishment of the official exchange rate ofBelarusian rouble to the Russian rouble andUS dollar by the National Bank upon tradingtotals in foreign currency;PAGE 29