Sessions - 2010
Capital Market Reform

Mongolia’s capital markets began with the establishment of the Mongolian Stock Exchange (MSE) in 1991. The newly established Securities Committee was given the goal to privatize more than four hundred major state companies and develop a competitive business environment. Necessary laws were drafted, and the staff of the MSE, along with brokers and dealers were trained by international experts.

Since 1993 to present, however, the stock exchange and securities marked have failed to become a driver of the economy. This general irrelevance is attributed to a weak legal framework, lack of enforcement, non-transparent practices, insufficient information provided to public, and the general lack of understanding of the securities market, its operations and benefits from policy makers and domestic investors.

The need to improve the country’s capital markets is driven by the current business, social and economic needs of Mongolia. Wrapped within this structural improvement, is the crisis of urban infrastructure issues, the lack of financing for private companies, the short supply of mortgage loans provided by commercial banks, and the decrepitude of the social benefits, insurance and pension system.

The Government of Mongolia has announced that 2010 to be the Year of business environment improvement. Within this initiative, the Forum has the ability to launch the beginning of a reform for the country’s capital markets.

Financial Markets

  • What changes should occur to the existing Mongolian Stock Exchange? Should a foreign professional team be brought in to organize the exchange or should it be privatized to strategic investors? Are there agencies with deep pockets ready to support this change with TA?
  • Should the exchange be used to issue local and government bonds to finance prioritized infrastructure projects in the country? What is the role of the market in provision of housing financing in light of the suprime scandal in the Western world, and what are the lessons to be learned?
  • How could be Mongolian benchmark interest rate be set? Is UBIBOR (Ulaanbaatar Interbank Offered Rate) a factor? How can this be enhanced and what is the role of Mongolbank (Central Bank of Mongolia) in this initiative?
  • How can the insurance sector be reformed, and how would it be linked to budgetary reforms? Is it a time for the Pension fund be separated from the state budget?

Mining

  • How can the country benefit from funds raised by the mining companies in international stock exchanges, and what should be MSE role be? How can IPOs be utilized to reach this goal? What should be changed in the legal framework?
  • How should administration of mining revenues be conducted? What are the lessons to be drawn from the global financial crisis?

Corporate Governance

  • What steps are needed to created a legal environment that protect minority shareholders and build a trust in the market? Is it accountability?
  • How we build more transparent business environment? How can bureaucratic red tape be cut?
  • How can risk management be instituted into the system?
  • What steps are needed to define procedures and outcomes of corporate bankruptcy?
  • How can current accounting standards be modified to comply with international financial accounting standards?

How can we ensure consumer protection? How can redundancies be removed to improve and streamline current regulatory and supervisory structures?

Published by: 2010-05-08 20:06:59