Contents President’s Message
3
News Federation of Euro-Asian Stock Exchanges Istanbul Stock Exchange: Private Sector Initiatives in Southeastern Europe Takasbank:Turkish Capital Market Report: Efficient Clearing and Settlement International Accounting Standards Committee International Federation of Stock Exchanges
4 10 12 79 80
Stock Exchange Profiles Amman Baku Interbank Bulgarian Dhaka Egyptian Georgian Istanbul Karachi Kazakhstan Kyrgyz
18 21 24 27 30 33 37 42 44 47
Lahore Macedonian Moldovan Mongolian Tehran Tirana “Toshkent” Republican Ukrainian Yerevan Zagreb
Members List
50 53 56 59 62 65 68 71 73 76
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Federation of Euro-Asian Stock Exchanges (FEAS), IMKB Building, Istinye 80860 Istanbul, Turkey Tel: (90) 212 298 2160 Fax: (90) 212 298 2209 E-mail:
[email protected] Web address: http://www.feas.org Contacts: Mr. Aril Seren, Secretary General Ms. Rosalind Marshall, Assistant Secretary General The Federation of Euro-Asian Stock Exchanges Yearbook 2000/2001 is published by the Federation of Euro-Asian Stock Exchanges in association with Emerging Markets Investor. All editorial material was collated and edited by the Federation of Euro-Asian Stock Exchanges. The design, production and distribution was coordinated by Emerging Markets Investor. Emerging Markets Investor Tel: +44 (0)20 7484 9700 Fax: +44 (0)20 7930 2238 Emerging Markets Investor is a monthly magazine that covers the flow of portfolio and direct investment into and between the global emerging markets. Emerging Markets Investor is published by Risk Waters Group. Although every care has been taken to ensure the accuracy of the information contained within the publication, the Publishers cannot be held liable for any inaccuracies, errors or omissions, nor held liable for any actions taken on the basis of the information provided herein.
© Risk Waters Group and the Federation of Euro-Asian Stock Exchanges, 2001. All rights reserved. No part of this publication may be reproduced, stored in or introduced into any retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the copyright owners.
FEDERATION OF EURO-ASIAN STOCK EXCHANGES
1
is proud to work with the
FEDERATION OF EURO-ASIAN STOCK EXCHANGES
Increasing awareness of the financial markets in Euro-Asia.
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Federation of Euro-Asian Stock Exchanges
President’s Message We, the Federation of Euro-Asian Stock Exchanges (FEAS), have successfully completed our fifth year of operation. As we move into the year 2001, we move closer to achieving the goals of our 7-year Strategic Plan as embodied in our Mission Statement that was set forth at the founding meeting in 1995: “The mission of FEAS is to create fair, efficient and transparent market environments, with little or no barriers to trade, between the FEAS members and their operating regions. Harmonization of rules and regulations and adoption of new technology, for trading and settlement, by member securities markets, will facilitate the objectives of FEAS by promoting the development of the member markets and providing cross listing and trading opportunities for securities issued within FEAS member countries.”
The Goals With the Mission Statement as our guide, we created a 7-Year Strategic Plan, with four overall objectives, to direct the development of the Euro-Asian region: ■ to facilitate the development of domestic markets with a goal to achieving greater interaction, cooperation and harmonization among the FEAS securities markets, finally leading to the establishment of a common trading platform onto which member exchanges will route their markets’ orders; ■ to achieve higher efficiency among FEAS members through technological cooperation; ■ to establish the requirement for the General Secretariat as well the FEAS membership to act as a representative voice of the members vis-à-vis other federations of stock exchanges and related associations in the world; and ■ to promote the development of markets within FEAS, international in structure and operations and to achieve the distribution of member market information to the world at large.
The Achievements What makes the Federation invaluable to the region is the utilization of a common strength to overcome individual adverse effects of market fluctuations and to bring the region as a whole into the global arena. We have made significant achievements in the development of the region during these last 5 years and the highlights of our collective accomplishments can be noted as follows: ■ the creation of a FEAS Data Center (FDC) to standardize information dissemination among our members and internationally through a joint implementation effort with the International Federation of Stock Exchanges (FIBV), ■ the establishment of a FEAS ‘Rule Book,’ which defines the minimum internationally recognized standards of operation for our member markets, ■ the development of both intra-regional and international marketing strategies to facilitate the inflow of funds from emerging markets, ■ tthe development of a FEAS List of top performing stocks in our member markets and the creation of a FEAS Index to reflect the performance of the region against other emerging markets for implementation in the year 2001, ■ the continued efforts towards a common trading platform in conjunction with the SECI (Southeastern European Economic Cooperation Initiative), and ■ the strengthening of our markets through regional meetings of issuers, market regulators and our respective central depositories. The successes of the Federation over these last five (5) years are due to the dedication of our members and the strong support of international organizations with whom we are affiliated. We would like to take this opportunity to thank you for your continued support of FEAS and in facilitating the development of the Euro-Asian region.
Osman Birsen Chairman & CEO Istanbul Stock Exchange
Federation of Euro-Asian Stock Exchanges
3
FEAS
Federation of Euro-Asian Stock Exchanges REGIONAL PERFORMANCE The Federation currently is represented by 22 members in 21 countries, consisting of over 9,500 traded companies with a market capitalization of US$ 134 billion. While traded companies were down 4% over 1999 and market capitalization down almost a third in the same period, 2000 saw volumes in the region soar. Liquidity returned to many markets with average daily turnover in US$ terms reaching US$ 975 million or an increase of 86% over 1999; average daily traded share volume reached over 45 billion or an 82% increase over the same period. The five-year consolidated statistical
comparison between 1996 and 2000 shows that development of the region has continued steadily throughout this period. 1996-2000 Market Capitalization (US$ millions) 2000 1999 1998 1997 1996
Consolidated FEAS Members 2000 Statistics
2000
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
Average Daily Volume
Total Volume
Total Volume
(# Shares Millions)
(US$ Millions)
1,006,717 783,808 780,563 1,018,532 827,370 783,857 672,462 852,687 1,030,049 1,307,938 1,205,837 870,742 11,140,563.1
(# Shares Millions)
33,511.58 25,020.81 26,254.35 28,781.25 22,264.68 15,812.58 14,325.58 13,716.40 13,928.69 19,208.19 17,257.45 9,796.69 239,878.3
53,027.88 37,327.33 43,306.70 50,939.27 37,603.38 35,640.82 32,020.01 38,759.41 49,050.06 59,451.66 54,825.52 54,406.44 54,406.44
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
1,789.38 1,192.13 1,403.98 1,447.05 1,009.76 729.46 680.51 620.42 664.87 873.33 791.53 601.81 601.81
197,134.57 188,488.69 186,765.12 199,162.39 176,165.70 161,650.10 173,990.25 164,464.96 147,044.19 159,501.09 125,226.18 133,771.99 133,772.0
Euro-Asian Region Consolidated Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization (US$ Millions)
1996
1997
1998
1999
0
50000
100000
150000
200000
1996-2000 Traded Companies
10,000 8,000 6,000 4,000 2,000 1996
1997
1998
1999
2000
Monthly Volume vs Market Capitalization 40,000
250,000
2000
35,000
4,689
5,795
8,424
9,883
9,537
200,000
94,173
130,619
97,348
195,661
133,772
150,000
52,288
80,706
92,009
125,128
239,878
402,150
938,722
2,271,706
214.5
325.4
373.7
30,000 25,000
Total Volume (US$ Millions)
Total Volume (# Shares Millions)
5,870,500 11,140,563
Average Daily Volume (US$ Millions)
523.3
15,000 10,000
50,000
5,000
975.0 0
Average Daily Volume (# Shares Millions)
20,000 100,000
1,630.7
3,728.9
9,164.1
24,867.6
45,288.3
0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Market Cap. (US$ Millions)
4
Federation of Euro-Asian Stock Exchanges
Volume (US$ Millions)
FEAS History/Organization The Federation of Euro-Asian Stock Exchanges (FEAS) was established at the initiation of the Istanbul Stock Exchange, on May 16 1995 with 12 founding members. Membership in the Federation is open to emerging stock exchanges in Europe and Asia. During 2000 the positions of president and vice president were held by the Istanbul and Tehran Stock Exchanges, respectively. In 2001 the vice presidency will be held by the Karachi Stock Exchange until 2003. The Governing Body of FEAS is the General Assembly, comprised of all 22 members, which meets annually in a member country. The Executive Committee, comprised of 12 members, is responsible for developing Federation policies, making major administrative decisions as mandated by the General Assembly, approving the content and scope of tasks assigned to the Working Committees and making recommendations to the General Assembly. Currently, the Federation has three (3) working committees: Rules & Regulations, Technology and Marketing. The General Assembly unanimously approved the membership applications of the Georgian Stock Exchange and the Palestine Securities Exchange. Membership becomes immediately effective upon acceptance of the Articles of the Charter of FEAS. Total membership has now reached 22. Georgian SE (GSE) On 2 August 2000 the GSE applied for membership in the Federation. The GSE was established on 12 January 1999 under the joint USAID/government capital market development program. Trading began on 29 April 2000 and has reached a total volume of nearly US$ 2 million since opening. Mr. George Loladze, Chairman, attended the proceedings as a special guest and in his remarks stressed how important the need for regional cooperation was for the Georgian market, currently in its developmental stages. For additional information see their newly launched site at www.gse.ge. Palestine SE (PSE) The PSE applied for membership on 3 September 2000 and has been established since 1995. Trading began on 18 February 1997 and during the year 2000, the average daily trading volume reached almost US$ 1 million. The trading system is a fully automated, order-driven system accessible
ORGANIZATIONAL STRUCTURE
PRESIDENT Istanbul Stock Exchange, Turkey PRESIDENT Istanbul Stock Exchange, Turkey VICE PRESIDENT Tehran Stock Exchange, Tehran SECTRETARIAT Istanbul, Turkey telephone: (90) 212 298 2160 fax: (90) 212 298 2209 email:
[email protected] SECTRETARY GENERAL Mr Aril Seren Senior Vice Chairman, Istanbul Stock Exchange, Turkey
ASSISTANT SECRETARY GENERAL Ms Rosalind Marshall, Istanbul, Turkey
GENERAL ASSEMBLY All members* *Voting may be restricted if there is more then one member per country
EXECUTIVE COMMITTEE The Chairman and Vice Chairman are the President and Vice President of FEAS 12 members
WORKING COMMITTEE 1 Rules and Regualtions Committe Chair: Tehran Stock Exchange, Tehran
WORKING COMMITTEE 2 Technology Committee Chair: Istanbul Stock Exchange, Istanbul
WORKING COMMITTEE 3 Marketing Committee Chair: Amman Stock Exchange, Jordan
SUB COMMITTEES
SUB COMMITTEES
SUB COMMITTEES
remotely. There are 7 members. The IFC is currently assisting in the redraft of the Securities Law of Palestine. For more information see www.p-s-e.com. Istanbul Re-elected The Istanbul Stock Exchange was re-elected as President of FEAS for an additional twoyear term or until May 2003. In his acceptance speech, Mr. Birsen reiterated that the development of the FEAS list, composite index, FDC implementation and other important objectives of the strategic plan were within our grasp and would be achieved under the leadership selected by the members. Karachi Elected VP The Karachi Stock Exchange (KSE), a founding member of FEAS, was elected to the position of Vice President for a two-year term from May 2001 to May 2003. The KSE is committed to the promotion of the region and the attainment of the goals of FEAS. As a first step the KSE plans to implement the FDC by 31 October of this year. The Federation thanked the Tehran Stock Exchange for their contributions during their Federation of Euro-Asian Stock Exchanges
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FEAS
President Opens Trading Session
Mr. Osman Birsen
Skopje, Macedonia
occupancy of this office. The Tehran Stock Exchange also chairs the Rules and Regulations Committee. Dhaka and Kyrgyz to EC The Dhaka and Kyrgyz Stock Exchanges were elected to the Executive Committee, which is responsible for the development of Federation policies and recommendations to the General Assembly. The other existing committee members were re-elected for an additional two-year term until 31 December 2002. The other members are Amman, Bulgaria, Istanbul, Karachi, Kazakhstan, Macedonia, "”Toshkent”" Republican, Ukraine and Zagreb Stock Exchanges. 6TH ANNUAL GENERAL ASSEMBLY 2001 Working Committee Mandates Rules & Regulations (R&R WC) During 2000 the R&R WC made strides in areas of defining, harmonizing or standardizing issues related to: defining the study for diminishing volatility, investor protection as it relates to corporate governance, feasibility of regional issuer, regulator and depository organizations, stock exchange revenue/expense analysis and previous year comparison, FEAS list of top companies and the FEAS index and the review of ISSA recommendations. For 2001 the mandates will be:
6
Federation of Euro-Asian Stock Exchanges
O
n September 14th, prior to the opening of the General Assembly, the President of FEAS, Mr. Osman Birsen, opened the trading session of the Macedonian Stock Exchange (MSE). Volumes on the MSE have been steadily rising to an average daily volume for the first 6 months to over US$ 1 million. In addition, this trading system marked the beginning of government-backed bond trading over the MSE. The members of the Federation met on the occasion of the 6th Annual General Assembly in Ohrid, Macedonia. In addition, the three working committees, Marketing, Rules and Regulations and Technology, met to finalize recommendations to the Executive Committee that convened a day prior to the General Assembly on September 14th in Skopje, Macedonia. Hosts of the meeting and surrounding events included the Macedonian Stock Exchange, chaired by Mr. Josif Eftimovski and the brokerage houses of BRO-DIL Inc., Makos-Invest Broker, Broker SB Inc., Stopanska Bank Inc., MAK Broker Inc., Makedonska Bank Inc., KB Broker Inc. and Komercijalna Bank Inc. Mr. Nikola Gruevski, Minister of Finance and Chairman of the SEC, opened the 6th Annual General Assembly along with Mr. Osman Birsen, President of FEAS and Chairman of the Istanbul Stock Exchange
FEAS n
Completion of a feasibility report by the Istanbul Stock Exchange (ISE) research department and international academicians on the factors affecting diminishing volatility in the market, by April 2001.
n
Data collection and preparation for the creation of a FEAS list and FEAS index through collaboration with Standard & Poors.
n
Organization of meetings of top issuers, regulators and stock exchange intermediaries on a region level.
n
Issuance of recommendations on the issues of investor protection, for inclusion to the FEAS Rule Book, by the early summer WC meeting.
n
Continuation of the stock exchange revenue and expense analysis for fiscal year 2000 with comparisons to previous years.
n
Determination and adoption of the ISSA Recommendations 2000.
n
Review and determination of sections for revision or inclusion in the FEAS Rule Book.
Marketing (MWC) The MWC continues to improve and facilitate FEAS publications and marketing tools. Of major importance is the development of a regional marketing strategy, which began this year and will be continued into 2001. In addition to the development of a plan, the MWC prepared a formal 'spotlight' presentation at the FIBV Emerging Markets Conference and Exhibition in Istanbul in April of this year. For the year 2001 the MWC will continue to: n
add marketing tools to the Federation members, such as investment cds;
n
complete a marketing strategy for the region;
n
improve the 2000 Year Book and distribute it in the first quarter of 2001;
n
further expand the FEAS web site to include advertising and additional content as determined.
Above 1.Osman Birsen, FEAS President (left) with Nikola Gruevski, Macedonian Minister of Finance. 2.Aril Seren, FEAS General Secretary (left), Osman Birsen, FEAS President (center) and Josif Efjimovski Chairman of the Board, Macedonia Stock Exchange.
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7
FEAS TECHNOLOGY WORKING COMMITTEE Activity FDC Tier 1 Implementation: Istanbul, Karachi, Tehran FDC Tier 2 Implementation: Amman, Bulgaria, Egypt, Macedonia, Zagreb FDC Tier 3 Implementation: All Others Training Program for SE Executives and IT Personnel n Trading Systems Internet Security Training n Security for FDC & issuer disclosures Issuer Disclosures w/ electronic signature Technology Software for Remote Access (CTP Criteria) Software for Surveillance Technical Issues - Clearing & Settlement Training - Derivatives
Target Dates October 31st 2000 1st Half 2001
Year-End 2001 Spring 2001 WC meeting
3rd Quarter 2001
1st Quarter 2001 4th Quarter 2001 4th Quarter 2001 4th Quarter 2001 As announced
Technology (TWC) The main focus of the TWC over the last three years has been in the design, development and implementation of the FEAS Data Center (FDC). With that implementation coming to a close, other objectives in the creation of a Common Trading Platform (CTP) are being focused on in the year 2001 and beyond. SPECIAL PROJECTS AND SUPPORTING ORGANIZATIONS OECD-Financial Sector Development Program The meeting of the Capital Markets Working Group that was held at the Center for Private Sector Development in Istanbul on 7-8 February 2001 was a resounding success. The fundamental aim of this meeting was to arrive at a consensus on the Draft Report on Best Practices for the Development of Stock Exchanges in Emerging Capital Markets in Eurasia. During the meeting that was attended by over two dozen chief executive officers of emerging stock markets, as well as a number of experts notably from the International Federation of Stock Exchanges, the European Federation of Stock Exchanges, the International Finance Corporation, and the Commodity Futures Trading Commission, the Draft Report was thoroughly discussed and revised in order 8
Federation of Euro-Asian Stock Exchanges
to prepare the final version of the Report for publication in the first half of 2001. In preparation for the meeting, working group participants from Eurasia were requested to structure their comments on the Report by answering the following questions: (i) Are there major elements missing from the Report? (ii) Are there important parts in the Report with which you would suggest to amend? (iii) Do you have suggestions to include additional information in the Report? In addition, working group members were asked to provide the OECD Secretariat with information on "typical" problems that they face in their respective emerging markets when implementing the best practices detailed in the Report. As a result of the two-day in-depth discussions and drafting sessions, the Report is now a more concise and better-focused product that will be a useful tool for a wide range of future users. The second part of the Capital Markets Development project is Project Financing. As a continuation of this project in 2000, it was proposed to convene a group of experts from NIS, Black Sea and South-East European countries to prepare "Basic Elements of a Law on Infrastructure Agreements cum Explanatory Notes." The Expert Group began the process of developing a text that sets out in legislative language the guiding principles of a modern law on concession agreements and comments on these principles in light of best international practices. The Group met twice last year and held its final meeting in Istanbul on 16-18 November 2000. This meeting successfully resulted in the finalizing of the draft law. The accompanying explanatory notes are now underway and will be finalized by the end of May 2001. SECI The Southeastern European Economic Cooperative Initiative (SECI) Project, during the year 2000, focused on the creation of a Common Trading Platform (CTP). Achievements included: n
A subgroup of stock exchanges which will address the technical issues of the CTP was formed.
n
The regulators subgroup met for the first time on 10 April 2000 in Istanbul. Participants in the meeting were delegates from Albania, Croatia, Greece, Macedonia, Romania and Turkey as well as observers
FEAS Participants of the General Assembly in Ohrid, Macedonia.
from the SECI Secretariat, UNECE and USAID. n
n
A trading model, adopted by the stock exchanges subcommittee, entitled "The Decentralized Trading Platform" was presented and regulatory issues were discussed and prioritized. A draft "Memorandum of Understanding" relating to the exchange of information
among the SECI countries was presented and adopted for further refinement. Participants agreed to reach a consensus in May 2001 when they get together in Sydney for the annual IOSCO meeting. In 2001, the SECI Committee members await decisions to be declared by the regulators. During this time the stock exchanges will continue to move towards the development of the CTP.
PUBLICATIONS AND CALENDAR Publications n Year Book: began publication in 1997 and has been partnered with Risk Publications (Emerging Market Investor) since 1998. In 2000 the Year Book was included on the web site: http://www.feas.org/yearbook/index.htm n
Web Site: www.feas.org contains information on FEAS Members (with direct links to their sites), Calendar of FEAS Events and Member Holidays, Past Meetings, Organizational Structure, Working Committees, Charter & Mission,
History, an electronic version of the monthly newsletter and the 1999/2000 FEAS Year Book. n
Newsletter: contains Quarterly and SemiAnnual Statistical Analysis, with Year-toYear Comparisons and Reviews. It is prepared monthly and includes press releases of FEAS members, General Secretariat News and Headlines of FEAS activities. Archived copies of the newsletter can be found on our web site www.feas.org/newsletter.
