Capital Markets within a Year and Further by FRC

1. CAPITAL MARKET OF MONGOLIA
WITHIN A YEAR AND FURTHER
2018.01.25

2. CAPITAL MARKET OF MONGOLIA WITHIN A YEAR AND FURTHER
Brief results of the year 2017:
POLICY AND
REGULATION
MARKET
INTERMEDIARIES
CAPACITY
PUBLIC KNOWLEDGE
AND PARTICIPATION
OF THE CAPITAL
MARKET
DUAL LISTING
MARKET SUPPLY AND
DEMAND
 Intermediaries and professional institutions have strengthened their capacities.
 Started to improve the knowledge and participation of the capital market for local people.
 Capital Market textbook was published and distributed to the intermediaries and professional institutions.
 2 companies issued the IPOs and 1 company issued the corporate bond in the market.
 Financial new product on the derivative instruments trading has launched.
 Financial regulatory authorities jointly developed “The Reform and Development Program of Financial
Market until 2025”, which was approved by the Government of Mongolia.
The regulatory environment of dual listing was jointly developed by the Financial Regulatory Commission
of Mongolia (FRC) and Mongolian Stock Exchange (MSE).
 Appropriate time to create the regulatory environment of dual listing.
 List and justification of eligible and world’s leading stock exchanges.
 Features of dual listing rules.
 Opportunities for the market .

3. CAPITAL MARKET OF MONGOLIA WITHIN A YEAR AND FURTHER
I. POLICY AND REGULATION
• "The Reform and Development
Program of Financial Market
until 2025" was jointly
developed by the Financial
Regulatory Commission,
Ministry of Finance and the
Bank of Mongolia, approved by
the 299th decree of Government
of Mongolia in October 03,
2017. Temporary list of eligible
and world’s leading 26 stock
exchanges were approved by
the Financial Regulatory
Commission’s 151st decree in
July, 2017. Subsequently, the
regulation of dual listing was
developed by collaboration
between Financial Regulatory
Commission and Mongolian
Stock Exchange in November,
2017.
• To develop and implement "The
Reform and Development
Program of Financial Market
until 2025“ in 2018.
• The draft law on the Securities
Market and law on Investment
Fund will be amended in
cooperation with the Ministry of
Finance.
• Improve the regulation and
supervision of the securities
market and implement a
comprehensive set of reforms in
line with the principles of
IOSCO.
YEAR
2018
YEAR
2017

4. IPO: 1.5 тэрбум төгрөг
ЗЗҮ: 3.9 тэрбум төгрөг
II. MARKET SUPPLY AND DEMAND
Graph 1. “MSE” JSC Market Cap /billion MNT/
1,373.9
2,104.7
1,799.9 1,670.5 1,442.6 1,262.5 1,474.2
2,436.3
2010 2011 2012 2013 2014 2015 2016 2017
Mongolian Stock
Exchange
“Itools” IPO
SUU
BOND
Mongol Securities
Exchange
“And Energy”
IPO
YEAR 2017:
IPO: 1.34 billion MNT
Market Cap: 5.78 billion
MNT
IPO: 1.5 billion MNT
Market Cap: 3.9 billion MNT
CAPITAL MARKET OF MONGOLIA WITHIN A YEAR AND FURTHER

5. CAPITAL MARKET OF MONGOLIA WITHIN A YEAR AND FURTHER
II. MARKET SUPPLY AND DEMAND
Graph 1. “MSE” JSC Securities Trading /As of 2017.12.31/
Securities Type
Trading Amount /billion MNT/ Comparison
between Year 2016
and 2017
Trading Amount /billion MNT/ in 2017
2015 2016 2017 Primary Market
Secondary
Market
Stock 30.5 49 76.4 +56% 1.3 75.1
Government Bond 515.5 299.6 772.5 +158% 630.2 142.3
Corporate Bond 0.5 - 10.2 6 4.2
2017
Mongolian Commodity Exchange -
Financial new product on the derivative
instruments trading.
2018
The draft law on Crowdfunding
Regulation on OTC Market
Rule for Derivative Instruments
Rule for Securities Lending and Collateral

