PRESENTATION

1. Mongolian Stock Exchange:
The extend to which liquidity will be
Improved by working with the LSE
Mongolian Stock Exchange www.mse.mn
Altai Khangai /CEO/
Mongolian Stock Exchange

2. Mongolia: Country Statistics
• GDP 2012: $8.7 Billion
• GDP per capita 2012: $4,763;
• GDP growth 2012: 12.3%
• Inflation: 9.5%
• Exports 2012: $4.384 billion
• Imports 2012: $6.738 billion
• Population: 2.9 million
Factors supporting the growth:
– Much potential with promising human resources (literacy rate of 98%);
– Abundant natural resources (copper, gold, coal, uranium resources among the top in
the world)
– Next door to the largest consumer/ manufacturer;
– Large scale infrastructure projects (e.g. railway and road pavement);
– Boom in real estate and construction sector (e.g. Construction of 100,000
apartments);
– High potential for agricultural industry with over 45 million livestock;
Mongolian Stock Exchange

3. 2012 2011 2010
Market Cap (in USD bln) 1.28 1.62 1.03
Equity TradingValue
(in USD mln)
103 78 45
Equity Trading
Volume (bln shares)
131.1 122.8 64.5
Daily share turnover
(in thousand USD)
510.4 311.2 178.6
No. of Members 80 76 45
No. of Listed Companies 329 332 336
TOP 20 Index 17714.5 21687.57 14759.81
Mongolian Stock Exchange
Capital Markets: Mongolian Stock Exchange Statistics
Opportunity to grow
with the fastest growing
market
Mongolia’s GDP in 2012:
+12.3%
International standards
offered domestically
(Millennium IT
technology, revised
rules & regulations,T+3
settlement system)
-
20
40
60
80
100
120
140
160
180
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Millions
Millions
Market Cap USD
Shares #

4. Mongolian Stock Exchange
MSE TOP-20 Index
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
1995
он
1996
он
1997
он
1998
он
1999
он
2000
он
2001
он
2002
он
2003
он
2004
он
2005
он
2006
он
2007
он
2008
он
2009
он
2010
он
2011
он
2012
он
Топ 20 индекс

5. Mongolian Stock Exchange
MSE TOP-20 Index VS World’s Major Indices
-200
0
200
400
600
800
1000
1200
1400
1600
1800
2007.01.02
2007.02.09
2007.03.23
2007.05.02
2007.06.12
2007.07.25
2007.09.03
2007.10.11
2007.11.20
2007.12.28
2008.02.07
2008.03.19
2008.04.28
2008.06.05
2008.07.16
2008.08.25
2008.10.02
2008.11.11
2008.12.22
2009.01.30
2009.03.13
2009.04.22
2009.06.02
2009.07.10
2009.08.20
2009.09.29
2009.11.06
2009.12.17
2010.01.27
2010.03.11
2010.04.20
2010.05.28
2010.07.08
2010.08.19
2010.09.28
2010.11.05
2010.12.16
2011.01.25
2011.03.09
2011.04.18
2011.05.26
2011.07.06
2011.08.17
2011.09.26
2011.11.03
2011.12.13
2012.01.23
2012.03.05
2012.04.13
2012.05.23
2012.07.04
2012.08.16
2012.09.25
2012.11.02
2012.12.14
IN/DEC percentage TOP20
IN/DEC percentage CAC40
IN/DEC Percentage NIKKEI225
IN/DEC Percentage HANG SENG
IN/DEC Percentage NASDAQ-100
IN/DEC Percentage DAX
IN/DEC Percentage S&P500
TOP-20 Index 800%

6. Changes in total trade value by Foreign entities
Year
Foreign
Institution/L
egal entity
Foreign retail
investor
Domestic
Institution/
Legal Entity
Domestic
retail
Investor Total Trade
value /USD
million/
Total trade
value
percentage
of foreign
entities
Total trade
value
percentage
of domestic
entities
Trade Value
/USD /
Trade Value
/USD/
Trade Value
/USD /
Trade Value
/USD/
% %
2006 $3,046,318 $425,068 $4,817,433 $4,463,210 $12,752,030 27.2 72.8
2007 $24,158,012 $3,046,318 $33,084,433 $12,256,117 $72,544,880 37.5 62.5
2008 $7,792,907 $2,833,784 $7,651,218 $25,858,282 $44,136,192 24.1 75.9
2009 $4,604,900 $637,601 $4,179,832 $7,013,616 $16,435,949 31.9 68.1
2010 $35,493,149 $5,384,190 $19,765,646 $5,100,812 $65,743,798 62.2 37.8
2011 $50,795,585 $7,863,752 $173,994,361 $15,373,280 $248,026,978 23.6 76.4
2012 $92,523,060 $2,054,494 $6,163,481 $2,054,494 $102,795,528 92 8