2001 Calendar February 10-17 2001
October 7, 2001 October 8, 2001 (Morning) October 8, 2001 (Afternoon)
SE Operations (Training for SE Executives and IT Personnel) Houston, Texas, USA The seminar will be hosted by University of Houston Working Committee Meetings Issiyk Kul, Kyrgyzstan 7th Executive Committee Meeting Issiyk Kul, Kyrgyzstan 7th Annual General Assembly Issiyk Kul, Kyrgyzstan
Federation of Euro-Asian Stock Exchanges
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ISTANBUL STOCK EXCHANGE
Private Sector Initiatives in Southeastern Europe s the hostilities end, the international focus is shifting gradually from the humanitarian and emergency needs of the refugees, to damage assessments and reconstruction of Southeast Europe (the region). Strategies are being formulated to support the integration of the Balkan Region into Western Europe and to assist in economic regeneration with the aim of ensuring political stability. International financial institutions identified a number of programs that could boost the economic recovery of Southeast Europe.
A
The projects that are financed in these countries mainly focus on telecoms, bank privatization, oil and oil storage, pipelines, chemicals, transportation, railways, airport, power, building materials, harbor facilities and municipalities. The EBRD has provided €2.7 billion to the region to date, of which €2.3 billion is outstanding and the total project value funded is €9.8 billion. Providing technical support and finance for Small- and Medium-Sized Enterprises (SMEs) are of utmost importance. The EBRD has equity and loan financing available to SMEs through financial intermediaries. These financial intermediaries cannot provide finance for the majority state-owned companies or for government-guaranteed projects. Only the enterprises that propose to expand their businesses or product lines, or start-ups that have a strong business plan and sponsors with relevant business experience
“SECI will endeavor to facilitate close cooperation among the governments of the region”
are in the scope. Besides, a sound business plan for establishing or expanding a company's business, solid management with a proven track record and products that are highly competitive in the marketplace are some of the key requirements for obtaining finance. Moreover, the funds provided by the intermediaries are to be used in strict accordance with the aims stated in the original business plan. As another effort to promote regional economic and environmental cooperation among the countries of Southeast Europe, the Southeast European Cooperative Initiative (SECI) was advocated by the United States together with the European Union. The impetus behind the SECI is to create a regional association aimed at encouraging cooperation among its member states and to facilitate their integration into European structures. The SECI will endeavor to facilitate close cooperation among the governments of the region and create new channels of communication among them. Furthermore, SECI attempts to emphasize and coordinate region-wide planning, identify needed follow-up and missing links, provide for better involvement of the private sector in the regional economic and environmental efforts and help to create a regional climate that encourages the transfer of know-how and greater investment in the private sector. Another initiative run in the region is the Stability Pact for Southeastern Europe. It aims to assist the Southeastern European countries to start reconstruction, development and cooperation after the difficult transition period, in some countries under heavy post-war circumstances. It is intended to develop an economic basis for political democracy through
ISTANBUL STOCK EXCHANGE “It is a program to prepare selected categories of small companies in Turkey as well as in FEAS member countries to obtain access to resources for future growth”
he overall objective of an on-going program is to assist the FEAS members to:
T n
Develop a mechanism that allows identification of companies with promising growth potential in Turkey in the first instance and subsequently in other FEAS member countries.
n
Identify solutions and related action plans to cover the financing gap of companies that are unable to take advantage of capital markets.
n
Assist the key actors in government and the private sector in developing the policies to enhance strategic business management practices in those small- and medium-sized businesses.
n
Establish a structured development approach for selected sectors and companies to improve their individual competitive positions.
n
Establish new mechanisms to assist growth-oriented companies to meet the challenges of rapidly changing international markets.
n
Ultimately facilitate a major shift in the business culture of FEAS member countries toward relying on external sources of equity as part of their future development.
strengthening of the dynamic forces of economic development. Within this context, and under the Central European Initiative, a project is designed for the "Development of Small- and Medium-Sized Enterprises and Entrepreneurship in Bosnia and Herzegovina, Montenegro and Macedonia." Its mandate is to support the development of SMEs and entrepreneurship as well as public and state institutions and to prepare ground for legal changes needed to enhance dynamic development of SMEs. The project value is estimated to 8.5 million in funding commitments, leaving about 4.5 million of funding to be still secured over the 3-year life span of this initiative. The Central European Initiative and the Government of Slovenia provide both funding to the project and the management team to implement the proposed activities. On the other hand, OECD is preparing a program that proposes the employment of venture capital for the funding of SMEs in Southeast Europe. The program is targeted at venture capital funds and promoters with the overall objective of stimulating the growth and employment potential of growth-oriented enterprises through the provision of additional equity funding at the lower end of the seed/venture capital market and to fill the gap left by existing venture capital funds. The Istanbul Stock Exchange is running joint programs with OECD together with the Capital Markets Board and the Federation of Euro-Asian Stock Exchanges (FEAS). It is a program to prepare selected categories of small companies in Turkey as well as in FEAS member countries to obtain access to resources for future growth. This activity is building on the work and experiences undertaken within the framework of the OECD Forum for Entrepreneurship and Enterprise Development (FEED).
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Takasbank
Turkish Capital Market Report: Efficient Clearing and
Settlement Favorable Structure TAKASBANK is favorably structured to render clearing, settlement, custody, safekeeping and related banking services under one single roof. Established under the Turkish Banking Law and classified as a "Bank that can not accept deposits," TAKASBANK is a sector bank dedicated to securities operations in Turkey. TAKASBANK is the "Central Securities Depository of Turkey," "Clearing and Settlement Center for the Istanbul Stock Exchange (ISE)," and the "National Numbering Agency of Turkey," authorized by the Capital Markets Board. Apart from
“TAKASBANK provides ISE members with banking services including cash credits, securities lending/borrowing, and cross-border custody and settlement services” these unique services for the Turkish capital market, TAKASBANK provides ISE members with banking services including cash credits, securities lending/borrowing, and crossborder custody and settlement services. TAKASBANK is owned by the ISE (22.7%) and ISE members (27 banks and 77 brokerage houses with 47.1% and 30.3% stake in the share capital, respectively). Regulatory Environment Regulatory Bodies for TAKASBANK With respect to its Central Securities Depository (CSD) functions and responsibilities, TAKASBANK is regulated by 12
Federation of Euro-Asian Stock Exchanges
the Capital Markets Board (CMB). Rules relating to clearing and settlement are specified by the ISE in accordance with the general rules and regulations of the CMB. As TAKASBANK is organized as a banking institution under the Turkish Banking Law, the relevant regulators with respect to its banking services are the Banking Regulation and Supervision Board and the Central Bank of Turkey. Enforcement of Compliance with Participation to Takasbank System ISE members are direct participants in the TAKASBANK system. Enforcement for compliance with the conditions of participation is carried out on three levels: i) At the first level, the main regulator of the capital markets, CMB, issues authorization licenses for the intermediary institutions (banks and brokerage houses) for each of their capital markets services (IPO, secondary market trading, repo-reverse repo, custody, etc.). Any breach of compliance would lead to the suspension and/or termination of these authorizations by the CMB. ii) On the second level, ISE has its own criteria for ISE membership. ISE membership further provides and obliges direct participation in the TAKASBANK system. Rules relating to clearing, settlement and failures are set by the ISE and endorsed by the CMB. Settlement failures are reported to the ISE and related penalty payments are collected from the participants by TAKASBANK. Disciplinary rules that directly affect participation in the TAKASBANK system and that may result in the suspension and termination of ISE membership are enforced by the ISE.
Takasbank iii) On the third level, TAKASBANK applies related rules and regulations set by the CMB and the ISE, and issues general operational instructions for the enforcement of compliance. Apart from ISE members, those institutional investors such as Mutual Funds, Investment Trusts and Portfolio Management Companies are required to be participants in the TAKASBANK system for custody purposes and to comply with the rules and regulations of the CMB, the ISE and TAKASBANK. Efficient Clearing and Settlement Clearing and Settlement Infrastructure The facts that are providing higher efficiency in the Turkish clearing and settlement infrastructure, are summarized below: Central Securities Depository Despite the latest amendment in the Capital Markets Law that oversees dematerialization, securities are currently in bearer and physical form. As the Central Securities Depository of Turkey, no other institution than TAKASBANK is authorized in Turkey to safe keep physical securities. Physical certificates may only be held by the beneficial owners if those securities are held outside TAKASBANK. When a beneficial owner wants to sell those securities, he/she delivers it to a brokerage house. It is obligatory for the brokerage house to deliver these securities to TAKASBANK in two business days. Lodging and removing equities to/from the depository are realized by physical delivery of the actual certificates. The related transaction (credit/debit) is effected in the account of the participant immediately. Therefore, these securities can be traded at anytime and used for settlement immediately after their credit to the participant's account.
TAKASBANK number. Investors are able to check their equity holdings with ISE members as a whole, via the proprietary interactive voice response system of TAKASBANK, Alo-Takas. However, TAKASBANK does not directly deal with investors. It is the ISE members' responsibility to move securities in and out of the investor sub-accounts for settlement purposes. Centralized Clearing and Settlement for ISE Trades with Netting and DvP. TAKASBANK carries out the clearing and settlement of securities trading in all markets of the ISE. Offsetting cash settlement obligations among "Equities Market" "Bonds and Bills Market" and "Takasbank Money Market" is also available for members. Settlement is based on delivery versus payment (DvP). Receivables of the members are pledged against their obligations. Thus, members do not get their receivables unless they fulfill their obligations. In case of partial fulfillment of the obligation, proportional payment/transfer out of the receivable is made to the member. However, TAKASBANK does not guarantee the settlement. The settlement process has been designed to settle both securities and funds on a net basis in order to reduce principal risk and minimize the need for members to maintain large balances throughout the settlement process. Information on trade contracts is
Equities are immobilized in TAKASBANK vaults. As of year-end 2000, the market value of equties under custody at TAKASBANK was approximately US$ 26 billion. Customer Name-Based Custody System ISE members are required to set-up subaccounts for each of their clients under their main account with TAKASBANK. Each investor is identified by TAKASBANK by name and is assigned a unique
Internal and external shots of TAKASBANK
Federation of Euro-Asian Stock Exchanges
13
Takasbank transmitted on-line to the TAKASBANK system by the ISE on the date of trade (T). TAKASBANK creates binding statements of obligation for securities and funds due via multilateral netting among the participants. These obligations, together with receivables due, are reported to the members electronically via TAKASBANK's proprietary automation system on T+0 for bonds and bills and on T+1 for equities. The average daily equity trading volume at the ISE has been around US$ 750 million with 130,000 contracts in the year 2000. As a result of multilateral netting, on average net cash settlement amounts to 15% and net securities settlement amounts to 30% of the original value of trading. Book-entry Transactions via On-line Connections Settlement is conducted in book entry form at TAKASBANK. The TAKASBANK computer system is on-line connected to all ISE members, the ISE, the CMB, and the Central Bank of Turkey. ISE members can transfer securities from their main accounts to the sub-accounts of their clients and to other ISE members' accounts with TAKASBANK through their office terminals. For Turkish lira fund transfers out of the TAKASBANK system, the Central Bank's EFT system is utilized. Settlement is carried out on T+2 for equities, T+0 for bonds and bills and T+3 for the Eurobonds and GDRs, with same day value funds. Cash and Securities Transfers Through the EFT System The EFT (Electronic Fund Transfer) system is a real-time gross settlement (RTGS) system developed and operated by the Central Bank of Turkey for clearing Turkish lira payments in the Turkish banking system. Only banks incorporated in Turkey are eligible to be members of the EFT. As TAKASBANK is a member of the EFT system, those banks that are also ISE members, can use EFT to fulfill their cash and securities (G-bonds and Tbills) settlement obligations to the TAKASBANK system via their accounts with the Central Bank of Turkey. For those ISE members who are not EFT members (brokerage houses), TAKASBANK has developed a proprietary system called TETS (TAKASBANK Electronic Transfer System) through which brokerage houses can reach EFT system for cash and securities (G-bonds and T-bills) transfers purposes. Federation of Euro-Asian Stock Exchanges 14
TAKASBANK Electronic Transfer System (TETS) TETS enables brokerage houses to transfer both securities (G-bonds and T-bills) and cash in and out of TAKASBANK electronically in real-time connection with the Central Bank's EFT system, and to receive reports related to these transactions. TETS started with the participation of 45 brokerage houses in November 1997. As of year-end 2000, TETS has 74 members. Although banks are not direct members of TETS, they can also transfer securities (Gbonds and T-bills) from their account with the Central Bank to TAKASBANK through TETS. Before TETS was launched, brokerage houses used to need an intermediary bank in order to make use of the banking system for the transfers of cash, as they could not be members of the Central Bank's EFT system. Now, brokerage houses can virtually participate in the Central Bank's EFT system through TETS and have the same rights that EFT users have. With TETS, participants can transfer cash and securities (G-bonds and Tbills) within the banking system quickly and cost-effectively. Bids for Treasury auctions and open market transactions can also be made through TETS. Brokerage houses are now able to fulfill their settlement obligations in a shorter period, and settlement receivables can be transferred to the requested bank account in shorter time in an electronic environment that provides more effective and faster settlement. Default Procedure for Clearing and Settlement ISE members have to fulfill their obligations within the deadlines (for equities, T+2 15:00; for bonds and bills, T+0 16:30). If the obligations are fulfilled after the deadline but on the date of settlement, a failure penalty payment is charged which is calculated as a multiple of the Central Bank's highest interest rate. For fulfillment of obligations after the date of settlement, the ISE extends an inquiry to the member asking the reasons for the failure. If the failure still exists on T+1 for bonds and bills and on T+3 for equities, TAKASBANK notifies the ISE for buy-in or sell-out, indicating the due obligation (cash or securities) and the detailed list of securities and cash receivables under pledge at TAKASBANK.
Takasbank The payment and securities obligations arising from the trade related with the buyin or sell-out process are settled on the same day (T+1 for bonds and bills, T+3 for equities). If the receivables value under pledge is not sufficient to discharge the obligations as a whole, the member's collateral with the ISE is used to fulfill the rest of the obligation.
system will not be an integral part of TAKASBANK's organized market settlement. It is rather designed to ease the settlement between the custodians and brokers or other custodians, where normally DvP is applied and where this DvP collides with the DvP that is applied by TAKASBANK in the organized market settlement.
There is a fund belonging to the ISE under the management of TAKASBANK that is used for the ease of settlement. This fund is made up of the fines collected from ISE members with late payments and deliveries to settlement. The amount of the fund was approximately US$ 3.8 million as of year-end 2000. This fund is activated every day providing the first liquidity to the settlement process, which is centrally carried out by TAKASBANK. At the end of the settlement, if all the parties fulfill their obligations, this fund is released in full and remunerated in market terms via the Treasury Department of TAKASBANK.
This collusion of DvPs sometimes leads to failures of the brokerage houses on T+2, which so far has been 100% resolved on T+3. The new system aims to prevent such settlement failures and to ease the costs created by such cases.
Otherwise, it is used to cover the failure of the buyer against the seller. The coverage is limited to the prevailing value of the fund. Therefore this fund is actually a temporary liquidity facility for the settlement process.
As the custodians' customers are mainly foreign institutions, this new system is expected to have a positive effect on settlement transactions. From an operational perspective, this new system is deemed a settlement pre-matching system especially by the foreign investors, which could possibly be facilitated as such, as well.
“The average daily equity trading volume at the ISE has been around US$ 750 million with 130,000 contracts in the year 2000”
New Projects Related to Clearing and Settlement Time Priority in the Organized Market Settlement With this upgrade in the system, receivables from settlement will be prioritized according to the time of the fulfillment of obligations to the TAKASBANK system by the members. The new settlement software, which will also provide full automation in the organized market equity settlement, will be operational in the first quarter of 2001. When introduced, the members will be encouraged to fulfill their obligations earlier in order to get their receivables earlier from settlement, which in turn would provide higher efficiency in the system. "DvP Settlement" Facility Among Participants A new system allowing DvP settlement among participants is under development. However, this new instructions matching
Credit Services to Ease Clearing and Settlement For the purpose of making the settlement process easier and more efficient for ISE members and to reduce default risk, fully collateralized cash and securities credit facilities are provided by TAKASBANK. TAKASBANK's Credits Department assigns credit lines for each of the below mentioned facilities to each ISE member according to their financials: Credits from TAKASBANK’S Own Sources Securities Purchasing Loans (Cash Credits) These are secured loans for a period of up Federation of Euro-Asian Stock Exchanges
Takasbank to one month for ISE members to cover their cash requirements. Interest rates are announced by TAKASBANK on a daily basis. Types of Securities Purchasing Loans are listed below: Spot Credits These credits may not be repaid partially or completely before the maturity date. ISE members may extend the term to up to one month after paying the accrued interest plus tax and commissions at the original maturity. Optional Collection Before the Maturity Date Loans with a repayment option can be liquidated partially or completely before the maturity date. ISE members have to pay the accrued interest plus tax and commissions for the amount liquidated.
“The payment and securities obligations arising from the trade related with the buy-in or sell-out process are settled on the same day” Intra-Day This is mainly used by ISE members who work with foreign investors on a delivery versus payment basis to cover the settlement liabilities. The cut-off time for equities settlement is 15:00, whereas the cut-off time for repayment of intra-day loans is 17:00. To be able to cover their settlement liabilities, ISE members use intra-day loans paying a commission of 2.5 bp of the loan. Intra-day loans not paid by 17:00 during the day are
regarded as O/N securities purchasing loans and priced with Interbank O/N average interest rate plus 25%. Credit Facilities Intermediated and Guaranteed by TAKASBANK Securities Lending and Borrowing This covers equities in the ISE-100 composite index and lending is available for a period of up to one month. TAKASBANK meets the securities borrowing requests of the ISE members by the available securities of other ISE members upon their consent. Borrowers will not pay any commissions or fees, but bear the alternative cost of holding cash as collateral. Lenders will receive a commission of 5 bp of the weighted average price of stock at the last session of the day before the transaction date. This commission is equal to 18% in simple, 22% in compound interest per annum. TAKASBANK Money Market A market organized by TAKASBANK where ISE members can lend and borrow TRL funds from other ISE members through telephone orders directed to TAKASBANK. Although the money market facility was mainly developed for the non-bank ISE members who are unable to participate in the Central Bank's Interbank Money Market, banks also have become active participants of this market in time. TAKASBANK Money Market operations are realized between 10:00-12:30 and 13:00-15:00 with same day value. Banking Insurance Transaction Tax for the TAKASBANK Money Market is exclusively 1% instead of 5%. Both the borrower and the lender are charged a commission of 0.2 bp plus tax, 1% over the principal amount on the day of transaction.
CONTACT INFORMATION Takasbank International Department Abide-i Hurriyet Cd. Mecidiyekoyyolu Sk. No:286 80260 Sisli-Istanbul Turkey
16
Federation of Euro-Asian Stock Exchanges
web http www.takasbank.com.tr e-mail
[email protected] telephone +90 212 315 21 87 fax +90 212 315 26 26
Federation of Euro-Asian Stock Exchanges
Member Exchanges
Amman Stock Exchange
The year 2000 was the year of challenges and accomplishments for the Amman Stock Exchange (ASE) as the ASE took serious steps toward the development of the Jordanian capital market. Briefly a few of our accomplishments are as follows:
Letter from the Chief Executive Officer
“The year of challenges and accomplishments”
Jalil Tarif Chief Executive Officer
n The ASE launched the
electronic trading system on 26 March 2000. This event represents a qualitative leap toward the international standard of electronic trading as a preferred alternative to manual trading. Electronic trading started with ten companies, after that the companies were transferred gradually from manual to electronic trading. On June 15, the ASE completed the transfer of all listed companies, bonds and investment funds from the manual to the electronic trading system.
Future Outlook n
The ASE, the Securities Depository Center, the Dubai Financial Market and the Bahrain Stock Exchange signed a letter of intent to conduct a feasibility study for the development of a regional IT stock market in the year 2001. This market will be established to list and trade IT companies and to provide a mechanism for firms in Jordan, Dubai and Bahrain to access capital for growth and liquidity.
“The ASE will join the projects of the Middle East Financial Markets Network”
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Federation of Euro-Asian Stock Exchanges
n On 15 June 2000, the
ASE began implementing new Directives for Listing Securities on the Amman Stock Exchange. The issuance of these directives ushered in new internationally recognized concepts by way of market divisions and listing criteria. Traded shares of listed companies on the ASE are now divided into three markets in accordance to various criteria. In addition, trading in unlisted companies through the Third Market has been introduced. n In August, the ASE
issued the Internal ByLaws for Disputes Settlement. The basic component of these bylaws sets up a clearly defined mechanism to resolve disputes arising between ASE members, as well as between members and clients, through arbitration.
n By the end of the year
2000, the ASE completed the shift from the electronic trading floor to remote access trading at the site of the member brokerage firm. n A Brokers’ Guarantee
Fund (BGF) was set up to cover broker defaults arising from trading on margin. We feel the establishment of such a fund is an important step toward promoting confidence in the Jordanian capital market and in showing our commitment toward our investors. n An Intranet was created
for ASE members to improve communications. n A ticker tape has been
added to the ASE web site to disseminate live data. As a result, monthly traffic on the site increased to 1.2 million hits in December 2000.
n
The ASE will join the project of the Middle East Financial Markets Network, currently under construction, that when concluded, will collect live information on buy-sell, volume and market data and disseminate it to brokers and investors in Arab markets.
n
It is expected that the ASE will complete its new building by the beginning of 2001. A visitors’ gallery is planned to contain display screens for investors and visitors to watch the trading process in real time.