6. CAPITAL MARKET OF MONGOLIA WITHIN A YEAR AND FURTHER
III. MARKET INTERMEDIARIES CAPACITY
50
90 95
87
66 62 62
51
2010 2011 2012 2013 2014 2015 2016 2017
Graph 2. Securities Companies (Broker, Dealer, Underwriter, Investment Advisor)
10.23
22.29 22.17
30.63
36.81
46.51 49.07 53.55
2010 2011 2012 2013 2014 2015 2016 2017
Graph 3. Total Capital of Securities Companies (Broker, Dealer, Underwriter, Investment Advisor) /billion MNT/

7. CAPITAL MARKET OF MONGOLIA WITHIN A YEAR AND FURTHER
III. PUBLIC KNOWLEDGE AND PARTICIPATION OF THE CAPITAL MARKET
Within the
framework of
establishing
professional
institutions that have
the potential to bear
the risk of the market
and the investors:
Implement the
Risk-Based
Approach
Adapt
requirements
of professional
institutions to
international
standards
Create
effective and
sound
“Integrated
Database of
the Capital
Market”
YEAR 2018:

8. CAPITAL MARKET OF MONGOLIA WITHIN A YEAR AND FURTHER
III. PUBLIC KNOWLEDGE AND PARTICIPATION OF THE CAPITAL MARKET
2017
• Began to conduct activities related with
raising the awareness of local residents
about the capital market and organized a
basic training successfully.
• Within the "Capital Market Capacity
Building" project, capital markets
textbook has been developed and
published.
2018
• To improve the training of the
Commission related with offering
services and granting rights to market
participants, and transferring training
into theoretical and practice based
mode.
• The draft law on the Protection of
Rights of Investors will be jointly
developed. It is an effective step
towards increasing the confidence of
investors in the market.

9. OPPORTUNITY TO BE DUAL LISTED
IN CAPITAL MARKET OF MONGOLIA

10. CAPITAL MARKET OF MONGOLIA WITHIN A YEAR AND FURTHER
Appropriate time to create the regulatory environment of dual listing:
Graph 4. New and additional shares of stocks
Successful Unsuccessful
I. The growth of domestic stock market activities
2
3
1
0
2
3
0
2
0 0 0 0 0
-1
-2
0
2010 2011 2012 2013 2014 2015 2016 2017

11. OPPORTUNITY TO BE DUAL LISTED IN CAPITAL MARKET OF MONGOLIA
Appropriate time to create the regulatory environment of dual listing:
According to the Minerals Law of Mongolia (2006), 5.6. No less than 10% of the shares of a legal person holding mining license for a
mineral deposit of strategic importance shall be sold through the Mongolian Stock Exchange (MSE).
II. There are about 30 companies registered with foreign stock exchanges, but operate in Mongolia, which 9 of them registered with
Australian stock exchange (ASX). (These companies are mainly engaged in the mining sector).
Mining
company
(Limited
liability
company)
Mining
company
(Joint-stock
company)
Corporate
governance
will be
improved
Financial
and mineral
resource
reporting
will be
improved
The revenue
composition
of the state
budget will
be real and
objective
A mining company to become a Joint-stock company:

12. OPPORTUNITY TO BE DUAL LISTED IN CAPITAL MARKET OF MONGOLIA
Temporary list of eligible and world’s leading stock exchanges
Temporary
list of eligible
and world’s
leading 26
stock
exchanges
Proposal of the
Mongolian Stock
Exchange
There are about 30
companies registered
with foreign stock
exchanges, but
operate in Mongolia.
Stock exchanges
of the developed
countries in the
MSCI and FTSE
index categories,

13. OPPORTUNITY TO BE DUAL LISTED IN CAPITAL MARKET OF MONGOLIA
Features of dual listing rules
Before
The same requirements apply to the
issue of new stocks to be dual listed in
Mongolia.
NOW
 Dual listed companies are open to get exemption from the
requirements of securities registration rules of the MSE.
 The right to abide by the laws and regulations of foreign
jurisdictions is open.
 Conditions for dual listing have been simplified.

14. OPPORTUNITY TO BE DUAL LISTED IN CAPITAL MARKET OF MONGOLIA
The dual listing environment:
CAPITAL
MARKET
OF
MONGOLI
A
The activities
of
professional
intermediaries
will intensify.
Liquidity will
be improved.
Internationally
recognized
product will be
launched.

15. THANK YOU
FOR YOUR ATTENTION!