7. Mongolian Stock Exchange and the London Stock Exchange Group
The Master Service Agreement
• The Master Services Agreement was signed on April, 7 2011 between the State
Property Committee (SPC), the Mongolian Stock Exchange (MSE) and the London Stock
Exchange for the purpose of implementing the MSE Development Plan
• The Principle Objective of the Plan is to transform the MSE to a world class Exchange
Operator and Develop the Mongolian Capital Market as a whole
• Establishment of an appropriate regulatory framework
• Implementation of new technology
• Development of a sustainable business model for the exchange
• Training of market participants and exchange employees
MASTER SERVICE
AGREEMENT
OBJECTIVES OF
THE AGREEMENT
Mongolian Stock Exchange

8. Mongolian Stock Exchange since the strategic partnership with the
London Stock Exchange Group: Key achievements
The Principle Objective of the Plan is to transform the MSE to a world class Exchange Operator and Develop the
Mongolian Capital Market as a whole;
The Master Services
Agreement was signed
between the State
Property Committee
(SPC), the Mongolian
Stock Exchange (MSE)
and the London Stock
Exchange Group for the
purpose of implementing
the MSE Development
Plan;
April, 7 2011
July, 2 2012
Revised market
rules and
regulations (app.10)
necessary for making
Mongolian market
highly productive,
well organized, open
and transparent.
Advanced level Capital
markets training
provided by London
Stock Exchange
Academy professionals
in Ulaanbaatar and
London.
June–September
2011
2011 - 2012
Launched the integrated
Millennium IT technology,
consisting of Millennium
Exchange, Millennium CSD,
Millennium Surveillance,
Millennium Trader programs,
produced by LSEG subsidiary
Millennium IT company.
The
System
Launch
2011 - 2012
Mongolian Stock Exchange

9. Mongolian Stock Exchange and the London Stock Exchange Group
The Master Service Agreement: High-level Project Milestones
NEW RULES
AND
REGULATIONS
TRAINING
 Listing Rules Pending FRC approval
 Trading Rules Complete
 Membership Rules Complete
 Clearing & Settlement Rules Complete
 The Academy of the London Stock Exchange has carried out a series of training programs
for regulators, market participants and other stakeholders
 Optimal organization structure, new roles and responsibilities
 Mid to long-term Business Development Plan adopted by the Board
A SUSTAINABLE
BUSINESS
MODEL FOR THE
EXCHANGE
Mongolian Stock Exchange

10. Newly Implemented Clearing, Settlement, Custody Model
• Payments in NPSS are handled by Clearing Banks on behalf of
MongolBank
• The new Securities Markets Law has been submitted to the parliament
for approval with an aim to
– Provide needed updates to the legislation
– Address concentration of securities processing activities
– Improve market standards and procedures
– Increase international exposure
SECURITIES
SETTLEMENT
AND CUSTODY
Mongolian Stock Exchange
• The new Millennium IT system launched in July, 2012, moving from pre-
funded trades to T+3 rolling settlement model
• The new system has all of the technological capabilities needed to
operate a modern world-class exchange
• Payments executed through the National Payment and Settlement
System (NPSS), a RTGS operated by MongolBank

11. Clearing, Settlement, Custody Model Specifics
SETTLEMENT
FEATURES
Mongolian Stock Exchange
CLEARING
• Net clearing for cash and gross clearing for securities settlement
• Multilateral trade matching among participants
• Facilitate Domestic settlement at the moment
• Goal is to expand up to cross-border and international settlement
types with the introductions sub-custodian banks
• Securities settled through the CSD, but cash is paid through MongolBank
payment system, which in turn is handled through select clearing banks
• Securities are delivered in dematerialized form based on cash settlement
through DVP model on single currency
• Securities borrowing and lending are likely to be legalized with the
passage of the new Securities Markets Law