History and Development The Amman Financial Market (AFM) was established in 1976, and started its first day of business on 1 January 1978, as a public financial institution with legal, administrative and financial independence, operating under the auspices of the Minister of Finance. The AFM shared features normally found in both a stock exchange and a government securities and exchange commission. It acted as a government-mandated vehicle
Amman Stock Exchange for both the regulating and operating of the securities market in Jordan. The Jordanian Government adopted a comprehensive reform policy for the restructure of the capital market of Jordan, and a new Securities Law was passed in May 1997. According to this law, the AFM was restructured to create three different entities: the Jordan Securities Commission (JSC), the Amman Stock Exchange (ASE) and a Depository Securities Center (SDC). The JSC has already drawn up a set of regulations dealing with securities issuance, disclosure, accounting and auditing standards, financial services and licensing and mutual funds. Meanwhile, on 11 March 1999 the Amman Stock Exchange came into being, and a board of directors was elected. Also on 10 May 1999 the SDC was launched and a board of directors was elected. As a part of the restructuring process and the regulatory reforms, a fully automated system, provided by the Paris Bourse for the ASE, was launched on 26 March 2000. The new system will be in accordance with international standards. It has taken into account the G-30 recommendations and will provide an alternative to the manual-trading floor.
2000 Non-Jordanian Market 2000 Non Jordanian Ownership Ownership 2000-Non Jordanian Ownership 41%
59%
Non Jordanians
Jordanians
Structure & Regulations Legal
Special Status
Regulation Securities Market Regulations Trading Rules
Self Exchange with Regulator approval Responsibility of Exchange Yes, electronic Managed by Issuer Yes, if necessary 2001
Surveillance Corporate Actions Trading Halts Regulations Investor Protection
Practices and Procedures
Foreign Participation
Trading
Foreign Investors Investment Limitations Repatriation
Days Hours First & Second Markets Block Trades Market Segmentation
System Mechanisms Market Maker/Specialists Instruments Currency Real Time Information
Sunday-Thursday Pre-Opening 9:30-10:00 10:00-17:00 12:00-12:15 First, Second, Third Markets, Bonds, Off Floor transactions, Foreign Securities Allowed Automated, Remote Access, Intranet, Depository links, WAN Continuous Auction, Price Fixing No Stocks, Bonds Local Best bid/ask, last price, last volume, total volume
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Yes, electronic T+5 Yes Book Entry Transaction by transaction No No No No Banks
Allowed, no restrictions No limitation No restrictions
Taxes Cash Dividends Interest Income
10% Assessed for all investors as income Tax exempted
Capital Gains
“By the end of the year 2000, the ASE completed the shift from the electronic trading floor to remote access trading” Contact Information Contact Person E-mail Web-site
Mr. Sami Hattab
[email protected] www.ase.com.jo
Federation of Euro-Asian Stock Exchanges
19
Amman Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float
First Market 2 years Minimum is JD 2 million 10% turnover and 15% of the overall trading days. Not less than 100% of the paid-in-capital. 2 years Once yes yes
Shareholders Equity Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Prospectus Required Special Requirements
2000 Monthly Volume vs Index 60 50
Total Volume
200
(# Shares Millions)
150 30 100 20 50
Dec
Oct
Nov
Sep
Jul
Volume (US$ Millions)
Aug
Jun
Apr
May
Mar
Jan
0
Feb
10
Index
0
Not less than 50% of the paid-in-capital. yes yes
Official 2000 Statistics
250
40
Second Market 1 year -
2000
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
17.88 24.21 12.55 16.75 21.80 22.38 11.42 11.62 13.89 26.27 24.09 25.54 228.41
Total Volume (US$ Millions)
29.23 56.75 34.70 39.47 37.09 48.76 26.14 33.75 35.04 51.63 38.66 41.58 472.80
Average Daily Volume (# Shares Millions)
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
0.94 1.15 0.66 0.88 0.99 1.12 0.52 0.51 0.69 1.19 1.15 1.70 0.94
1.54 2.70 1.83 2.08 1.69 2.44 1.19 1.47 1.75 2.35 1.84 2.77 1.95
-Year Statistical Comparison 1996-2000 5-Year Statistical Comparison
5,834.74 5,625.17 5,443.92 5,227.47 5,251.52 5,168.74 5,036.03 4,912.63 4,876.18 4,970.23 4,938.15 4,950.13 4,950.13
Index
229.4 224.6 216.6 206.7 208.3 201.9 196.0 189.7 187.1 191.9 189.3 187.7
1996-2000
Category # Companies Traded Market Capitalization
1996
1997
1998
1999
2000
196
216
212
212
210
(US$ Millions)
4,881.7
5,447.0
5,862.7
5,834.7
4,950.1
350.6
501.1
655.0
549.3
472.8
162.5
191.1
247.9
271.2
228.4
1.43
2.02
2.68
1.12
1.95
0.7 216.0 13.5 0.07 2.5 0.7
0.8 238.7 14.7 0.09 2.3 0.7
1.0 240.0 16.4 0.11 2.3 0.7
5,834.7 236.0 14.3 0.09 2.9 0.7
0.9 187.7 14.8 0.10 3.6 0.7
Total Volume (US$ Millions)
Total Volume (# Shares Millions)
Average Daily Volume (US$ Millions)
Average Daily Volume (# Shares Millions)
Automated Trading System
20
Federation of Euro-Asian Stock Exchanges
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Baku Interbank Currency Exchange
From a development point of view, the year 2000 was occupied with different events and projects in both the Azeri national market and the international arena.
Letter from the General Manager “The year 2000 was occupied with different events and projects” Farkhad Amirbekov General Manager
The BICEX activity in the Azerbaijan financial market, on the whole, moved in the following main directions: financial market development, infrastructure, information technologies and professional training. Within financial market development are two main BICEX-backed projects:
1 the development and implementation of the BICEX E-system of Trades (BEST) and 2 the creation of the Organized Interbank Money Market (OIMM). Details concerning the projects are available on our web-site. I can only say that all the projects are directed towards reducing system risks in the financial market and increasing both liquidity and the exchange market share. The banking sector is also following suit and awaiting the implementation of the epayment system - the Azerbaijan Interbank
Payment System (AzIPS) by the National Bank.The BICEX management is also paying a great deal of attention to improving the professional skills of its employees. In support of this goal, the BICEX remains informed on all international issues and developments through our relations with foreign partners and colleagues, including FEAS. Finally, as we begin a new era comprised of new technological advances and growth tendencies, I would like to extend my hope for prosperity and success in all markets.
Future Outlook
History and Development
The year 2001 goals include:
The joint-stock closed-type company “Baku Interbank” (BICEX) was founded on 21 June 1993 by the five biggest banks of the Azerbaijan Republic:
n
launching of the BICEX E-System of Trading (BEST);
n
creation of the Organized Interbank Money Market (OIMM);
n
increasing the number of financial tools traded;
n
n
n
the National Bank of Azerbaijan;
n
the joint-stock and commercial International Bank of Azerbaijan;
development of improved information technologies and analytical services;
n
the joint-stock and commercial Industrial and Investment Bank of Azerbaijan;
changing web structure and strategy.
n
the joint-stock and commercial AgroIndustrial Bank of Azerbaijan;
n
the joint-stock and commercial Savings Bank of Azerbaijan.
“The BICEX management is also paying a great deal of attention to improving the professional skills of its employees”
The BICEX was registered on 26 July 1993 by the Ministry of Justice of the Azerbaijan Republic. The purposes of the BICEX are as follows: n
to set up regular exchange trading to carry out currency operations;
n
to determine the market exchange rate of the Azerbaijan currency (manat) to foreign currencies;
n
to create a mechanism for inter-state settlements;
n
to provide convertibility of the national currency;
n
to maintain management and information service for currency operations; Federation of Euro-Asian Stock Exchanges
21
Baku Interbank Currency Exchange Clearing & Settlement Main Historical Dates 18 October 1991
Declaration of Independence of Azerbaijan Republic 21 June 1993 Establishment of the BICEX 26 August 1994 Beginning of regular exchange trading in the currency market 31 March 1995 First credit auction of the National Bank at the BICEX 20 September 1996 First T-bill auction 22 January 1997 First exchange trading in the BICEX Stock Department 30 August 1997 Beginning of the trading in the Organized Interbank Currency Market (OICM) 25 September 1997 First trading in the OICM by means of universal trading enetwork of the BICEX 17 December 1997 “Corresponding emerging market” membership status in FIBV (Paris) 2 October 1998 Full member of FEAS (Istanbul) 24 February 1999 Membership in the Azerbaijan Commercial Chamber (Baku Interbank) 1 December 1999 Membership in the Azerbaijan Commercial Banks Association (Baku Interbank) n
to settle transactions made at the BICEX both in national and foreign currencies;
n
to organize and carry out exchange trading and auctions with interbank credits;
n
to organize and carry out exchange trading with securities;
n
to provide depository servicing in the securities market;
n
to conduct exchange trading with futures.
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
22
Monday-Friday Forex 10:00-11:00 Non-Forex 10:00-17:00 n/a Automated, Remote Access, WAN Call Auction Yes Currency, Interbank credit Local System under development
Federation of Euro-Asian Stock Exchanges
Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Yes T+0 Yes Book Entry Netting Yes, Full DVP Yes Yes No Exchange Members
Structure & Regulations Legal n/a Regulation Self Securities Market Regulations Regulator and Exchange with Regulator Approval Trading Rules Government institution Surveillance Yes, Electronic Corporate Actions Centralized Trading Halts Regulations n/a Investor Protection Yes
Foreign Participation Foreign Investors Investment Limitations Repatriation
Allowed, no restrictions No limitation No restrictions, yes repatriation
Taxes Cash Dividends Interest Income Capital Gains
15% n/a n/a
“The BICEX remains informed on all issues and developments through relations with foreign partners”
Contact Information Contact Person E-mail Web-site
Mr. Mustafa Mamedov
[email protected] www.az/bicex
Baku Interbank Currency Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue
Pre-Listing 2 statutory fund according to legislation n/a n/a 2 n/a n/a yes n/a
Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
2000 Monthly Volume vs Index 2000 Total Volume byy Month
Official Official 2000 Statistics
26.0
Total Volume
21.0
(# Shares Millions)
2000
16.0 11.0 6.0
Total Volume ($ mil)
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Jan
-4.0
Feb
1.0
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
“The year 2001 goals include development of improved information technologies and analytical services”
0.01 0.01 0.05 0.01 0.01 0.05 0.01 0.01 0.05 0.00 0.01 0.11 0.34
Total Volume (US$ Millions)
2.62 2.08 11.65 3.19 2.07 11.07 2.93 2.27 10.69 0.77 2.19 25.04 76.58
Listing 3 n/a n/a 200 3 n/a n/a yes must announce P/E ratio
2000 Statistics Average Daily Volume (# Shares Millions)
0.0006 0.0004 0.0027 0.0007 0.0004 0.0025 0.0006 0.0004 0.0023 0.0002 0.0005 0.0057 0.00
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
0.13 0.10 0.61 0.16 0.09 0.55 0.14 0.10 0.51 0.04 0.10 1.25 0.31
5-Year Statistical Comparison 5-Year Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization (US$ Millions)
Index
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
1996-2000
1996
1997
1998
1999
2000
0
1
6
0
0
#N/A
#N/A
0.0
1.3
3.1
10.7
48.3
61.2
55.4
76.6
0.0
0.2
0.3
0.2
0.3
0.14
0.20
0.24
0.00
0.31
0.0 #N/A #N/A #N/A #N/A 4,098
0.0 #N/A #N/A 36.11 #N/A 3,888
0.0 #N/A #N/A 19.85 #N/A 3,890
#N/A #N/A #N/A #N/A #N/A 4,373
0.0 #N/A #N/A #N/A #N/A 4,565
Total Volume (US$ Millions)
Total Volume (# Shares Millions)
Average Daily Volume (US$ Millions)
Average Daily Volume (# Shares Millions)
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Federation of Euro-Asian Stock Exchanges
23
Bulgarian Stock Exchange
Letter from the Chairman
“The main efforts have been concentrated on developing and stabilizing Bulgaria’s capital market infrastructure”
George Prohasky Chairman of the Board of Directors
Since trading was launched on the Bulgarian Stock Exchange-Sofia (BSE) in October 1997, the main efforts have been concentrated on developing and stabilizing Bulgaria’s capital market infrastructure. With the coming into force of the new public offering of the Securities Act in February 2000, with the modernization of the BSE and the Central Depository, as well as the launching of a new trading system, the infrastructure now basically fulfils the requirements of domestic and foreign investors. Despite these positive developments, it is evident that the Bulgarian capital market is still underdeveloped and does not perform the important economic and social functions that are
Future Outlook The future outlook for the BSE is as follows: n New trading instruments, especially in the bond market (government securities, corporate, municipal and mortgage bonds) are planned for 2001.
24
n
Launching of a derivatives market is also under discussion. Futures contracts with some of the most liquid stocks, as well as derivative issues with “packages” of government bonds are also being considered for 2001.
n
Developing the alternative market for secondary trading of government bonds on the Exchange, which started in November 2000, to provide small investors with the chance to invest in the market is continuing.
n
The recently installed market-makers trading system will undoubtedly have a positive effect on the development of the Bulgarian capital market. It is estimated that the continuous quotation of certain stocks by investment intermediaries/market-makers will give a boost to the liquidity and will increase the activity of the institutional and portfolio investors in Bulgaria.
Federation of Euro-Asian Stock Exchanges
characteristic of developed economies. In 2000 there was an acceleration of the privatization process in Bulgaria. The Exchange played a significant role in this process by introducing a special segment for the public offering of stateowned “packages” of securities. This type of privatization has proven to be very successful due to the transparency of the trading system and the price formation, the access of a very wide shareholder base, as well as the guaranteed settlement of the transactions. The major change in the legal framework of the Bulgarian capital market came with the adoption by Parliament of the Public Offering of Securities Act, which came into force on 31 January 2000. The new act guarantees the
n
investors improved protection, creates conditions for the stability of the stock market, ensures equal access and fair treatment for all participants, as well as transparency and settlement. In addition, on 20 October 2000, the BSE launched the SOFIX - a weighted market capitalization index that currently includes ten companies from the official market. Significant support for the modernization of the technological base of the Exchange was given by the consultants, working for the USAID-sponsored Capital Markets Project in Bulgaria. With their assistance, a new trading system based on the RTS Plaza system was installed and launched in October 2000.
Acceleration of the privatization process in 2001 is expected.
History and Development The First Bulgarian Stock Exchange (FBSE) was inaugurated on 8 November 1991 and started trading in May 1992. In 1996, the newly established Securities and Stock Exchange Commission (SSEC) introduced the requirement that all listed stocks must have their prospectuses approved by the Commission in order to trade on the FBSE. @Normal:As no company was able to comply with the new SSEC requirements, trading on the FBSE was suspended on 23 October 1996.
“The infrastructure now basically fulfils the requirements of domestic and foreign investors”
Bulgarian Stock Exchange The Bulgarian Stock Exchange-Sofia (BSE) was licensed as a new entity by the SSEC in October 1997, replacing the FBSE. Operations on the BSE floor began on 21 October 1997. Due to the mass privatization process, several million Bulgarians became small investors, creating a solid base for the development of a large and liquid capital market. Now practically all companies from the mass privatization program are being traded on the BSE. On 12 January 1998, the Exchange launched its official floor, trading shares in the first listed company - Elkabel. By the end of 1998, there were 19 companies listed on the Official Market. At the start of the new millennium, the number of listed companies on the Official Market of the BSE rose to 32. Major industrial companies, banks, holding groups and investment funds are among the issuers on this market. Over 800 companies are being traded on the Free Market. In August 1999 the first corporate bond issue of Prosoft was listed on the Official Bond Market.
Clearing Institution Risk Sharing Margin/Lending Custodians
Yes Yes Yes, Lending Banks
Structure & Regulations Legal Not-for-profit company Regulation Self Securities Market Regulations Regulator and Exchange with Regulator Approval Trading Rules Exchange Surveillance Yes, Electronic Corporate Actions Centralized Trading HaltsRegulations Yes Investor Protection Yes
Foreign Participation Foreign Investors Investment Limitations Repatriation
Taxes Cash Dividends
0% - received by local companies, 15% payable by local companies to Bulgarian residents and non-profit organizations, 15% distributed by Bulgarian companies to foreign shareholders 15% - all investors Included in the corporate income and taxable corporate income tax
The Law on Public Offering of Securities was adopted by the Bulgarian Parliament in December 1999. It replaced the Securities, Stock Exchanges and Investment Companies Act. The law provides greater protection for investors and creates prerequisites for the development of a transparent and efficient capital market in the country.
Practices and Procedures
Interest Income Capital Gains
Trading Days Hours Market Segmentation
System Mechanisms Market Maker/Specialists Instruments Currency Real Time Information
Monday-Friday 9:30-13:00 Official Market of equities segments A, B, C; Official bond market segments: Government, Municipality bonds, Corporate bonds; Free Market Automated, Remote Access, Depository Link, Internet Services, WAN Continuous Auction Yes Government & Corporate Bonds, Bulgarian Depository Receipts Local Best bid/ask, Last price, Last volume, Total volume
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP
Yes, Central T+3 Yes, Bearer Book Entry Transaction by transaction Yes, Full DVP
Allowed, no restrictions No limitation No restrictions
“The recently installed market-makers trading system will undoubtedly have a positive effect on the development of the Bulgarian capital market” Contact Information Contact Person E-mail Web-site
Mr. Georgi Prohaski
[email protected] www.bse-sofia.bg
Federation of Euro-Asian Stock Exchanges
25
Bulgarian Stock Exchange Minimum Listing Requirements Requirements
Segment A
Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Min.No. shares traded per month
3 BGN 20,000,000 25% 400 3 1 yes yes 1000
Share Volume by Markets 1998-2000
Official fficial 2000 Statistics Total Volume 2000
30,000,000 25,000,000 20,000,000
15,000,000 10,000,000 5,000,000
-
1998
1999
Official Market
2000
Free Market
Block Transactions
(# Shares Millions)
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
2000 Volume vs Market Capitalization
Category # Companies Traded Market Capitalization
4
Average Daily Volume
100
2
(# Shares Millions)
0
0
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Dec
6
200
Oct
300
Nov
8
Sep
400
Jul
Total Volume
Aug
(US$ Millions)
10
Jun
12
500
Apr
600
May
Total Volume
Mar
14
Feb
16
Volume ($ mil)
Federation of Euro-Asian Stock Exchanges
Total Volume (US$ Millions)
5.75 2.59 2.72 2.37 3.22 1.16 4.65 1.24 4.16 6.92 8.33 14.87 57.98
Segment C (Provisional) 1 BGN 500,000 5% 100 n/a n/a yes yes 1000
2000 Statistics Average Daily Volume (# Shares Millions)
0.0846 0.0623 0.0438 0.0464 0.3131 0.1727 0.0360 0.0227 0.0390 0.0531 0.2022 1.1495 0.17
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
0.30 0.12 0.12 0.12 0.16 0.05 0.22 0.05 0.22 0.31 0.36 0.93 0.23
tatistical Comparison 1995-1999 5-Year Statistical Comparison
700
Jan
26
1.61 1.31 1.01 0.93 6.26 3.80 0.76 0.52 0.74 1.17 4.65 18.39 41.14
800
Market Capitalization ($ mil)
Segment B (Parallel) 2 BGN 10,000,000 10% 100 1 n/a yes yes n/a
(US$ Millions)
(# Shares Millions)
718.89 692.67 687.56 626.76 619.32 649.60 594.06 572.09 539.20 601.97 580.72 572.61 572.61
Index
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A 110.6 109.7 104.7
1996-2000
1996
1997
1998
1999
2000
12
123
998
858
503
11.9
#N/A
146.3
707.9
572.6
0.1
43.7
121.1
72.2
58.0
0.0
8.3
26.2
20.9
41.1
0.00
0.99
0.49
0.08
0.23
0.1
707.9 #N/A 5.5 0.10 2.6 1.9
0.2 104.7 #N/A 0.10 #N/A 2.3
Average Daily Volume (US$ Millions)
0.0 77.6 0.0 0.00 0.0 487.4
0.2 #N/A
#N/A 0.0
#N/A 0.0 1,775.5
0.0 0.83 0.0 1,664.0
Dhaka Stock Exchange Letter from the Chief Executive Officer
“Over the past couple of years, our objective has been to establish a state-of-the-art stock exchange”
Md. Rezaur Rahman Acting CEO
During 2000, the Dhaka Stock Exchange (DSE) experienced a year of significant achievements. Various reforms in the banking sector and government incentives for the stock market have created favorable impact towards the stock market. The Bangladesh economy grew at a healthy 5.2 percent in 1999, up from 5.1 percent in the previous year. The growth of Bangladesh was better than expected; a bumper rice crop and sound macro-economic management helped to offset the effects of the 1998 floods. The Board of Councillors
and staff of the DSE concentrated their efforts on popularizing the capital market and making it more transparent, modernizing the trading system to increase effectiveness, and improving rules and regulations to better guarantee the interests of both our members and our investors. Over the past couple of years, our objective has been to establish a stateof-the-art stock exchange. Accordingly, we have been taking measures to enhance the regulatory environment, our dissemination of information, operational efficiency and the design of new products.
