Mongolia Weekly: 4 April 2011 - Eurasia Capital

Mongolia Weekly (March 28-April 1, 2011)April 4, 2011 (Monday)Parliament Members Visit MSE and FRCOn March 25, the Parliament Speaker Mr. D. Demberel and the members of Economic StandingCommittee of the Parliament visited Mongolian Stock Exchange (MSE) and Financial RegulatoryCommission (FRC), news.mn reports. Mr. D. Sugar, Chairman of State Property Committee, Mr. B. Bold,Chairman of MSE, Mr. Kh. Altai, Acting CEO of MSE, Mr. Ts. Bayarsaikhan, Chairman of FRC, and Ms. T.Gandulam, CEO of Securities Clearing House Central Depository, received the Parliament representativesand updated them on the current status of the operations of MSE, FRC and other issues related to thestock market.Answering the questions regarding dual listing of companies with operations in Mongolia, Mr. Kh. Altaisaid “Several of these companies proposed to be dually-listed on MSE. However due to the undevelopedlegal environment, dual listing would pose risk for these companies.” In this regard Mr. D. Dembereladded “We will pay attention to the development of the stock market and to the improvement of thelegal environment. We expect from your side submission of well-written proposals and regulations tothe Parliament”. So far draft proposals on Securities Market Law, Company Law, Insurance Law and newInvestment Fund Law are being developed.Mr. Ts. Bayarsaikhan and other professionals of FRC added “Currently, banking sector represents 95% ofthe Mongolian financial market and capital market is only 5%. We expect this proportion to become50%-50% by 5 years.” FRC representatives also informed that they proposed to have supervisory roleover the newly established Development Bank. Proposal will be formally submitted to the Governmentduring the next month. FRC is currently considering applications from more than 10 companies forbrokerage and dealing licenses, news.mn reports.Golomt and TDB to Get Underwriting LicensesOn March 28, news.mn reported that Golomt Bank and Trade and Development Bank (TDB) submittedapplication for a underwriting license. The request from one of the banks was sent back forresubmission due to incomplete application. According to the new Banking Law approved in January2010, commercial banks are allowed to provide underwriting services.LSE Wants US$15mn for MSE ManagementOn March 28, news.mn reported that LSE informed Mongolian counterparts that their service charge forMSE management would equal to US$15mn. This charge includes the payment for Millennium IT systemto be installed at the MSE, and 2 year salary payment (contract term) for the management team fromLSE. State Property Committee of Mongolia and LSE signed strategic partnership agreement on thedevelopment of MSE on December 30, 2010, and Master Service Agreement is scheduled to be signedby April 20, 2011. The latter agreement will include payment terms. However, Mongolian side has notresolved financial source for related payments. One option is to amend the state budget to include thepayments. On this issue, Mr. Kh. Altai, Acting CEO of MSE commented: “If it will be necessary to amendthe budget, the Government has to submit its proposal to the Parliament. Then the final decision will bemade by the Parliament.”www.eurasiac.com 8