12. New Securities Market legal framework: Optimal climate for
investing in MSE
The new securities law is the gateway to promoting the principles of fair,
transparent and efficient market, creating a robust capital market and achieving ambitious
growth and development objectives in Mongolia .
1. Efficient procedure for new listings
2. Dual listing opportunities
1. Provides legal framework for infrastructure required to attract foreign investment.
a) Global custodian services
b) Investment fund framework
2. Higher free-float requirement -
a) Requirement to increase free-float over time up to 30 percent
3. Investor protection –
a) Adequate disclosure requirement and proper dissemination of information by Issuers
b) Stringent licensing requirements for regulated activities and professionals working for
regulated persons.This will include the services of Broker/dealers, underwriters
custodians, investment advisors.
c) “fit and proper test” for regulated persons
1. New instruments such as Depository Receipts both Mongolian DR’s and Foreign DR’s,
Derivatives, asset backed securities and other instruments approved by the commission.
2. Easier compliance procedures for foreign PLCs looking to list in MSE secondary market
3. Provision for setting up of institutional investor base in Mongolia
Mongolian Stock Exchange
ATTRACTIVE
LISTING VENUE
ATTRACT FOREIGN
INVESTMENT
IMPROVE MARKET
LIQUIDITY

13. Mongolian Stock Exchange and FTSE Group: A New Frontier Market
• The Mongolian capital market has been placed on FTSE’s Watch List for possible promotion to
Frontier market status.
• FTSE assumes a major position in global financial market and enjoys an unparalleled reputation
for provision of indices and market data that many international investors an investment funds
base on to make informed investment decisions.
• The implementation of a world standard
trading and settlement system and market
infrastructure and increased transparency in
the market had a major influence in placing
Mongolia on a Watch list for possible
promotion to Frontier market status.
Mongolian Stock Exchange

14. Tax and other advantages of investing on MSE
Mongolian Stock Exchange
Mongolia is considered “tax heaven” since
companies pay 10% corporate tax (25% for
taxable profit exceeding 3 billion MNT) on
their profits and with 10% flat rate tax on
individual incomes whereas in developed
countries corporations pay effective tax rate
of up to 55 % on their earnings.
There is no stamp duty tax when trading on
MSE, while UK have 0.5% stamp duty rate on
share transfers valued more than 1000 GBP
and EU is planning to introduce such tax.
Another advantage is that foreign firms and
individuals can open their depository account
directly at MSCHCD (Mongolian central
depository and clearing house).
Mongolian capital market and financial
system is very liberal and flexible, for
example there is no currency movement
restriction and there is no prohibition on
foreign individuals and companies to
participate in stock exchange trading.
Advantages

15. Mongolian Capital Market – the foreign investment friendly
environment
0 10 20 30 40 50 60
Italy
Denmark
France
United States
Sweden
Norway
Germany
Finland
United Kingdom
Australia
Japan
Spain
Canada
OECD Avg (non-US)
Israel
Estonia
Iceland
Ireland
Poland
Slovak Republic
Belgium
Mongolia
Capital Gains Taxation by Country (OECD) and
Mongolia (in %)
** Capital gains rate plus the corporate income tax
rate.
Mongolian Stock Exchange
20
0 10 20 30 40
US
UK
Australia
Belgium
Germany
China
Japan
Mongolia
Dividend Tax Rate in %

16. MSE looking to the future: The market of choice for small to
mid-cap companies looking to maximize their growth potential
• One of the smallest exchanges with the biggest potential
• The market of choice for companies and investors looking to participate in Mongolia growth story
• Higher visibility of MSE companies and development of liquidity through new product initiatives
including:
 The promotion of equity research
 Development of new indices
 Hosting Company Investor days
• Driving growth through following initiatives:
 Mongolian top strategic deposits
 Foreign listed companies in mining sector with assets in Mongolia
 Leading domestic companies in mining, infrastructure and consumer sectors
 State-owned enterprises planned to be privatized
Mongolian Stock Exchange

17. Future Prospect for Mongolian Stock Exchange
Mongolian Stock Exchange
•MCS Group
•Mobicom
•Tavan Bogd
Mongolia’s Top 20
listed companies
account for 86%
of the current
market cap
•MMC
•Oyu Tolgoi
•South Gobi
•Tavan Tolgoi
•Oyu Tolgoi
•MIAT
•Erdenet
= $45 bln POTENTIAL
$5 bln
$15 bln
$15-20 bln
$4+ bln
Billions USD
Current Market Cap doesn’t reflect the full market potential

18. THANK YOU FOR YOUR ATTENTION
Mongolian Stock Exchange www.mse.mn
Altai Khangai /CEO/
Mongolian Stock Exchange