Disclosure and dissemination of financial and economic information have been high on our agenda. In that respect, a web site was set up in 1999 in addition to the daily, monthly and other periodic publications produced by the DSE. International Accounting Standards (IAS) and International Standards of Auditing (ISA) are being followed to ensure proper disclosure of concerned companies. Finally, we encourage all investors, domestic and foreign, to take advantage of the stable, growing and promising stock market in Bangladesh.
Future Outlook The DSE looks to the near future with the following objectives: n
developing the secondary market of securities and creating a new trading section with government bonds and derivatives
n
enhancing the capacity of automated trading
n
establishing a more efficient communication network
n
increasing the number of listed shares on the Exchange
n
making ongoing improvements in the legal regulatory framework of the DSE
“We’ve been taking measures to enhance the regulatory environment, our dissemination of information, operational efficiency and the design of new products”
Dhaka Stock Exchange
Federation of Euro-Asian Stock Exchanges
27
Dhaka Stock Exchange n
developing an in-house clearing and settlement system
n
providing more automated trading connections to each member
n
updating the listing regulations of the Exchange to ensure quality listings.
History and Development The Dhaka Stock Exchange (DSE) was incorporated in March 1954 as the East Pakistan Stock Exchange Association Ltd. On 23 June 1962, it was renamed the Dhaka Stock Exchange. Formal trading began in 1954 but was suspended when Bangladesh gained independence in 1971. With the change in the economic policy of the government in 1976, however, trading activities were ultimately resumed with nine listed companies. By December 2000, there were 241 securities listed on the DSE, including ten mutual funds and ten debentures, with a total market capitalization of approximately US$ 1.056 billion. During 2000, the DSE embarked on a radical reform program: n
n
A board of trustees was formed to the Investors’ Protection Fund. A retired Justice of the Supreme Court was nominated as chairman. Earlier Investors’ Protection Fund Regulations had been introduced to protect the interest of the investors. A Customers’ Grievance Cell has been set up to settle disputes between the members and their clients.
n
A CPE (Continuous Professional Education) program for our members on various rules and regulations of securities market has been started.
n
Automated trading regulations were recently introduced.
n
The DSE (Members’ Margin) Regulations has been introduced.
n
A Central Depository System is being introduced in the capital market to make the settlement of transaction more correct and transparent.
Market Segmentation
Public Market, Spot Market, Block Market, Odd lot Market
System
Automated, Reporting Facilities, WAN Continuous Auction No Stocks, Debentures, Mutual Funds Local Best bid/ask, Last Price, Last Volume, Order Book, Listed Company Announcement
Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Clearing & Settlement Central Depository Period Registered Settlemen Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
No T+5 Yes Physically Netting No DVP Yes No No Not Applicable
Structure & Regulations Legal Regulation Securities Market Trading Rules Surveillance Corporate Actions Trading Halts Regulations Investor Protection
Not-for-profit company Self Regulations Exchange w/ Regulatory institutions and jointly Exchange Yes, Electronic Equity Yes Yes
Foreign Participation Foreign Investors Investment Limitations Repatriation
Allowed, no restrictions No limitation No restrictions
Taxes
n
10% for individuals above Tk 40,000 10% Negligible
Interest Income Capital Gains
An additional index, DSE-20, was introduced on 1 January 2001. The DSE-20 includes the best performing twenty listed companies. The base index is 1000 points as of 1 January 2000.
Practices and Procedures
Contact Information
Trading
Contact Person: E-mail: Web-site:
Days Hours
28
Cash Dividends
Saturday-Thursday Continuous 10:30 -14:00 Post Closing 14:00 - 14:30
Federation of Euro-Asian Stock Exchanges
Mr. Md. Rezaur Rahman
[email protected] www.dsebd.org
Dhaka Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
2000 Monthly Volume vs Index
National Market n/a Tk 10,000,000 n/a 250 n/a n/a n/a yes n/a
Official Official 2000 Statistics Total Volume
2000-Monthly Volume vs Index 200 180 160 140 120
2000
600
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00
500 400 300 200
Dec
Oct
Volume (US$ Millions)
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Jan
100 Feb
100 80 60 40 20 0
700
0
Index
(# Shares Millions)
Total
1996-2000 Market Capitalization ($ millions) 1996-2000 Market Capitalization ($ millions)
41.43 28.03 36.27 32.77 64.79 75.11 297.97 118.44 89.79 75.32 68.61 20.52 949.04
Total Volume (US$ Millions)
28.85 18.44 32.12 35.40 42.93 55.08 180.03 101.84 81.57 82.54 75.46 31.43 765.68
2000 Statistics Average Daily Volume (# Shares Millions)
1.8832 1.5572 1.5769 1.3653 2.5916 3.2658 11.4605 4.9349 3.5915 3.0126 2.7442 1.2073 3.43
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
1.31 1.02 1.40 1.47 1.72 2.39 6.92 4.24 3.26 3.30 3.02 1.85 2.76
Statistical Comparison 1995-1999 5-Year Statistical Comparison Category
873.37 902.29 941.47 958.26 991.92 1,048.62 1,202.94 1,177.15 1,100.90 1,153.88 1,147.24 1,165.25 1,165.25
Index
484.4 493.6 517.8 519.5 532.9 546.8 639.3 660.9 623.2 644.1 625.5 642.7
1996-2000
1996
1997
1998
1999
2000
# Companies Traded Market Capitalization
205
222
229
240
244
(US$ Millions)
4,002.5
1,568.8
1,036.2
869.5
1,165.3
717.6
400.9
717.1
793.5
765.7
103.3
91.2
1,015.3
739.4
949.0
2.81
1.50
2.67
2.88
2.76
0.4 2,300.0 40.0 0.18 #N/A 42.4
0.3 757.0 11.3 0.26 #N/A 45.3
3.8 540.2 7.1 0.69 7.9 48.1
869.5 487.8 6.7 0.91 7.4 50.6
3.4 642.7 8.7 0.66 5.9 54.0
Total Volume (US$ Millions)
2000
Total Volume (# Shares Millions)
1999
Average Daily Volume (US$ Millions)
1998
Average Daily Volume (# Shares Millions)
1997 1996 500
1,000
1,500
2,000
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
“We encourage all investors, domestic and foreign, to take advantage of the stable, growing and promising stock market in Bangladesh” Federation of Euro-Asian Stock Exchanges
29
Egyptian Stock Exchange
Letter from the Chairman
“It has been a challenging time for us” Dr. Sameh Y. El-Torgoman Chairman
The years 1999 and 2000 were challenging ones for us at the Exchange. We saw a number of large transactions in the cement and technology industries. We saw our market react to the gyrations taking place elsewhere in the developed and the emerging world. We prepared ourselves for possible difficulties in connection with Y2K issues. We planned for the introduction of our new trading system in terms of software, hardware, premises, staff and their training. We have tapped the hundreds of years of combined knowledge and experience of our domestic and international advisory committees and applied
their guidance in formulating rules and guidelines. We have engaged in dialogue with other exchanges around the globe to initiate, build relationships, and to cooperate on matters of mutual benefit. In summary, it has been a challenging time for us. Our future holds more of the same. We feel very strongly that given the economic fundamentals, our market is poised, more so than other emerging markets, to move higher. That being said, our goals for the coming years are to assist in the grooming of budding investors, to disseminate information widely, to ensure continual transparency and fair practice, to monitor our economic environment at
all times in order to develop and encourage the use of novel financial instruments, and last, but not least, to create the preeminent capital market in the region. We intend to nurture our regional relationships that have been built up in the recent past based on commonality of language, culture and technological platforms not to mention geographical proximity. Our well-wishers around the globe, the Government of Egypt via the Ministry of the Economy and other agencies, the Capital Market Authority and our staff have got us where we are today, and we hope to enjoy their continued support in the future to progress in quantum steps to achieve our many goals.
Future Outlook
2 media campaigns,
CASE is currently working on the following:
3 launching of the “Stock Riders” game,
n
4 creation of information centers,
implementation of a new automated trading and advanced market surveillance system in accordance with international standards in the first quarter of 2001;
n
complete renovation and modernization of the premises;
n
relaunching of the CASE web site - this site will upgrade information for investors, including statistical data and now provide the ability to retrieve up to one year of historical data;
n
listing rule modifications forthcoming from the Capital Market Authority (CMA);
5 conducting training courses for brokers and issuers, such as the Harvard University (USA)/CASE course on investment appraisal, project finance and risk analysis. Another course will be offered for judges and lawyers on 8 January 2001, covering the capital market rules and regulations, interpretation and implementation. This is the first Harvard-sponsored course in the MENA Region.
History and Development
n
presentation to Parliament of a new capital market law in 2001, to give freedom to the Exchange to set its own regulations after CMA approval;
n
restructuring of membership rules;
n
enhancing information dissemination and public awareness through:
1 upgrade and distribution of the various publications issued by the Exchange, 30
Federation of Euro-Asian Stock Exchanges
The Egyptian Stock Exchange is comprised of two exchanges: the Cairo and Alexandria Stock Exchanges (CASE), and is governed by the same board of directors that share the same trading, clearing and settlement systems. The Alexandria Stock Exchange was officially established in 1888 followed by Cairo in 1903. The two Exchanges were very active in the 1940s, when the Egyptian Stock Exchange ranked fifth in the world. Nevertheless, the central planning and socialist policies adopted in the mid-1950s led to the demise of activity on the Exchange, which remained dormant throughout the period between 1961 and 1992.
Egyptian Stock Exchange In 1990, the Egyptian government started an economic reform and restructuring program. The move towards a free-market economy has been remarkably swift and the process of deregulation and privatization has stimulated stock market activity. In the period between 1992 and 1996, the Capital Market Authority (CMA) played an instrumental role in initiating and leading the effort for the revival of the Egyptian stock market. CASE signed a contract with EFA Software Ltd., to deliver the new trading, clearing and settlement system that will replace the existing one in May 1998. The Board of Directors also set up several committees with specific responsibilities. At the senior level, an international advisory committee made up of internationally prominent economists, investment bankers, financiers and investors has been developed in order to ensure that CASE stays closely linked to the international arena. This group will also provide continuous feedback on its policies.
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Sunday-Thursday 11:30 - 15:30 n/a Automated, Depository Link, Data Dissemination, Remote Login, WAN Primary market, Continuous auction No Stocks Local and US Dollars Best bid/ask, Last price, Last volume, Total volume, Order book, Counter-parties, Listed company announcements
Clearing & Settlement Central Depository
Central
Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
T+1 Yes, Bearer Book Entry, Physical Netting Yes, Full DVP Yes, wholly owned Yes No Banks, Clearing Members
Structure & Regulations Legal
Special status within the law Regulation Not self-regulated Securities Market Regulations Regulatory Institution(s), the Exchange and the market participants jointly develop new rules and projects Trading Rules Shared regulatory responsibility Surveillance Yes Corporate Actions Equity (centralized), Fixed Income (centralized) Trading Halts Regulations Yes Investor Protection No
Foreign Participation Foreign Investors Investment Limitations Repatriation
Allowed, no restrictions No limitations No restrictions
Taxes Cash Dividends Interest Income Capital Gains
None None None
Contact Information Contact Person: E-mail: Web-site:
Ms. Mai Aly
[email protected] www.egyptse.com
Egyptian Stock Exchange
Federation of Euro-Asian Stock Exchanges
31
Egyptian Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements information
Official Schedule n/a n/a 30% 150 n/a n/a yes no must abide by the financial disclosure rules stated in Article 6 of Law 95/1992
Total Volume
2000-Monthly Volume vs Index 680
1,000 800 600 400 200 0
620
660 640
600 580 Dec
Oct
Nov
Sep
Jul
Volume (US$ Millions)
Aug
Jun
Apr
May
Mar
Jan
Feb
560 Index
2000
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 Market Capitalization ($ millions) 1996-2000 Market Capitalization ($ millions)
Unofficial Schedule 2 n/a n/a n/a 100 n/a n/a yes no auditing and financial statements must be in accordance with the Egyptian and international accounting and auditing standards
Official 2000 Statistics
2000 Monthly Volume vs Index 2,000 1,800 1,600 1,400 1,200
Unofficial Schedule 1 n/a n/a n/a 100 n/a n/a yes no auditing and financial statements must be in accordance with the Egyptian and international accounting and auditing standards
(# Shares Millions)
91.89 99.01 83.61 60.80 120.00 49.70 81.00 62.00 57.00 91.00 109.00 53.20 958.21
Total Volume (US$ Millions)
1,882.00 1,248.00 1,737.00 910.00 1,200.00 612.00 1,063.00 1,442.00 582.00 982.00 638.00 605.00 12,901.00
Average Daily Volume (# Shares Millions)
4.59 4.71 4.18 3.38 5.45 2.49 3.86 2.70 2.85 4.14 4.95 2.80 3.86
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
94.10 59.43 86.85 50.56 54.55 30.60 50.62 62.70 29.10 44.64 29.00 31.84 52.02
40,490.00 39,900.00 40,030.00 38,000.00 37,600.00 34,545.00 34,849.00 35,000.00 33,000.00 31,000.00 31,000.00 30,700.00 30,700.00
Index
673.1 665.0 673.4 637.4 650.7 615.2 609.2 613.5 598.0 598.3 624.9 622.2
5-Year Statistical Comparison 1996-2000 Category
1995
1996
1997
1998
1999
# Companies Traded Market Capitalization
746
646
654
870
1,049
(US$ Millions)
8,064.7
14,142.9
20,845.0
24,176.5
32,723.2
674.8
2,579.2
6,141.9
5,270.1
8,981.0
43.7
170.5
286.7
436.0
823.3
2.7
10.4
24.7
21.5
36.1
0.2 213.0 #N/A 0.08 #N/A 3.4
0.7 296.7 15.0 0.18 0.1 3.4
1.2 359.9 12.0 0.29 0.1 3.4
1.8 382.8 9.0 0.22 0.1 3.4
3.3 549.6 7.70 0.27 13.50 3.4
Total Volume (US$ Millions)
2000
Total Volume (# Shares Millions)
1999
Average Daily Volume (US$ Millions)
1998
Average Daily Volume (# Shares Millions)
1997 1996
-
32
10,000
20,000
30,000
40,000
Federation of Euro-Asian Stock Exchanges
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Georgian Stock Exchange
Letter from the Chairman
“The year of 2000 marked the beginning of operations of the Georgian Stock Exchange (GSE)” George Loladze Chairman of the Supervisory Board
The year of 2000 marked the beginning of operations of the Georgian Stock Exchange (GSE). Therefore, we cannot yet discuss market turnover developments. We can, however, boldly note that the last year turned out excessively full of significant events for the young Exchange. Despite the widespread skeptical viewpoint that Georgia has not yet prepared grounds for organized securities trading, the GSE has not only managed to produce and legalize the Exchange rules, set up a trading system and test its operational capacity, but also commenced regular trades starting in March 2000. The commencement of trades was largely due to the
Future Outlook The GSE has an aggressive program for 2001, including: n
increasing traded companies to 400 from the December 2000 total of 269.
n
listing companies, for the first time, on the first or “official” tier.
establishment and implementation of the Georgian Securities Central Depository (GSCD). Assisted by the National Securities Commission (NSC), the stock market took a serious push toward the growth of transparency by starting to aggressively admit the securities of reporting companies (having more then 100 shareholders) to the trading system of the GSE, thus greatly facilitating the preparation and submission of company financial accounts. In addition, the Memorandum of Understanding on the Specialized Exchange Privatization Auctions signed by the Ministry of State Property Management, the NSC and the GSE also created visible prospects for the development of the securities market.
The high level of trading, the clearing and settlement system and the use of the internationally acknowledged regulatory principles enabled the GSE to become a member of FEAS in the first year of its operations. It is our strong belief that the principles of transparency and disclosure, underlying the operation and development strategy of the Exchange is an unquestionable guarantor of our success. Despite many concerns still existing, the GSE will unwaveringly continue to apply the policy to extensively encompass the various facets of the stock market and work in cooperation with all those who strive toward the improvement of the investment climate in Georgia.
The Georgian Securities Central Depository (GSCD), a full subsidiary of the GSE, will begin implementing an electronic information exchange and dissemination system with brokerage companies, securities registrars and settlement banks.
History and Development
n
implementing a remote trading system with incentives to brokers to convert to this system;
n
in cooperation with the Ministry of State Property Management, beginning the first stock exchange privatization auctions.
n
implementing an infrastructure to trade new instruments, particularly T-bills and municipal bonds.
“The GSE has an aggressive program for 2001”
Equity securities first appeared in Georgia in 1991 after the declaration of independence that signaled the beginning of market-oriented reforms. A vast majority of the newly established joint-stock companies were owned by a relatively small number of private shareholders and trading in these companies’ shares was relatively inactive. With the launching of the Mass Privatization Program in 1994, approximately 1300 stateowned enterprises were organized as joint-stock companies, creating about half a million individual private shareholders. However, during the past five years (1994-1999), the lack of an appropriate legal framework and organized market infrastructure seriously impeded the secondary trading of these shares and any over-the-counter market activity was nearly non-existent. The Georgian Stock Exchange was founded in 1999 by a group of Georgian securities market professionals, Federation of Euro-Asian Stock Exchanges
33
Georgian Stock Exchange leading banks, investment and insurance companies. Today it is the only organized securities market in Georgia. Designed and established with the assistance of the United States Agency for International Development (USAID) and operating within the legal framework of corporate and securities laws drafted with the assistance of American and German experts, the GSE can assert that it is designed and operated to comply with “global best practices” and offers an attractive investment environment to foreign investors. In order to promote the concept of self-regulation, the GSE membership adopted a number of rules (Trading Rules, Code of Ethics, Dispute Resolution Rules, Arbitration Code, etc.). After approval of these rules by the National Securities Commission of Georgia, the GSE was officially recognized as a Self-Regulatory Organization (SRO) and received a stock exchange license in January 2000. The trading system of the GSE utilizes an automated trading facility. Thousands of different securities can be traded by its members from the workstations at the GSE floor or remotely from their offices. The GSE adopted the platform employed by the Russian Trading System (RTS) in Moscow. However, RTS - as an excellent informational-communication system - was significantly modified to ensure those requirements outlined under the GSE Trading Rules reflected the peculiarities of Georgian securities market. After several months of training and a series of mock trading sessions for the members/brokers, official trading at the GSE began in March 2000. By the end of 2000, the number of companies admitted to the GSE trading system reached 269 and the total volume of trades exceeded 4 million shares and US$ 3 million.
Practices and Procedures
Clearing & Settlement Central Depository Period Registered Settlement
Yes T+1 Yes Book Entry
Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Transaction by transaction Yes, Full DVP Yes, wholly owned No Yes, margin Individuals, Institutional Investors, Brokerage Houses, Banks, Exchange Members
Structure & Regulations Legal
Not-for-profit company, Special status within the law Regulation Yes Securities Market Regulations Regulatory Institution(s), the Exchange and market participants jointly Trading Rules Exchange, Shared regulatory responsibility Surveillance Yes, Electronic Corporate Actions Centralized Trading Halts Regulations Yes Investor Protection No
Foreign Participation Foreign Investors Investment Limitations Repatriation
Allowed, no restrictions No limitations No restrictions
Taxes Cash Dividends Interest Income Capital Gains
10% 10% 20%
Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Tuesday and Thursday 13:00-15:00 No Segmentation Automated, Depository Link, Data Dissemination, Reporting Facilities, WAN Continuous Auction No Stocks, Government Bonds Local Best bid/ask, Last price, Last volume, Total volume, Listed company
“By the end of 2000, the number of companies admitted to the GSE trading system reached 269 million” Contact Information Contact Person: E-mail: Web-site:
34
Federation of Euro-Asian Stock Exchanges
Ms. Sophia Motsonelidze
[email protected] www.gse.ge
Georgian Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results
Non-listing n/a n/a n/a n/a n/a
# Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Special Requirements
n/a n/a n/a According to the Law on the Securities Market, only securities of the companies which comply with the following requirement shall be admitted to the Exchange for trading: Their securities register is maintained by an
ficial 2000 Statistics Official Total Volume (# Shares Millions)
2000
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
#N/A #N/A #N/A 0.00 0.63 0.22 0.00 0.46 0.18 1.09 0.14 1.63 4.35
Total Volume (US$ Millions)
#N/A #N/A #N/A 0.00 0.76 0.26 0.01 0.49 0.04 0.24 0.04 1.16 2.99
2000 Statistics Average Daily Volume (# Shares Millions)
#N/A #N/A #N/A 0.00 0.07 0.02 0.00 0.05 0.02 0.12 0.02 0.20 0.06
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
#N/A #N/A #N/A 0.00 0.08 0.03 0.00 0.05 0.00 0.03 0.01 0.15 0.04
#N/A #N/A #N/A 4.27 25.93 25.92 17.31 17.84 11.10 19.61 13.73 24.23 24.23
Index
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
Listing not less than 3 years n/a n/a n/a at least 2 years during the past 3 years n/a n/a n/a According to the Law on the Securities Market, only securities of the companies which comply with the following requirement shall be admitted to the Exchange for trading: Their securities register is maintained by an independent share registrar independent share registrar Ownership capital - not less than US$ 100,000 equivalent in the national currency Number of shares issued - at least 50,000 The issuer maintains its accounting records and bookkeeping according to the International Accounting Standards
5-Year Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization (US$ Millions)
1996
1997
1998
1999
0
0
0
0
#N/A
#N/A
#N/A
#N/A
2000
269
2000 Volume vs Market Capitalization
24.2
Total Volume (US$ Millions)
2000 Volume vs Market Capitalization 30.0
1 1
#N/A
#N/A
#N/A
#N/A
3.0
25.0
#N/A
#N/A
#N/A
#N/A
4.4
20.0
#N/A
#N/A
#N/A
#N/A
0.04
Total Volume Average Daily Volume
0
Market Capitalization ($ mil)
Dec
Oct
0 Nov
0
0.0 Sep
5.0
Jul
0.1 #N/A #N/A 0.12 #N/A 2.0
Aug
#N/A #N/A #N/A #N/A #N/A #N/A
Jun
#N/A #N/A #N/A #N/A #N/A #N/A
Apr
#N/A #N/A #N/A #N/A #N/A #N/A
May
#N/A #N/A #N/A #N/A #N/A #N/A
Mar
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
1 10.0
Average Daily Volume (# Shares Millions)
1 15.0
Jan
(US$ Millions)
1
Feb
(# Shares Millions)
Volume ($ mil)
Federation of Euro-Asian Stock Exchanges
35
Istanbul Stock Exchange
Letter from the Chairman and CEO
“80% of our members have been provided with trading terminals in their own headquarters”
Osman Birsen Chairman and CEO
In the year 2000, in line with the initial results of the anti-inflationary program supported by the IMF with a stand-by agreement, interest rates fell in both real and nominal terms. This led stocks to gain popularity as an investment instrument, which resulted in a significant increase in the number of individual investors trading on the Istanbul Stock Exchange (ISE) to 1.4 million. Another implication of the positive sentiment in the market has been the increase in trading volume, with the average daily trading volume surging from US$ 356 million in 1999 to a level of US$ 749 million; registering an increase of 110 percent. On the demand side, 36 new
companies were listed on the ISE in 2000, setting a new record in public offerings. By year’s end, the number of companies traded on the ISE reached 315. As a result of our on-going efforts toward allowing remote access to the trading system, around 80% of our members have been provided with trading terminals in their own headquarters. We expect to complete the project in 2001 when Turkish Telecom finalizes its work concerning the project. Another important change has been with the Bonds and Bills Market, where a market-making system was introduced.The ISE was very active on the international side throughout 2000. We hosted the third FIBV
Global Emerging Markets Conference and Exhibition in Istanbul, which brought together over 700 participants from 65 different countries and 60 stock exchanges. New partnerships were also on the agenda in the past year: the ISE became partners with the Kyrgyz and Baku Interbank Stock Exchanges, thereby further strengthening its cooperation with these markets. We are also examining the feasibility of becoming partners with the Kazakhstan, Turkmenistan, and Uzbekistan Stock Exchanges.In general, 2000 has been a year when the ISE showed its resolve to be a major player in the development of the region. Our efforts will continue in this direction in 2001 as well.
Future Outlook
n
A Central Registry for dematerialization is planned.
n
Remote access trading on the Bonds and Bills Market continued throughout 2000 and is to be completed in 2001. The number of members operating in the Bonds and Bills Markets from their offices reached 153 as of December 2000.
n
A Turkish Association of Broker and Dealers will be established as was recently provided for in the Capital Markets Law.
n
The Wide Area Network (WAN) project, providing remote access to the stock trading system will be completed in 2001. The number of members operating in the equities market remotely reached 96 in December 2000.
History and Development
n
Within the framework of the new regulations in the Turkish Capital Markets, an investors’ protection fund will be set up to a predetermined and limited amount.
n
As the project co-leader of Southeast Europe Cooperative Initiative (SECI), the ISE and the Capital Markets Board of Turkey will continue to carry out efforts to establish a common trading platform in the year 2001; which will provide remote access for the members of each stock exchange within an agreed upon regulatory framework.
n
A licensing and training center will be established in order to increase the occupational proficiency of the capital markets participants.
Turkish securities markets have their roots in the second half of the 19th century with the development of the Dersaadet Securities Exchange in 1866. Following the creation of the Turkish Republic, a new law was enacted in 1929 to reorganize the fledgling capital markets under the new name of “Istanbul Securities and Foreign
Istanbul Stock Exchange
Federation of Euro-Asian Stock Exchanges
37
Istanbul Stock Exchange Exchange Bourse.” In 1981, the Capital Market Law was enacted and one year later, the main regulatory body, the Capital Markets Board, was established. In October 1983, the Parliament approved the Regulations for the Establishment and Functions of Securities Exchanges, which paved the way for the establishment of the Istanbul Stock Exchange (ISE), formally inaugurated at the end of 1985.
Clearing Institution Risk Sharing Margin/Lending Custodians
Yes, wholly owned Yes Yes Institutional Investors, Brokerage Houses, Banks Exchange Members, Clearing Members
Structure & Regulations Among current achievements, the ISE has established an International Market in a securities “free trade zone” in order to provide a fair and organized market for the trading of depository receipts, eurobonds and other foreign bonds. Having proven to be a crucial link in the region, the ISE has been assuming active roles in other projects, aiming at regional cooperation as well. Among these is the three-year Securities Market Development Program initiated by OECD and the ISE jointly, in 1998, with an aim to provide assistance to the development of the securities markets in the Euro-Asian region as well as for the financing of related projects. Additionally, the ISE is participating in the Southeast European Cooperative Initiative (SECI), Cooperation among Securities Markets Project, which started in 1998 and is expected to lead to better integration of the region’s capital markets.
Legal
Special Status within the Law Regulation Self Securities Market Regulations Exchange, Regulatory Institution, and the market participants jointly Trading Rules Exchange Surveillance Yes, Electronic Corporate Actions Equity (centralized), Fixed Income (centralized) Trading Halts Regulations Yes Investor Protection Yes
Foreign Participation Foreign Investors Investment Limitations Repatriation
Allowed, no restrictions No limitations No restrictions
Taxes Practices and Procedures
Cash Dividends
If dividends are distributed by a public company, a withholding tax of 5.5% applies; otherwise 16.5% No withholding tax applies on interest income of gov’t debt securities issued after 1/10/98 Tax exempt if underlined equities are held for 3 months after purchase
Trading Days Hours
Market Segmentation System Mechanism Market-Maker/Specialists Instruments
Currency Real Time Information
38
Monday-Friday Equity Market 10:00 -12:00 / 14:00 -16:00 Bond Market 09:30 -12:00 / 13:00 -17:00 National Market, Regional Market, New Companies Market Automated, Depository Link, Data dissemination, Reporting Facilities, WAN Continuous Auction Yes Stocks, Equities, Government Bonds, Treasury Bills, Repos, Private Sector Bonds Local Best bid/ask, Last price, Last volume, Total volume, Counter-parties Order book, Listed Company Announcements
Interest Income
Capital Gains
Istanbul Trading Floor
Clearing & Settlement
Contact Information
Central Depository Period Registered Settlement Clearing DVP
Contact Person: E-mail: Web-site:
Yes T+2 Bearer Book Entry Clearing Yes, Full DVP
Federation of Euro-Asian Stock Exchanges
Mr. Eren Kiliclioglu
[email protected] www.ise.org
Istanbul Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float
Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Special Requirements
2000 Monthly Volume vs Index
National Market 3 years if free float rate is higher than %25 then 2 years
Regional Markets 2 years if free float rate is higher than 25% then 1 year
15% if its capital is under TL 750 billion 10% if its capital is within range of TL 750 billion and TL 1,500 billion 5% if its capital is more than TL 1,500 billion 250 2 years if free float rate is higher than 25%, 1 year n/a n/a yes yes
n/a
n/a n/a
n/a n/a
n/a n/a
n/a n/a yes yes
n/a n/a yes n/a
Official fficial 2000 Statistics
2000-Monthly Volume vs Index
Dec
Oct
Nov
Sep
Jul
Volume (US$ Millions)
Aug
Jun
Apr
May
1,000 800 600 400 200 0
Mar
5,000 4,000 3,000 2,000 1,000 0
Jan
2,000 1,800 1,600 1,400 1,200
Feb
10,000 9,000 8,000 7,000 6,000
Index
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 Market Capitalization ($ millions) 1996-2000 Market Capitalization ($ millions)
2000 Statistics
Total Volume
Total Volume
Average Daily Volume
Average Daily Volume
(# Shares Millions)
(US$ Millions)
(# Shares Millions)
(US$ Millions)
2000
999,424.31 26,426.82 776,012.99 17,855.01 772,309.83 18,365.33 1,011,700.85 23,014.40 819,450.18 15,696.17 779,620.32 12,170.54 668,397.72 10,223.08 849,250.53 9,949.57 1,026,212.35 10,885.82 1,304,106.79 15,645.56 1,202,065.09 13,927.42 867,133.76 7,773.87 11,075,684.72 181,933.57
52,601.28 36,953.00 42,906.10 50,585.04 37,247.74 35,437.29 31,828.46 38,602.30 48,867.25 59,277.58 54,639.32 54,195.86 45,023.11
1,390.89 850.24 1,020.30 1,150.72 713.46 553.21 486.81 452.25 518.37 711.16 633.06 485.87 739.57
5-Year Statistical tatistical Comparison 1996-2000Comparison Category # Companies Traded Market Capitalization (US$ Millions)
New Companies Market n/a
Market Capitalization (US$ Millions)
121,703.02 111,897.00 109,197.19 125,444.79 105,210.72 94,116.82 106,412.10 97,455.70 82,399.67 95,777.89 62,722.72 69,507.42 69,507.42
Index
1,751.4 1,620.4 1,575.8 1,844.6 1,537.9 1,360.9 1,273.5 1,174.1 996.3 1,155.9 745.9 817.5
1996-2000
1996
1997
1998
1999
2000
228
258
277
285
315
30,797.2
61,879.3
33,975.2
114,270.8
69,507.4
37,737.0
58,103.6
70,395.9
84,033.8
181,933.6
390,917
919,784
2,242,531
5,823,858
11,075,685
152.78
230.57
283.85
24,677.37
739.57
1,582.7 534.0 12.2 1.23 2.9 106,342.0
3,649.9 982.0 24.4 0.94 1.6 204,500.0
9,042.5 484.0 8.8 2.07 3.4 312,340.0
114,270.8 1,654.0 0.0 0.00 0.0 535,019.0
45,023.1 817.5 16.1 2.62 1.3 671,761.0
Total Volume (US$ Millions)
2000
Total Volume (# Shares Millions)
1999
Average Daily Volume (US$ Millions)
1998
Average Daily Volume (# Shares Millions)
1997 1996
-
40
20,000 40,000 60,000 80,000 100,000 120,000
Federation of Euro-Asian Stock Exchanges
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Karachi Stock Exchange
Letter from the Chairman
“We are in the process of developing our market to compete with any other market in the world.” Yasin Lakhani Chairman
The year started with optimism: a bumper cotton crop, surplus agricultural produce and a low inflation rate helped economic recovery in general and capital markets in particular. The subsequent decision of a 2 percent cut in lending rates by the public sector banks and the removal of restrictions on the remittance of funds to the foreign investors restored the confidence of investors. The Karachi Stock Exchange (KSE) 100 Index which was 1408.91 points as of 31 December 1999 increased to 2000 points by 31 March 2000. Due to this remarkable recovery of 43 percent in the first quarter of the year, the Exchange was far above
Future Outlook n
The facility of Internet-routed trading from the web sites of the members of the Exchange shall be available by the middle of this year.
n
Plans are underway to establish the National Clearing Company shortly with features such as 7+3, rollover, CNS integrated with CDS having securities lending and borrowing facilities.
History and Development The Karachi Stock Exchange (KSE) came into existence on 18 September 1947. It was later converted and registered as a company limited by guarantee on 10 March 1949. Although as many as 90 members were licensed at that time, only half a dozen were active as brokers. Initially, only 5 companies were listed with a paid-up capital of Rs. 37 million. In 1991 the secondary market was opened to foreign investors on an equal basis with local participants. This measure, along with a policy of privatization, has resulted in rapid growth of the market since 1991. Privatization has been adopted as a philosophy, and activities which were previously reserved for the public sector have now been opened to the private sector. The change is most marked in the financial sector where a number of commercial banks, investment banks, discount houses, leasing companies, life insurance
mentioned exchanges were down by anywhere from 13 to 44 percent.
the other markets of the region. The bullish sentiment lasted till the middle of the second quarter with slight technical corrections. In the third and fourth quarters the market remained stable. The resumption of IMF assistance and the resolution of the HUBCO issue played major roles in the stability and consolidation of the KSE Index at the1500 level. In 2000, the KSE outperformed other regional markets such as Mumbai, Colombo, Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Manila and Singapore by a wide margin. By the end of the year, the KSE 100 Index was up by 7% whereas the major indices of the above-
During this period, a new version of the Karachi Automated Trading System (KATS) was introduced. This has increased the capacity of trades from 40,000 to 100,000 per day based on 5 hours of trading. This year the Exchange has also started providing investors with market information on realtime bases through the Internet. We are in the process of developing our market to compete with any other market in the world. For this we are making efforts to raise the standard of corporate governance, bring more transparency and adopt the latest information technology.
“By the end of the year, the KSE 100 Index was up by 7%” companies, Modarabas and mutual funds have been created by private initiative. The regulatory agency of the securities market and the corporate sector is the Securities & Exchange Commission of Pakistan (SECP). The commission was formed on 1 January 1999 by dissolving the Corporate Law Authority which was established in 1981. The SECP administers the compliance of the Companies Ordinance, 1984, the Securities and Exchange Ordinance, 1969, the laws governing Modarabas, leasing companies, NBFIs and other corporate laws and is run by five commissioners under the chairman. The Asian Development Bank’s Capital Market Restructuring Plan envisages the conversion of the CLA into the SECP as an autonomous regulatory authority. The new system provides administrative, operational and financial autonomy to the SECP and at the same time an accountability mechanism through the establishment of the Securities and Exchange Policy Board. All policy decisions are made by the Board on the recommendations of the SECP. The Board is also empowered to take suo moto action and is answerable to the Parliament. Federation of Euro-Asian Stock Exchanges
41
Karachi Stock Exchange Members of the KSE are subject to the discipline of selfregulation by the stock exchanges. The legal framework is being amended to facilitate the attainment of SRO (Self-Regulatory Organization) status.
Practices and Procedures Trading Days: Hours: Hours: Market Segmentation: System: Mechanisms: Market-Maker/Specialists: Instruments: Currency: Real Time Information:
Monday-Friday 10:00-16:15 10:00-16:15 n/a Automated, Depository Link, Data dissemination, Reporting Facilities, WAN n/a No n/a Local Best bid/ask, Last price, Last volume, Total volume, Listed Company Announcement
Karachi Stock Exchange
Trading Rules Surveillance Corporate Actions Trading Halts Regulations Investor Protection
Exchange, Shared Regulatory responsibility No Centralized Yes Yes
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Yes T+1 Yes Book Entry Netting Yes, Full DVP Yes, wholly owned Yes Yes/No Individuals, Institutional Investors, Brokerage Houses, Banks Exchange Members, Clearing Members
Structure & Regulations Legal Not-for-profit company Regulation Self Securities Market Regulations Regulatory Institution(s), the Exchange and the market participants jointly develop new rules or projects
Foreign Participation Foreign Investors Investment Limitations Repatriation
Allowed, no restrictions No limitations n/a
Taxes Cash Dividends Interest Income Capital Gains
n/a n/a n/a
“Privatization has been adopted as a philosophy, and activities which were previously reserved for the public sector have now been opened to the private sector”
Contact Information Contact Person: E-mail: Web-site: Karachi Trading Floor
42
Federation of Euro-Asian Stock Exchanges
Mr. Mohammed Memon
[email protected] www.kse.com.pk
Karachi Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float
Market n/a $50 million 50% of its capital is under Rs 200 million, 25% or Rs 100 million whichever is higher if the capital is above Rs 200 million 500 n/a n/a n/a yes yes
Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
Official 2000 Statistics
2000 Monthly Volume vs Index 2000-Monthly Volume vs Index
2,000 1,500
2,500 2,000 1,500 1,000 500 0
1,000 500
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Jan
Feb
0 Volume (US$ Millions)
(# Shares Millions)
2000 2,500
5,000 4,500 4,000 3,500 3,000
Total Volume
Index
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 Market Capitalization ($ millions) 1996-2000 Market Capitalization ($ millions)
5,257.88 5,534.92 6,104.65 4,917.47 5,479.30 3,013.59 2,675.26 2,394.91 2,639.99 2,777.60 2,569.02 2,741.42 46,106.01
Average Daily Volume
Average Daily Volume
Market Capitalization
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
3,801.83 4,385.60 4,591.22 3,590.00 3,812.13 2,221.27 2,200.56 1,672.60 1,706.29 1,846.22 1,901.42 1,139.44 32,868.58
309.29 263.57 290.70 245.87 249.06 143.50 127.39 108.86 125.71 126.25 122.33 161.26 187.42
223.64 208.84 218.63 179.50 173.28 105.77 104.79 76.03 81.25 83.92 90.54 67.03 133.61
8,718.79 9,507.16 9,717.44 9,353.72 7,766.91 7,556.43 7,578.16 7,276.32 7,003.92 6,789.26 5,880.78 6,602.22 6,602.22
Index
1,772.8 1,930.6 1,999.7 1,901.1 1,536.7 1,520.7 1,554.9 1,518.3 1,564.8 1,488.3 1,276.1 1,507.6
5-Year Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization (US$ Millions)
1996
1997
1998
1999
2000
782
781
773
765
762
11,756.4
11,899.0
5,836.3
7,064.9
6,602.2
5,461.5
11,128.2
9,390.3
21,351.5
32,868.6
6,733.5
13,301.3
18,485.3
31,330.0
46,106.0
23.85
46.37
39.13
127.88
133.61
29.4 1,339.9 9.7 0.46 2.1 40.12
55.4 1,753.8 12.9 0.94 3.9 44.1
77.0 945.2 8.4 1.61 7.6 46.0
7,064.9 1,408.9 0.0 0.00 0.0 51.9
187.4 1507.6 0.0 0.00 0.0 57.3
Total Volume
2000
(US$ Millions)
Total Volume
1999
(# Shares Millions)
Average Daily Volume
1998
(US$ Millions)
Average Daily Volume
1997
(# Shares Millions)
1996
-
Total Volume
2,000
4,000
6,000
8,000
10,000 12,000
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Federation of Euro-Asian Stock Exchanges
43
Kazakhstan Stock Exchange
Main events of 2000 include the further development of the corporate bonds market and the growth of pension funds on the stock market.
Letter from the President “Main events of 2000 include the further development of the corporate bonds market and the growth of pension funds” Damir Karasayev President
Capitalization of the corporate bonds market has grown from US$30 million to US$176 million in 2000. The investments of pension funds make up 62 percent of the total volume of the investments in corporate bonds. Some of the main directions of the Kazakhstan Stock
Future Outlook
Exchange (KASE) were the improvement of quality of rendered services, expansion of the list of traded financial instruments and the initiation of changes in legislation regulating the stock market. The institution of marketmakers has received a further development making it possible to calculate the stock market index. Stimulating the development of insurance and investment funds and attracting their assets onto
the stock market will become one of the priorities to offset the lack of development of institutional investors. It is also planned to give more authority to brokerage companies on financial markets and optimize access of companies onto foreign markets. The development of Internet trading remains one of the top priorities as well.
exchange to trade securities of the largest enterprises of Kazakhstan.
Below are the plans for 2001: n
development of collective forms of investment (stimulation of participation of the investment companies) and optimization of taxation - a new law is necessary for this purpose;
n
attraction of insurance companies as institutional investors;
n
the ordering of document circulation, in particular, on the introduction and use of the electronic signature;
n
expansion of the powers of the brokerage houses.
In September 1997, a closed joint-stock company, the Almaty Financial Instruments Exchange, separated from the KASE. Two exchanges resulted from the adoption in March 1997, of the law “On Securities Market” with the provision that a stock exchange could only operate in securities. However, on 1 April 1999, a merger took place between the KASE and the Almaty Financial Instruments Exchange (AFINEX), thus making the KASE the only organized market in Kazakhstan.
History and Development The KASE (previously, the Kazakhstan Interbank Currency and Stock Exchange) was founded on 17 November 1993 as a closed-end joint-stock company, on the basis of an earlier established Center of Interbank Currency Transactions (Currency Exchange) of the State National Bank. The main stimulus to create the KASE was the introduction of the national currency, the Kazakhstan tenge, on 15 November 1993. Starting in November 1995, the KASE began trading state T-bills. In November 1996, the KASE received its securities trading license from the National Securities Commission (NSC). As a result of a tender organized by the government in December 1996, the KASE was chosen as a model 44
Federation of Euro-Asian Stock Exchanges
Kazakhstan Stock Exchange
Kazakhstan Stock Exchange Practices and Procedures Trading Days Hours Stocks and Bonds Foreign Exchange Derivatives State Securities Market Segmentation
System
Mechanisms Auction, Primary Market, Market-Maker/Specialists Instruments Currency Real Time Information
Monday-Friday 11:30-17:00 10:15-11:00 11:30-15:30 10:30-13:30 11:30-19:30 First, Second, Third Markets, Bonds, OFF Floor Transactions, Foreign Securities Allowed Automated, Remote Access, Depository Link, Data dissemination, Reporting Facilities, WAN Call Auction, Continuous Price Fixing Yes Stocks, Government Bonds Local Trading Information
Kazakhstan Trading Floor
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Yes T+1 Yes Book Entry Transaction by transaction Yes, Full DVP No No No Individuals, Institutional Investors, Brokerage Houses, Banks Exchange Members, Market Makers
Structure & Regulations Legal Not-for-profit company Regulation Self Securities Market Regulations Exchange Regulatory Institutions, and the market participants jointly Trading Rules Stocks - Regulatory responsibility Surveillance Yes, Electronic Corporate Actions Independent Agents Trading Halts Regulations Yes Investor Protection No
Foreign Participation Foreign Investors Investment Limitations Repatriation
n/a No limitations Middle
Taxes Cash Dividends Interest Income Capital Gains
12% 0% 0%
“It is also planned to give more authority to brokerage companies on financial markets and optimize access of companies onto foreign markets”
Contact Information Contact Person: E-mail: Web-site:
Ms Zarina Arykbaeva
[email protected] www.kase.kz
Federation of Euro-Asian Stock Exchanges
45
Kazakhstan Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
Listing A 3 $10,000,000 n/a n/a 1 or sum of 3 n/a n/a yes n/a
2000 Volume vs Market Capitalization 2,500
Total Volume 25
2,000
20
1,500
15
1,000
10
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
0
May
0 Mar
5
Jan
500
Feb
Non-listing n/a n/a n/a n/a n/a n/a n/a n/a n/a
Official 2000 Statistics
2000 Volume vs Market Capitalization
Market Capitalization ($ mil)
Listing B 1 n/a n/a n/a n/a n/a n/a yes n/a
Volume ($ mil)
(# Shares Millions)
2000
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 # of Companies Listed/Traded 1996-2000 # of Companies Listed/Traded
13.46 0.16 0.74 0.00 0.35 0.25 0.46 0.09 1.04 1.31 14.23 1.12 33.20
Total Volume (US$ Millions)
21.41 1.43 2.43 1.18 1.64 9.50 21.38 4.03 7.07 17.81 22.75 5.62 116.24
Average Daily Volume (# Shares Millions)
0.75 0.01 0.04 0.00 0.02 0.01 0.02 0.00 0.05 0.06 0.65 0.06 0.13
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
1.19 0.07 0.12 0.06 0.08 0.43 1.02 0.18 0.34 0.85 1.03 0.28 0.46
2,217.21 2,170.86 2,228.31 1,625.87 1,689.09 1,513.51 1,329.82 1,331.93 1,329.03 1,305.55 1,354.54 1,342.34 1,342.34
Index
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
5-Year Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization
1996
1997
1998
1999
2000
0
13
36
66
55
0.0
(US$ Millions)
#N/A
1,839.3
2,264.4
1,342.3
Total Volume
0.0
2.3
26.2
21.0
116.2
0.0
0.1
3.7
14.2
33.2
0.00
0.09
0.11
0.06
0.46
0.0
0.0 #N/A #N/A #N/A #N/A 75.6
0.0 #N/A #N/A 0.01 #N/A 83.8
2,264.4 #N/A 0.0 0.00 0.0 138.2
0.1 #N/A 0.0 0.00 0.0 145.0
(US$ Millions)
2000
Total Volume (# Shares Millions)
1999
Average Daily Volume (US$ Millions)
1998
Average Daily Volume (# Shares Millions)
1997 1996
-
46
20
40
60
Federation of Euro-Asian Stock Exchanges
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
#N/A #N/A #N/A #N/A 0.0
Kyrgyz Stock Exchange
Letter from the President
“Market volume exceeded the one billion mark this year”
Abdyjapar Tagaev President
The year 2000 in the history of the young Kyrgyz Stock Exchange (KSE) can be significantly appreciated because there were large increases in volume, particularly in corporate securities. The market volume exceeded the one billion mark this year, reaching 1.9 billion soms (about US$ 22,000,000).
One significant event of last year is that the status of the KSE changed into a JSC, joining other exchanges with this same status. We are glad that the Istanbul Stock Exchange (ISE) has become one of our shareholders, not just a shareholder but also a partner in cooperation and development.
We are proud of this in light of the many difficulties that the KSE is trying to overcome in its development. 1999 was noted by the inconsistent splashes in transaction activity. We now are able to look forward to no longer trading in volumes in millions of soms but in billions.
Our international activity also increased in importance last year as the KSE joined the executive committee of FEAS and the Associations of Banks and Exchanges in the ISU and Baltic countries. In addition we intend to have a cooperative agreement with the Moscow Stock Exchange. In 2000 we
History and Development The Kyrgyz Stock Exchange was officially opened on 25 May 1995 by Askar Akaev, President of the Kyrgyz Republic. Establishment of the KSE was the natural result of Kyrgyzstan's transition to a market economy. With the privatization of state companies, there arose a need for a non-commercial organization whose sole mission would be to provide a fair and transparent mechanism for trading stocks and bonds. The KSE's first priority is protecting the rights and interests of the investors. The KSE was created through the joint efforts of professional securities market participants within the regulatory framework of the State Securities Agency of the Kyrgyz Government (transformed in September 1996 into the National Securities Commission [NSC]). The KSE has 16 members, including banks and brokerage houses. KSE members come from Kyrgyzstan, Turkey, Kazakhstan and Pakistan.
Partnership with the ISE has allowed us entry to partnership with other international institutions such as the OECD, USAID, among others. We co-hosted the international seminar "The development of enterprises and regional perspectives of securities market in Central Asia."
opened. This Center delivers broker-dealer licensing courses and other training seminars and workshops throughout the year. In the same year, the KSE joined the Federation of Euro-Asian Stock Exchanges (FEAS).
Future Outlook In 2001 the Kyrgyz Stock Exchange (KSE) will activate its work according to the following factors: n
The KSE will start trading corporate bonds.
n
Securities of foreign companies will be admitted to trading on the KSE, particularly, corporate bonds of the Almaty Merchant Bank (Kazakhstan) that passed the listing procedure. However, trading of bonds will start after the development of correspondent software and training of professional participants.
n
It is expected that securities of such natural monopolists such as "Kyrgyz Telecom," "KyrgyzEnergo" and "Kyrgyzstan Aba Jodory" will be traded more actively, as the Government of the Kyrgyz Republic is carrying out the restructuring of the indicated companies. The Parliament of the Kyrgyz Republic approved the removal of the moratoriums on the sale of lands. This will undoubtedly attract investment to the country and activate real estate operations.
n
In connection with the activation of cooperation of
The United States Agency for International Development (USAID) has provided vital advice and assistance to the KSE from the beginning. For example, USAID helped the KSE develop listing criteria and procedures as well as to set up model systems and by-laws regulating the relationship between the KSE and the issuers of securities. In September 1995, the KSE Training Center was
improved our foreign economic activity and today we regularly get much information from different stock exchanges around the world along with proposals of cooperation from diplomacy missions of various financial institutions in different countries.
Federation of Euro-Asian Stock Exchanges
47
Kyrgyz Stock Exchange the Kyrgyz Stock Exchange with the Istanbul Stock Exchange and the Demir Kyrgyz International Bank, the procedure of clearing will be further improved and developed. Thus the Central Depository will implement its activities according to international standards.
Foreign Participation Foreign Investors Investment Limitations Repatriation
Taxes Cash Dividends
0% (for local), 10% (foreigners) 5% (except banks), 5% (foreigners) 30% (for local), 30 (foreigners)
Practices and Procedures Interest Income
Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
No restrictions No limitations No restrictions
Capital Gains Monday-Friday 11:00-15:00 No market segmentation Automated, Depository Link, Reporting Facilities, WAN Primary Market, Price Fixing, Call Auction Yes Stocks Local Last price, Last volume, Total volume, Order book
Clearing & Settlement Central Depository Period Registered Settlemen Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Yes T+3 Yes Book Entry Transaction by transaction No, one day or more difference between payment and delivery Yes, Partly Owned Yes No Individuals, Institutional Investors, Brokerage Houses, Banks, Exchange Members, Market Makers
Structure & Regulations Legal
Special Status within the law Regulation Self Securities Market Regulations Regulatory Institution(s), the Exchange and the Market participants jointly develop new rules or projects Trading Rules Exchange Surveillance No, electronic Corporate Actions Equity, independent agents Trading Halts Regulations Yes Investor Protection Yes
Kyrgyz Trading Floor
Contact Information Contact Person: E-mail: Web-site:
48
Federation of Euro-Asian Stock Exchanges
Ms. Venera Itibaeva, Secretary General
[email protected] www.kase.kz
Kyrgyz Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
Category A n/a US$ 5 million n/a 1,000 n/a n/a n/a n/a n/a
2000 Monthly Volume vs Index 100 90 80 70 60 50 40 30 20 10 0
18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Jan Feb Mar Apr May Jun Jul
Aug Sep Oct Nov Dec
Volume (US$ Millions)
Index
2000
Total Volume
Total Volume
Average Daily Volume
Average Daily Volume
Market Capitalization
(# Shares Millions)
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00
0.35 2.37 5.79 5.63 3.17 2.69 143.00 1.85 1.34 1.73 2.07 1.99 171.99
0.10 0.87 0.89 1.28 0.43 0.62 16.71 0.10 0.55 0.51 0.54 0.19 22.78
0.02 0.11 0.28 0.28 0.16 0.12 6.81 0.08 0.07 0.08 0.09 0.09 0.68
0.00 0.04 0.04 0.06 0.02 0.03 0.80 0.00 0.03 0.02 0.02 0.01 0.09
Index
5.70 6.05 5.77 6.61 5.36 6.00 5.45 4.92 4.54 3.96 4.33 3.82 3.82
76.4 76.1 83.7 90.7 77.9 81.1 73.7 67.4 62.7 55.0 61.4 53.0
5-Year Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization (US$ Millions)
1996
1997
1998
1999
2000
27
40
51
63
69
4.9
8.8
9.1
3.9
3.8
0.3
0.8
2.3
7.5
22.8
0.4
3.2
4.7
9.5
172.0
0.00
0.00
0.01
0.04
0.09
0.0 166.7 #N/A 0.06 #N/A 16.7
0.0 197.0 #N/A 0.10 #N/A 17.4
0.0 122.0 #N/A 0.25 #N/A 29.4
3.9 81.5 0.0 0.00 0.0 45.4
0.7 53.0 0.0 0.00 0.0 48.0
Total Volume
2000
(US$ Millions)
Total Volume
1999
(# Shares Millions)
Average Daily Volume
1998
(US$ Millions)
Average Daily Volume
1997
(# Shares Millions)
1996 -
Category C n/a US$ 1 million n/a 750 n/a n/a n/a n/a n/a
Official 2000 Statistics
Total
1996-2000 Market Capitalization ($ millions)
Category B n/a US$ 1 million n/a 750 n/a n/a n/a n/a n/a
20
40
60
80
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Federation of Euro-Asian Stock Exchanges
49
Lahore Stock Exchange
Letter from the Chairman
“The Lahore Stock Exchange (LSE) has fully automated, electronic trading and settlement systems”
Dr. Yasir Mahmood Chairman
The Lahore Stock Exchange (LSE) has fully automated, electronic trading and settlement systems, making both inter-market and intramarket transactions swift and transparent. Among global emerging markets, the Pakistani stock market has been on top with the highest percentage gain achieved during the year 2000. The emphasis is shifting towards developing the private sector. Information Technology is being encouraged and the government plans to use the local stock exchanges to float a part of the total offering of state entities through the stock exchanges. The Securities and Exchange Commission of Pakistan (SECP) has already finalized the draft regulations for venture capital companies and the Venture Capital Fund, and the government has already announced seven years tax-holiday for IT companies. The State Bank
of Pakistan has also decided to provide funds to IT companies on interbank rates. At the same time, the SECP has accelerated its drive to enhance the efficiency and ensure protection of the interest of investors. Disclosure requirements are being made more stringent. Another phenomenon taking shape with the general rise seen in the stock markets is the revival of the mutual fund industry. The funds are becoming more attractive, and their portfolios attract new investors to capitalize upon the current trends. With the recovery of Pakistani stock market, it is a very good time for foreign funds to make their entry. There is a huge scope for income funds to be launched. In short, Pakistani stock markets are on the road to better performance and efficiency. No doubt their volatility, an essential part of all emerging markets,
creates higher risk but it also magnifies the potential for higher returns for any investor who has the patience and sophistication to participate in the growth of this emerging market. In recent years, the LSE has become an important emerging stock market of the region, by evergrowing turnover and high potential returns. More than 50 percent shares of listed companies have been deposited in the Central Depository System. The establishment of the National Clearing & Settlement System is in progress in which the LSE is one of the sponsors. It has also become a member of the South Asian Federation of Exchanges (SAFE). The LSE is also adopting the T+3 rolling settlement system to improve the efficiency of the settlement process, reduce potential risk and strengthen the genuine investor’s confidence by eliminating the element of speculation.
Future Outlook For the future we have an ambitious plan to further enhance the capabilities of the LSE in automation. We intend to market and sell the Ultra Trade to other national and international stock exchanges. Working on this agenda, we have recently entered in to an agreement with the Karachi Stock Exchange to deploy our automated trading system at their exchange. To accomplish this goal more successfully and get benefits available to IT companies, we are planning to form a wholly owned subsidiary of the Lahore Stock Exchange with the objective to develop and market software for capital markets.
Lahore Stock Exchange
50
Federation of Euro-Asian Stock Exchanges
We are also working on the objective to give global access to our trading system through Internet. The Internet trading system would be deployed very shortly. We have also started developing a standardized and integrated automated back office system. This will work
Lahore Stock Exchange as a gateway to our trading engine. Eventually, we will see the Lahore Stock Exchange as fully automated, independent and self-reliant in Information Technology, having the capability of working for the development of future capital markets in the region and assisting other stock exchanges to be fully automated and advanced stock exchanges.
History and Development The present Lahore Stock Exchange (LSE) was established in 1970 in Lahore, the provincial capital of Punjab, Pakistan under the 1969 Securities and Exchange Ordinance. Although the founders had taken into account the public interest of the 54 million people of the province, the main problem was lack of depth in the market and a general lack of awareness about the securities market as an alternative avenue of investment. From this modest beginning, the LSE has now become a key institution of the financial sector of Pakistan, and has a membership of 150 brokerage houses, of which 105 are active. Currently there are 626 listed companies, having a listed capital of Rs. 187 billion (approximately US$ 4.1 billion), a market capital of Rs. 240.3 billion (approximately US$ 5.5 billion) and an average daily turnover of over 50 million shares. The activities of the Exchange have increased in all areas. Its share turnover has increased substantially, as has the number of investors. However, much more must be done. Due to the importance of a stock exchange in the economy of Pakistan, the goal is to bring the LSE to international standards, ensuring that not only domestic but also foreign investors are attracted. The Exchange also has plans to introduce new instruments, create a separate and larger section for debt instruments and provide opportunities for unlisted companies to raise capital.
Currency Real Time Information
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP
Yes T+5, T+3, T+1 Yes Book Entry Netting No, 1 day or more difference between payment and delivery Yes, wholly owned Yes Yes Individuals, Institutional Investors, Brokerage Houses, Banks, Exchange Members
Clearing Institution Risk Sharing Margin/Lending Custodians
Structure & Regulations Legal Not-for-profit company Regulation Self Securities Market Regulations Exchange with the Regulatory Institution(s) Approval Trading Rules Exchange Surveillance Yes, Electronic Corporate Actions Independent Agents Trading Halts Regulations No Investor Protection Yes
Foreign Participation
Practices and Procedures
Foreign Investors Investment Limitations Repatriation
Trading
Taxes
Days Hours: First Session Second Session Carry Over Transactions Market Segmentation
System
Mechanisms Market-Maker/Specialists Instruments
Monday-Friday Monday-Thursday, 10:00 13:00; Friday, 09:00 - 12:00 Monday-Thursday, 14:30 - 16:30; Friday, 15:00 - 16:30 16:30 -18:30 Shares, Bonds, Terms of Finance Certificates, Foreign Exchange, Bearer Certificates Automated, Depository Link, Data dissemination, Reporting Facilities, Internet Services, WAN Continuous Auction No Stocks, Bonds, Term Finance Certificates,
Foreign Exchange Bearer Certificates Local Best bid/ask, Last price, Last Volume, Total volume
Cash Dividends Interest Income Capital Gains
Allowed, no restrictions No limitations Yes 10% 10% Exempt
Contact Information Contact Person: E-mail: Web-site:
Mr. Jamil Ahmad
[email protected] www.lse.brain.net.pk
Federation of Euro-Asian Stock Exchanges
51
Lahore Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results
New Companies Market Green Field or project in operation Rs. 20,000,000 50% 500 last five years or for the period company is in operation. n/a companies seeking listing will be declared “eligible” in the CDS. yes n/a
# Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
Official 2000 Statistics
2000 Monthly Volume vs Index Total Volume
2000-Monthly Volume vs Index 10 9 8 7 6
1,600 1,400 1,200 1,000
5 4 3 2 1 0
800 600 400 200
Volume (US$ Millions)
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Jan
Feb
0 Index
(# Shares Millions)
2000
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 Market Capitalization ($ millions) 1996-2000 Market Capitalization ($ millions)
1,745.14 1,882.64 1,697.56 1,514.75 2,081.72 807.62 709.19 711.24 867.95 701.77 670.07 516.88 13,906.54
Average Daily Volume
Average Daily Volume
Market Capitalization
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
1,202.63 1,353.07 1,268.97 1,097.98 1,348.53 504.34 501.00 447.18 502.13 478.90 499.20 238.48 9,442.40
102.66 89.65 80.84 75.74 90.51 38.46 33.77 32.33 41.33 31.90 31.91 30.40 56.30
70.74 64.43 60.43 54.90 58.63 24.02 23.86 20.33 23.91 21.77 23.77 14.03 38.23
Index
7,668.05 8,445.53 8,701.43 8,385.74 7,245.17 7,050.76 7,166.43 6,673.72 6,419.93 7,211.26 6,190.12 6,947.30 6,947.30
8.3 8.9 9.2 8.9 7.3 7.2 7.2 6.7 6.4 6.1 5.2 5.7
5-Year Statistical Comparison 1996-2000 Category
1996
1997
1998
1999
2000
# Companies Traded Market Capitalization
647
636
627
619
614
(US$ Millions)
8,396.7
9,234.0
5,463.5
5,989.4
6,947.3
2,454.9
2,509.7
3,556.8
6,751.0
9,442.4
2,820.1
4,380.6
7,655.3
11,914.0
13,906.5
10.14
10.20
14.76
48.63
38.23
11.7 10.3 #N/A 0.29 #N/A 40.1
17.8 11.1 #N/A 0.27 #N/A 44.1
31.8 6.0 #N/A 0.65 #N/A 46.0
5,989.4 6.7 0.0 0.00 0.0 51.9
56.3 5.7 0.0 0.00 0.0 57.3
Total Volume
2000
(US$ Millions)
Total Volume
1999
(# Shares Millions)
Average Daily Volume
1998
(US$ Millions)
Average Daily Volume
1997
(# Shares Millions)
1996
-
Total Volume
2,000
4,000
6,000
8,000
10,000
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
“For the future we have an ambitious plan to further enhance the capabilities of LSE in automation” 52
Federation of Euro-Asian Stock Exchanges
Macedonian Stock Exchange
The following are accomplishments of the Macedonian Stock Exchange (MSE) for the past year: n a new Securities Law
was adopted in the Parliament n the MSE’s operations
Letter from the CEO
adapted to new legislation n 2 new members joined
“The MSE’s operations adapted to new legislation” Dr. Evgeni Zografski CEO
the MSE making a total of 9 member firms/brokerage companies
purchase of controlling stakes through the MSE n there are two listed
n there was an absence of
securities and approximately 70-80 unlisted companies
foreign portfolio investors n strategic foreign
n the MSE successfully
listed the first government bond (EURO 500 million bond for covering frozen deposits) n there was a 251 million
DEM turnover in 2000 - a record year and 5 times higher than in 1999 with domestic investors creating liquidity
n there is now ownership
consolidation with
dominated with 96 percent of turnover
n the unofficial market
investors put 183 million DEM through MSE n secondary privatization
continued in 2000 with the selling of government residual shares in 54 companies (valued at 131 million DEM) and the privatization agency itself sold holdings in 53 companies (valued at 48 million DEM).
of Macedonia to be finished by the end of 2001;
Future Outlook n
new tax legislation (first half of 2001) - 5 year instruments will have tax free capital gain; 3 year instruments will have 50 percent and lower income tax for listed companies;
n
regional cooperation among stock exchanges (bilateral, regional, SECI, FEAS);
n
listing of the biggest pharmaceutical company
The goals for the following year are: n
n
macroeconomic stability, economic growth, relatively low inflation, stable currency rate, completion of privatization; adjustment of the legal framework of the MSE and brokerage companies with the legislation of the new Securities Law;
n
1-2 new brokerage companies to apply for membership in the MSE;
n
establishment of the Central Securities Depository and implementation of the process of full dematerialization for all securities in the Republic of Macedonia (end of 2001);
n
Investment Funds Law and accompanied regulations to be operational;
n
implementation of pension reforms in the Republic
“There was a 251 million DEM turnover in 2000 - a record year and 5 times higher than in 1999” Macedonian Trading Floor
Federation of Euro-Asian Stock Exchanges
53
Macedonian Stock Exchange
“Strategic foreign investors put 183 million DEM through the MSE” “Alkaloid” and the heating company “Toplifikacija” (first half 2001); n
listing of US$ 120 million government bond issue (first half 2001);
n
implementation of the new electronic trading system, BEST, to be implemented in March 2001 with technical assistance from the Ljubljana Stock Exchange;
n
continuing promotion of the MSE to the general public in Macedonia.
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
No T+5 Yes Book Entry Transaction by transaction Yes, Full DVP No No No Banks
Structure & Regulations Legal Not-for-profit company Regulatin Self Securities Market Regulations Regulatory Institutions, Exchange and Markets jointly Trading Rules Exchange, Government Institution Surveillance No Corporate Actions n/a Trading Halts Regulations Yes Investor Protection No
History and Development Foreign Participation The Macedonian Stock Exchange (MSE) was established in September 1995 and commenced trading on 28 March 1996, as the first organized stock exchange in the history of the Republic of Macedonia.
Foreign Investors Investment Limitations Repatriation
n/a No limitation No restrictions
Taxes Initially, the MSE had 19 members, among them 13 banks, 3 savings institutions and 3 insurance companies. In 1995, when the MSE was established, the founding members could be banks and other financial institutions (savings institutions and insurance companies). However, since the inauguration of the MSE, members have had to comply with the new Securities Law. The deadline for compliance was 1 March 1998. By 31 December 1998, 7 new brokerage firms (MSE members) were founded out of the 8 former members (banks and insurance companies). The Macedonian legal framework for the securities industry is prepared in accordance with EU securities laws and directives and with the technical assistance of the British Know-How Fund.
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information 54
Tuesdays and Thursdays 10:00-13:00 n/a Remote Access, Data dissemination, WAN Call Auction, Continuous Auction No Stocks, Bonds Local Brokerage Houses, Banks
Federation of Euro-Asian Stock Exchanges
Cash Dividends Interest Income Capital Gains
15% n/a 15-23%
“Secondary privatization continued in 2000 with the selling of government residual shares in 54 companies” Contact Information Contact Person: E-mail: Web-site:
Mr. Milco Kupev
[email protected] www.mse.org.mk
Macedonian Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
2000 Volume vs Market Capitalization
First Market (Official) 3 DEM 15,000,000 25% 200 n/a n/a no yes n/a
fficial 2000 Statistics Official Total Volume
2000 Volume vs Market Capitalization 7.4
45
7.2
40 35
7.0
30
6.8
25
6.6
20 15
6.4
10
6.2
Market Capitalization ($ mil)
0
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Jan
5
Feb
6.0
Second Market (Official) 2 DEM 1,000,000 15% 25 n/a n/a no no n/a
Volume ($ mil)
2000
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 # of Companies Listed/Traded 1996-2000 # of Companies Listed/Traded
(# Shares Millions)
0.54 0.31 1.32 156.67 0.28 0.19 0.12 0.07 1.31 0.42 0.43 0.32 161.97
Third Market (Unofficial) n/a n/a n/a n/a n/a n/a no no Submission of the last annual financial statement
2000 Statistics
Total Volume
Average Daily Volume
Average Daily Volume
Market Capitalization
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
1.71 3.04 19.28 39.24 6.55 3.89 3.63 2.62 6.21 9.26 15.87 5.32 116.63
0.0671 0.0347 0.1462 19.5840 0.0349 0.0209 0.0153 0.0070 0.1641 0.0466 0.0473 0.0394 1.57
0.21 0.34 2.14 4.90 0.82 0.43 0.45 0.26 0.78 1.03 1.76 0.67 1.13
tatistical Comparison 1996-2000 5-Year Statistical Comparison Category
7.28 7.12 7.06 7.06 6.91 7.01 6.94 6.66 6.55 6.55 6.68 7.13 7.13
Index
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
1996-2000
1996
1997
1998
1999
2000
# Companies Traded Market Capitalization
2
81
108
142
141
(US$ Millions)
101.0
8.6
8.5
7.7
7.1
0.9
20.3
89.4
26.6
116.6
0.0
8.0
8.5
4.3
162.0
0.01
0.20
0.86
0.04
1.13
0.0 #N/A #N/A 0.01 #N/A 41.4
0.1 #N/A #N/A 2.37 #N/A 55.4
0.1 #N/A #N/A 10.56 #N/A 51.6
7.7 #N/A #N/A 3.45 #N/A 60.2
1.6 #N/A #N/A 16.36 #N/A 65.1
Total Volume 2000
(US$ Millions)
Total Volume 1999
(# Shares Millions)
Average Daily Volume 1998
(US$ Millions)
Average Daily Volume (# Shares Millions)
1997 1996
-
50
100
150
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Federation of Euro-Asian Stock Exchanges
55
Moldovan Stock Exchange Important events in 2000 for both the Moldovan Stock Exchange (MSE) and the domestic capital markets took place. New regulations were introduced, modifying some of the Exchange’s procedures.
Letter from the President “Enforcement of the new regulations has positively affected Exchange transactions and the activity of MSE in general” Dr. Corneliu Dodu President
The enforcement of the new regulations has positively affected Exchange transactions and the activity of MSE in general. Another important event for MSE development was the decision of the National Commission for Securities taken on 7 December 2000, about the implementation of securities operations on the secondary market,
Future Outlook In 2001 the MSE will start a unique electronic network comprised of the National Depository for Securities and the MSE, independent registrars and offices of brokerage companies (SAIT). It will allow the increase in capital market liquidity by shortening the period required to put
“A positive event for the structure of exchange transactions was the increase in the rate of selling-buying transactions” the securities on depository accounts, and a decrease in exchange transactions costs. The creation of a remote access system will be also very useful and is successfully used on many international stock exchanges. The final phase will be ensuring network security between the brokers’ offices and SAIT electronically. A priority direction in the development of the exchange market will be the introduction of some new financial instruments and implementation of Moldovan 56
Federation of Euro-Asian Stock Exchanges
which will have essential priorities in transaction registrations. Although in 2000, a series of important measures were implemented, the results were not the expected ones. The volume of registered exchange transactions in 2000 was US$ 23,230 million, a decrease of 20.6 percent compared to 1999. Despite the increase in the number of issuers registered at the Exchange - from 899 in 1999 to 1017 in 2000, the number of joint stock companies participating in stock transactions decreased from 523 to 508.
the 1999 index and was US$ 588,822 million, US$ 435,556 million of which were stock transactions. The number of registered transactions decreased by 976 units in 2000. The average exchange rate (percentage ratio of exchange price and face value) for transactions during the past year was 60%, a decrease of 17.7%. A positive event for the structure of exchange transactions was the increase in the rate of selling-buying transactions from 31.5% to 63.8% in 1999 and a decrease in swap transaction volume from 61% to 28%.
The statutory capital of registered issuers increased by 30% in comparison with
Depositary Receipts (MDRs). These comprise Futures and Options contracts. The transaction of such MDRs will be organized at the MSE, its subdivision or in the exchanges separately as it is done in Russia. This is more favorable for present conditions in Moldova. One of the main directions in the future development of the MSE is the increase of exchange information transparency. Thus, the Exchange will insure the spreading of exchange information through existence information means, providing population with information regarding the daily results of exchange transactions (by TV). One of the existing problems that requires an immediate solution is the insuring of investments with maximum information about securities quoted and admitted at Exchange negotiations. The Exchange must create a database comprised of detailed information concerning its financial results for the previous years.
“One of the main directions in the future of the MSE is the increase of exchange information transparency”
Moldovan Stock Exchange History and Development The Moldovan Stock Exchange (MSE) was founded on 7 December 1994 and is located in Chisinau, Moldova. The first transactions took place on 26 June 1995. Under the assistance of the US government and through the instrumentality of USAID, the MSE has acquired the necessary up-to-date technologies to execute trades. In October 1995, the MSE adopted a new automated trading system making it a modern Exchange. There are 58 listed companies and more than 900 unlisted/traded companies as of 31 December 1999. Along with this development, the MSE’s trade volume increased beginning at US$ 0.5 million in 1995 to US$ 35.6 million in 1999. The average daily trading volume was US$ 0.144 million by year-end 1999, from US$ 0.09 million in 1995. The MSE facilitated the development and implementation of a new integrated trading and depository system, the Central Securities Depository (CSD) in 1998. According to the decision of National Commission of Security Markets, direct trades on the cash board of the trading system were prohibited during 1999. With this decision all trades executed on the main board of the MSE (interactive trades), using limit and market orders, are the only valid trades. The Parliament of Moldova further adopted two new laws in March 1999; the “Law on Securities Markets” and the “Law on the National Commission on Securities Markets.” Also during 1999, the security market of Moldova published its first edition “Capital,” a publication dedicated to reporting on the Capital markets in Moldova.
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Monday-Friday Equity Market 10:00-15:00 Bond Market 11:00-11:30 n/a Automated, Depository Link, Data dissemination, WAN Call Auction, Price Fixing No Stocks, Government and State Bonds Local n/a
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP
Yes T+4 Yes Book Entry Netting No
Clearing Institution Risk Sharing Margin/Lending Custodians
No No Yes/Yes Banks
Structure & Regulations Legal Regulation Securities Market Regulations Trading Rules Surveillance Corporate Actions Trading Halts Regulations Investor Protection
Not-for-profit Self Exchange with Regulators Exchange Yes, Electronic Centralized Yes Yes
Foreign Participation Foreign Investors Investment Limitations Repatriation
Not allowed No limitations n/a
Taxes Cash Dividends Interest Income Capital Gains
15% n/a 14% for local investors
“A priority direction in the development of the exchange market will be the introduction of some new financial instruments and implementation of Moldovan Depositary Receipts (MDRs)” Contact Information Contact Person: E-mail: Web-site:
Dr. Corneliu Dodu
[email protected] www.moldse.md
Federation of Euro-Asian Stock Exchanges
57
Moldovan Stock Exchange Minimum Listing Requirements Requirements
First Market (Official) 3 years 4 million lei n/a 1,000 1 n/a n/a yes Registered in the NSC equity of JSC, Audited Statement, IAS used
Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
2000 Volume vs Market Capitalization
Official 2000 Statistics Total Volume
2000 Volume vs Market Capitalization 420
2000 4 4
400
3 380
3
360
2 2
340
1 320
1
300
Market Capitalization ($ mil)
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Jan
Feb
0
Volume ($ mil)
(# Shares Millions)
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 # of Companies Listed/Traded 1996-2000 # of Companies Listed/Traded
7.80 2.71 14.54 12.22 5.51 6.72 5.01 5.09 2.51 7.12 1.78 17.77 88.79
Average Daily Volume
Market Capitalization
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
3.60 0.46 3.25 1.99 3.04 2.94 2.71 1.70 1.06 1.50 0.67 2.40 25.32
0.35 0.17 0.66 0.61 0.29 0.31 0.24 0.24 0.12 0.32 0.08 0.85 0.36
0.16 0.03 0.15 0.10 0.16 0.13 0.13 0.08 0.05 0.07 0.03 0.11 0.10
385.46 395.25 343.30 334.55 342.61 373.55 389.16 395.25 389.70 400.56 390.96 392.06 392.06
Index
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
Category # Companies Traded Market Capitalization
1996
1997
1998
1999
2000
523
715
918
988
1,005
0.0
0.0
0.0
385.5
392.1
2.5
38.6
80.0
35.6
25.3
3.6
22.4
74.8
67.1
88.8
0.02
0.17
0.31
0.27
0.10
0.0 #N/A #N/A #DIV/0! #N/A 4.7
0.1 #N/A #N/A #DIV/0! #N/A 4.7
0.3 #N/A #N/A #DIV/0! #N/A 8.3
385.5 #N/A 0.0 0.00 0.0 11.6
0.4 #N/A 0.0 0.00 0.0 12.4
Total Volume (US$ Millions)
Total Volume
1999
(# Shares Millions)
Average Daily Volume
1998
(US$ Millions)
Average Daily Volume
1997
(# Shares Millions)
1996
58
Average Daily Volume
5-Year Statistical Comparison 1996-2000
(US$ Millions)
2000
-
Total Volume
200
400
600
800
1,000
1,200
Federation of Euro-Asian Stock Exchanges
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Mongolian Stock Exchange
Letter from the Chairman and CEO
During the last 2 years, securities trading activity on the Mongolian Stock Exchange (MSE) declined and trading volume, trading value decreased sharply, indicating that the Mongolian capital market has come into a stagnant period caused by the following:
owned and 341 fully privatized. Compared to the end of 1999, total listed shares increased by 0.5% amounting to 273.5 million shares of which 36.5 % are state-owned 99.8 million shares. In 2000, shares of 19 stateowned companies were traded.
n increase in the trading
During 2000, securities trading was conducted 255 times. By the end of the year, trading volume reached 35.4 million shares with a trading value amounting to US$ 2.8 million, a decrease of 9.2% compared to the same time of the previous year. The average daily trading value totaled US$ 11,000 decreased by 13.8 % from 1999. Total market capitalization at the end of 2000 was US$ 36.9 million compared to US$ 32.1 million at the end of 1999.
of over-the-counter shares; n trading by sealed and
“The MSE will continue to implement an active policy for attracting domestic and foreign investors and develop a total Mongolian capital market” Dulamsuren Dorligsuren Chairman and CEO
public auction of stateowned shares of listed companies, outside of the MSE trading; n increase in share
concentration; n lessening of interest in
the capital market by the public and investors. By the end of the year, there were 410 companies listed on the MSE of which 69 were state-
I was appointed Chairman and CEO of the MSE on 6
September 2000. Mr. O. Batbileg, the former CEO, will become President of the Mongolian Association of Securities Dealers and Brokers. Despite many difficulties, one of the main achievements of the MSE in the year 2000 was an agreement with the Ministry of Finance & Economics to trade shortterm government bonds. As a result, in November and December the MSE traded government bonds, valued at US$ 10.1 million with terms of 14, 30, 60 and 90 days. This activity will continue in 2001. We hope that the year 2001 will be the year that we overcome obstacles in our market and that the MSE will continue to implement an active policy for attracting domestic and foreign investors and develop a total Mongolian capital market.
Future Outlook Plans for 2001 include: n
revising the Mongolian Securities Law and Companies Law;
n
developing the bond market so as to enable the continuance of trading in government bonds to begin trading in corporate bonds;
n
improving and strengthening listing criteria, with the goal of ultimately dividing stock trading into 3 sections as dictated by various market activities and requirements of listed companies.
History and Development
Mongolian Stock Exchange
In 1990, the public sector in Mongolia, as in other postcommunist countries, accounted for approximately 90% of the GDP. With a view to reducing this share, the government adopted a sweeping privatization program in mid-1991 and the Parliament passed a wide range of laws and regulations to improve the legal basis for capital ownership. The privatization of state-owned Federation of Euro-Asian Stock Exchanges
59
Mongolian Stock Exchange enterprises was regarded as "the center of the reform program," and many senior government officials regarded this as the program's most important achievement. Ultimately, the Privatization and Companies Law was passed in June 1991. The MSE was created in 1991. In the first phase, from February 1992 to August 1995, the MSE operated as a mechanism of voucher distribution (blue coupon privatization of big enterprises). During this period until the first half of 1995, the MSE traded shares of 470 companies worth US$ 40.9 million, and traded 1.5 million blue vouchers and 1.4 million pink vouchers received from over 460,000 people. During the second phase, beginning in August 1995, the MSE assumed the role of a regular stock exchange. In September 1995, the Parliament adopted the Law on Securities and set up the Securities Committee (SEC). Following this law, other regulations were issued throughout 1995 reorganizing the MSE as a non-profit entity, privatizing brokerage houses, providing financial resources for the Exchange's development, and clarifying rules regarding the distribution of dividends. Also in 1995, the Mongolian Association of Securities Dealers and Brokers was organized. The Association is a self-regulatory non-government organization with 41 members, consisting of legal entities and individuals licensed to participate in the securities market.
Structure & Regulations
Practices and Procedures
Legal Not-for-profit company Regulation Self Securities Market Regulations Exchange with the Regulatory Institution Trading Rules Exchange Surveillance Yes, Electronic Corporate Actions Centralized Trading Halts Regulations Yes Investor Protection No
Trading
Foreign Participation
Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Monday-Friday Equity Market 11:00-12:00 Bond Market 11:00-11:30 n/a Automated, Depository Link, Data dissemination, Reporting Facilities, WAN Call Auction, Continuous Auction No Stocks, Government Bonds Local Best bid/ask, Last price, Last volume, Total volume, Order book
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
60
Mongolian Trading Floor
No T+1 Yes Book Entry Transaction by transaction Yes, Full DVP No No No "Individuals, Institutional Investors, Brokerage Houses, Banks Exchange Members"
Federation of Euro-Asian Stock Exchanges
Foreign Investors Investment Limitations: Repatriation
Allowed, no restrictions No limitation No restrictions
Taxes Cash Dividends Interest Income Capital Gains
n/a 20% for local investors 15% for local investors
“One of the main achievements of the MSE in the year 2000 was an agreement to trade short-term government bonds” Contact Information Contact Person: E-mail: Web-site:
Mr. Dulamsuren Dorligsuren
[email protected] www.mse.com.mn
Mongolian Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
Equity Market n/a 10,000,000 togrog n/a n/a 3 n/a yes n/a n/a
Official 2000 Statistics
2000 Monthly Volume vs Index 2000 Monthly Volume vs Index
2000 500 450 400 350 300 250 200 150 100 50 0
1.40 1.20 1.00 0.80 0.60 0.40 0.20 Nov
Jul
Volume (US$ Millions)
Dec
Sep
Oct
Aug
Jul
May
Jun
Apr
Feb
Mar
Jan
0.00
Total Volume
Index
(# Shares Millions)
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 Market Capitalization ($ millions) 1996-2000 Market Capitalization ($ millions)
2.08 1.71 1.86 1.67 18.01 4.88 0.46 1.06 1.12 0.99 0.91 0.66 35.40
Average Daily Volume
Market Capitalization
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
0.21 0.24 0.22 0.16 1.24 0.19 0.04 0.07 0.22 0.08 0.09 0.07 2.81
0.0989 0.0853 0.0809 0.0834 0.7831 0.2323 0.0255 0.0463 0.0535 0.0450 0.0412 0.0314 0.14
0.01 0.01 0.01 0.01 0.05 0.01 0.00 0.00 0.01 0.00 0.00 0.00 0.01
33.65 36.95 31.88 27.59 29.05 28.17 28.81 30.02 30.42 33.35 33.97 36.90 36.90
Index
285.9 327.4 335.5 306.4 324.5 324.6 330.0 364.5 396.9 435.7 460.5 469.9
Category # Companies Traded Market Capitalization
1996
1997
1998
1999
2000
470
478
429
419
410
25.4
54.1
39.8
32.1
36.9
6.0
5.6
12.9
3.2
2.8
23.7
11.0
33.1
21.5
35.4
Total Volume (US$ Millions)
1999
Total Volume (# Shares Millions)
1998
Average Daily Volume (US$ Millions)
1997
0.03
0.09
0.05
0.09
0.01
0.1 152.9 14.2 0.24 17.3 693.5
0.2 360.1 5.6 0.10 10.8 813.2
0.1 235.0 8.7 0.32 25.6 902.0
32.1 255.7 3.9 3.60 14.4 1,072.4
0.1 469.9 2.1 0.08 151.0 1,097.0
Average Daily Volume (# Shares Millions)
1996 -
Average Daily Volume
5-Year Statistical Comparison 1996-2000
(US$ Millions)
2000
Total Volume
10.00
20.00
30.00
40.00
50.00
60.00
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Federation of Euro-Asian Stock Exchanges
61
Tehran Stock Exchange
The year 2000 was very successful for the Tehran Stock Exchange (TSE). In the last year, we have experienced a spectacular growth in the market.
Letter from the Secretary General and CEO “In the last year, we have experienced a spectacular growth in the market” S Ahmad Mir-Motahari Secretary General and CEO
Total trading volume increased 120.34%, the number of transactions increased 58%, market capitalization increased 56% and the TEPIX achieved a new record. Therefore, we have been facing upward market conditions. During the year, we had the opportunity to introduce a number of changes in order to increase the efficiency and transparency of the
Future Outlook n
An integrated information network for capital markets will be set up.
n
In some regional centers, stock exchange affiliates will be established.
n
In relation to privatization, value of the shares of public companies will be estimated.
n
Profit-sharing bonds will be introduced for trading on the stock exchange floors.
TSE. Among them was the issuing of a new regulation regarding insider trading a new code of conduct requiring companies to disclose intermediary information.
strategy we will be able to meet future challenges.
Our stock market has come a long way since its establishment. The ultimate goal of the TSE is to establish a transparent, well-regulated and efficient capital market.
I think that it will bring many opportunities to foster the relationships among us.
I hope 2001 will become the start of closer cooperation among FEAS members.
We believe the TSE is on its way to playing an increasingly important role in the Iranian economy. We are well aware that a lot remains to be done, but we are convinced that with a clear and broad
stagnation. This period ended in 1989 and since then the TSE has expanded continuously. By the end of 1998, a total of 277 companies, with a market capitalization of US$ 15.2 million, were listed on the TSE.
History and Development The idea of having a well-organized stock market to speed up the process of industrialization of the country dates back to the 1930s when Bank Melli Iran studied the market. The outbreak of WW II and subsequent economic and political events delayed the establishment of the Tehran Stock Exchange until 1967. The TSE opened in April 1968. Initially, only government bonds and certain statebacked certificates were traded. During the 1970s, the demand for capital boosted the demand for stock. At the same time, institutional changes led to the expansion of stock market activity. The restructuring of the economy following the Islamic Revolution expanded public sector control over the economy and reduced the need for private capital. At the same time, the abolishment of interest-bearing bonds terminated their presence in the stock market. As a result, the TSE entered a period of 62
Federation of Euro-Asian Stock Exchanges
Tehran Trading Floor
Tehran Stock Exchange Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Saturday-Wednesday 9:00-12:30 First Automated, Depository Link, Access, WAN Continuous Auction No Stocks, CDC Local Best bid/ask, Last price, Total volume
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP
No T+4 Yes Book Entry Netting No, one day or more difference between payment and delivery Yes, wholly owned No No Brokerage Houses, Exchange Members
Clearing Institution Risk Sharing Margin/Lending Custodians
Structure & Regulations Legal Not-for-profit company Regulation Self Securities Market Regulations Regulatory Institution(s) without the participation of the exchange Trading Rules Government Surveillance Yes Corporate Actions Equity, Independent Agents, Fixed Income Trading Halts Regulations Yes Investor Protection No
Foreign Participation Foreign Investors Investment Limitations Repatriation
Restricted Maximum share ratio No restrictions
Taxes Cash Dividends Interest Income Capital Gains
24% Average n/a n/a
Contact Information Contact Person: E-mail: Web-site:
Ms. Shahla Keshavarz
[email protected] www.tse.or.ir
Tehran Stock Exchange
“Our stock market has come a long way since its establishment. The ultimate goal of the TSE is to establish a transparent, wellregulated and efficient capital market”
Federation of Euro-Asian Stock Exchanges
63
Tehran Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
National Market 2 Rls. 3 billion n/a 1000 2 n/a n/a yes announcing EPS and future plans
Official 2000 Statistics
2000 Monthly Volume vs Index
Total Volume (# Shares Millions)
2000 160
3,500
140
3,000
120
2,500
100
2,000
80
1,500
60
1,000
40
500
20 0
Jan Feb Mar Apr May Jun Jul
Aug Sep Oct Nov Dec
Volume (US$ Millions)
0
Index
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 Market Capitalization ($ millions)
106.17 147.07 183.47 80.80 104.32 236.01 116.47 95.45 147.11 121.88 142.70 200.66 1,682.11
Category
(US$ Millions)
2000
Total Volume
1999
Total Volume
1998
Average Daily Volume
1997
Average Daily Volume
(US$ Millions) (# Shares Millions) (US$ Millions) (# Shares Millions)
0
64
5000
10000
15000
20000
25000
Federation of Euro-Asian Stock Exchanges
(US$ Millions)
92.42 74.35 142.36 28.50 61.13 150.24 73.61 46.83 90.00 73.69 93.65 151.73 1,078.51
(# Shares Millions)
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
5.06 7.35 11.47 4.04 4.54 13.11 5.06 4.34 7.36 5.54 7.13 10.03 6.87
4.40 3.72 8.90 1.43 2.66 8.35 3.20 2.13 4.50 3.35 4.68 7.59 4.40
4,903.97 5,211.15 5,400.22 5,617.84 5,851.85 5,904.85 5,894.73 6,164.89 6,461.89 6,861.81 7,404.45 7,538.08 7,538.08
Index
2,049.9 2,149.4 2,223.8 2,309.9 2,408.5 2,428.4 2,414.7 2,514.6 2,561.8 2,709.3 2,849.8 2,880.7
5-Year Statistical Comparison 1996-2000 # Companies Traded Market Capitalization
1996
Total Volume
Average Daily Volume
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
1996
1997
1998
1999
2000
220
263
277
295
304
16,889.1
15,159.6
15,167.7
21,858.2
7,538.1
2,608.6
1,209.9
1,389.0
2,271.0
1,078.5
1,013.8
561.4
1,017.6
1,064.3
1,682.1
10.74
5.00
5.74
4.38
4.40
4.2 1,967.3 6.6 0.15 #N/A 1,750.0
2.3 1,631.4 7.0 0.08 #N/A 1,750.0
4.2 1,531.1 #N/A 0.09 #N/A 1,750.0
21,858.2 1,989.7 #N/A 0.10 #N/A 1,750.0
6.9 2880.7 4.7 0.14 #N/A 7,914.0
Tirana Stock Exchange
Mainly due to the inability of private businesses to meet some of the quality Tirana Stock Exchange (TSE) listing criteria and the lack of privatization of state-owned enterprises through public offering, another year without any stocks traded was completed.
Letter from the Chairman
“The TSE has worked hard toward the completion of the regulatory basis of the Exchange” Dr. Shkelqim Cani Secretary General
Nevertheless, the TSE has worked hard toward the completion of the regulatory basis of the Exchange, the promotion of the Exchange itself and the financial instruments. To conclude, a very important and complex process is underway, not only to spin off the TSE from the Central Bank and establish it as an independent entity, but also to make it a lively and wellfunctioning Exchange.
Future Outlook In the future the Tirana Stock Exchange expects to: n
spin off the Tirana Stock Exchange from the Bank of Albania within 2001 and establish it as an independent institution;
“A very important process is underway ... to establish it as an independent entity and also to make it a lively and well-functioning Exchange” n
gear up the TSE in the Strategy of Privatization of strategic state-owned companies. The first target is the Savings Bank, which should be privatized by mid 2001, followed by the privatization of Albanian Telecom;
Tirana Stock Exchange
Federation of Euro-Asian Stock Exchanges
65
Tirana Stock Exchange n
establish the primary market of T-bills for individuals and private firms;
n
carry out the second phase of the marketing campaign to attract Albanian private companies in order to list their shares in the Tirana Stock Exchange.
History and Development The Securities Act was approved by the Albanian Parliament on 1 March 1996. This paved the way for the establishment of the Albanian Securities Commission (ASC) on 16 April and the Tirana Stock Exchange (TSE) on 2 May 1996. Once the law was approved, the necessary rules and regulations of the ASC and the TSE were prepared and adopted.
“The TSE opened officially on 2 May 1996, as the first exchange in the financial history of Albania”
Market-Maker/Specialists Instruments Currency Real Time Information
No Treasury Bills Local Best Bid/ask
Clearing & Settlement Central Depository Period
Yes T+0 for T-bills, T+3 for other securities Yes Book Entry Netting Yes, Full DVP No Yes No Individual Investors, Banks
Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Structure & Regulations Legal Special Status Regulation Self Securities Market Regulations Exchange w/ Regulatory Institutions Trading Rules Exchange Surveillance No, Electronic Corporate Actions Centralized Trading Halts Regulations Yes Investor Protection No
Foreign Participation The TSE opened officially on 2 May 1996, as the first exchange in the financial history of Albania. A lot of work, energy and foreign technical assistance were needed to create the necessary infrastructure of a capital market. Foreign assistance, represented by GMA Capital Market Limited (England), helped prepare the legal framework necessary in the establishment of both the ASC and the TSE. The TSE was originally established as a department of the Bank of Albania (BoA) with the goal to spin it off as a separate institution after a transition period of several years. At the beginning, trading sessions were held twice a week - every Monday and Thursday. By October 1997, the sessions were increased to every business day, and 3 and 6 month- maturity T-bills were added to the existing traded instruments. Primary auctions for T-bills were conducted by the TSE until 1 August 1998. They are currently carried out by the Monetary Operations Department of the BoA.
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms
66
Monday-Friday 9:00-14:00 T-bills WAN Primary Market, Call Auction
Federation of Euro-Asian Stock Exchanges
Foreign Investors Investment Limitations Repatriation
Allowed, no restrictions No limitation No restrictions
Taxes Cash Dividends Interest Income Capital Gains
10% 10% 10%
“At the beginning, trading sessions were held twice a week - every Monday and Thursday. By October 1997, the sessions were increased to every business day” Contact Information Contact Person: E-mail: Web-site:
Mr Elvin Meka
[email protected] n/a
Tirana Stock Exchange
Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
2000 US$ Exchange Rate
Level 1 3 US$ 360,000 20% 100 3 n/a yes yes no
Level 2 1 US$ 180,000 15% 100 1 n/a yes yes no
Official fficial 2000 Statistics
2000 Statistics
2000 US$ Exchange Rate 150
Total Volume
145
(# Shares Millions)
2000
140 135
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Feb
125
Jan
130
“The TSE has worked hard toward the completion of the regulatory basis of the Exchange, the promotion of the Exchange itself and the financial instruments.”
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
Total Volume
Average Daily Volume
Average Daily Volume
Market Capitalization
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
Index
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
5-Year Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization (US$ Millions)
1996
1997
1998
1999
2000
0
0
0
0
0
#N/A
#N/A
#N/A
#N/A
#N/A
Total Volume (US$ Millions)
24.3
43.8
34.8
0.5
#N/A
Total Volume (# Shares Millions)
#N/A
#N/A
#N/A
#N/A
#N/A
Average Daily Volume (US$ Millions)
0.35
0.31
0.13
#N/A
#N/A
#N/A #N/A #N/A #N/A #N/A 103.1
#N/A #N/A #N/A #N/A #N/A 149.1
#N/A #N/A #N/A #N/A #N/A 140.6
#N/A #N/A
#N/A #N/A
Average Daily Volume (# Shares Millions)
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
0.0 0.00 0.0 135.5
0.0 0.00 0.0 142.6
Federation of Euro-Asian Stock Exchanges
67
“Toshkent” Republican Stock Exchange
Letter from the Chairman
“In the year 2001 we are planning to modernize the trade complex and to create new rules of the Exchange” Rashid Rakhimdjanov Chairman
In 2000, the priorities of the “”Toshkent”” Republican Stock Exchange (TRSE) included provisions for trading shares of privatized enterprises and development of the secondary market. In total, during 2000, there were 8.7 million shares traded for a value of US$ 16.1 million. The TRSE has attracted five joint-stock companies to the main quotation board: Bukhorotex, Pakhtabank, Uzpromstroybank, Gallabank and Uzbek Metallurgical Combine. In 2000 volume on the secondary market reached US$ 1.9 million
or 12% of total volume traded. New rules on the Summary Securities Index (SSI) and amendments to the listing regulations were adopted. The SSI will be defined on the basis of price and will reflect the general status of the capital market index. A new information system was put into action on the Exchange that allows users not only to follow the Exchange trading in a real time but to find any transaction, concluded at the TRSE from the date of its creation, and to get information on joint-stock companies that have sold shares at the Exchange, as well as to get the data on
brokerage companies or everyday analytical information. Anyone who wishes can be connected to this system, not just in Tashkent but also in all the regions of Uzbekistan. In April 2000 the new electronic trade system for trade on the secondary market started its operation. It allows the trading of shares on a method of double continuous auction. Its operation is based on modern web technology. In the year 2001 we are planning to modernize the trade complex and to create new rules of the Exchange which will include electronic trading technology.
Future Outlook The major perspectives for the coming year for the TRSE are: n
perfecting the privatized companies shares trade on the primary market;
n
developing the secondary market - to be achieved by the restriction of unorganized out-of-stock and by transfer of security trading to the organized exchange market;
n
creation of a clearing system permitting settlement of transactions on the T+3 and T+1 scheme;
n
further magnification of the slate of listed companies;
n
integration into the international capital market and cooperation with foreign stock exchanges.
“In total, during 2000, there were 8.7 million shares traded for a value of US$ 16.1 million” 68
Federation of Euro-Asian Stock Exchanges
“Toshkent” Republican Stock Exchange
“Toshkent” Republican Stock Exchange History and Development
Structure & Regulations Legal
The Stock Department of the “”Toshkent”” Stock Exchange (TSE) was established in 1991 and became a pioneer of Uzbekistan’s securities market. In 1994 it was transformed into the “”Toshkent”” Republican Stock Exchange (TRSE) - a closed joint-stock company. It became an open type joint-stock company in 1998. Establishment of the TRSE was closely connected with its market performance and a policy of establishing public joint-stock companies on the basis of privatized government enterprises. Throughout its development, the TRSE completed a complex infrastructure, a central office in Tashkent and brokerage offices and branches in all regions of the Republic. In 1994, 12 brokerage houses were members of the Exchange; this number had increased to 141 as of 31 December 1999. On 1 February 1998, a listing procedure was introduced. Then on 1 September 1998, the shares of the first listed company began trading on the TRSE. A specialized trading platform, intended to sell shares of privatized enterprises to foreign investors in hard currency, was launched on 1 January 1999.
Special Status within the law
Regulation No Securities Market Regulations Regulatory Institution(s), the Exchange and the market participants jointly develop new rules or projects Trading Rules Shared responsibility Surveillance No, electronic Corporate Actions Independent agents Trading Halts Regulations Yes Investor Protection No
Foreign Participation Foreign Investors Investment Limitations Repatriation
Yes, restricted Yes, limited Yes, restricted
Taxes Cash Dividends Interest Income Capital Gains
15% to all investors 31% to all investors 4% to all investors
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Monday-Friday 10:00-12:00 First, Second Automated, Depository Link, Remote Reporting Facilities, WAN Primary Market, Call Auction No Stocks Local and US Dollars None
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Yes T+5 Registered, Bearer Book Entry Transaction by transaction No, one day or more difference between payment and delivery Yes, Partly Owned No No Individuals, Institutional Investors, Brokerage Houses, Banks, Market Makers
“In the year 2001 we are planning to modernize the trade complex and to create new rules of the Exchange which will include electronic trading technology”
Contact Information Contact Person: E-mail: Web-site:
Ms. Julia Chjen
[email protected] n/a
Federation of Euro-Asian Stock Exchanges
69
“Toshkent” Republican Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue (million sums) Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
A Segment 3 (JSC)* 5 (JSCB)** 100 (JSC) 200 (JSCB) n/a 2000 (JSC); no minumum (JSCB) 3 (JSC); for all periods (JSCB) n/a n/a n/a n/a
B Segment 2 (JSC) 4 (JSCB) 50 (JSC) 100 (JSCB) n/a 1000 (JSC); no minimum (JSCB) 2 (JSC); 1 (JSCB) n/a n/a n/a n/a
C Segment 1 (JSC); 3 (JSCB) 25 (JSC) 50 (JSCB) n/a 500 (JSC); no minimum (JSCB) 1 (JSC & JSCB) n/a n/a n/a n/a
* JSC - joint-stock company ** JSCB - joint-stock commercial bank
2000 Volume vs Market Capitalization
fficial 2000 Statistics Official Total Volume
2000 Volume vs Market Capitalization 50 45 40 35 30
5
2000
4
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00
4 3 3
25 20 15 10 5 0
2 2 1 1
Market Capitalization ($ mil)
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Jan
Feb
0 Volume ($ mil)
(# Shares Millions)
Total
1996-2000 # of Companies Listed/Traded 1996-2000 # of Companies Listed/Traded
0.30 0.61 0.93 0.72 0.43 0.94 0.58 0.43 0.79 0.53 1.00 1.43 8.69
2000 Statistics
Total Volume
Average Daily Volume
Average Daily Volume
Market Capitalization
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
1.41 1.62 2.96 4.28 1.10 2.63 0.95 1.16 2.39 0.87 1.36 2.48 23.20
0.02 0.04 0.06 0.04 0.03 0.05 0.04 0.02 0.04 0.02 0.05 0.07 0.04
0.09 0.10 0.18 0.27 0.06 0.15 0.06 0.06 0.13 0.04 0.06 0.12 0.11
Statistical Comparison 1996-2000 5-Year Statistical Comparison Category # Companies Traded Market Capitalization (US$ Millions)
19.01 21.57 42.30 35.17 12.01 39.52 21.23 23.20 40.98 18.15 44.38 31.91 31.91
Index
94.5 53.8 67.1 125.6 85.3 99.8 63.9 108.5 127.5 70.8 60.4 79.8
1996-2000
1996
1997
1998
1999
2000
217
198
430
1,150
496
34.2
41.7
168.5
262.6
31.9
68.2
36.0
34.7
28.8
23.2
6.8
5.4
5.6
6.7
8.7
0.42
0.18
0.17
0.03
0.11
0.04 #N/A #N/A 1.99 #N/A 54.7
0.03 #N/A #N/A 0.86 #N/A 80.2
0.03 #N/A #N/A 0.21 #N/A 110.0
262.56 #N/A #N/A 0.11 #N/A 140.0
0.04 79.8 #N/A 0.73 #N/A 325.0
Total Volume (US$ Millions)
2000
Total Volume (# Shares Millions)
1999
Average Daily Volume (US$ Millions)
1998
Average Daily Volume (# Shares Millions)
1997 1996
-
70
200
400
600
800
1,000
1,200
Federation of Euro-Asian Stock Exchanges
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Ukranian Stock Exchange
In 2000, for the first time during the last decade, the Ukraine witnessed the emerging signs of economic stabilization. In general, the continuous decrease of the gross national product has been curtailed.
Letter from the Chairman “The Ukraine witnessed the emerging signs of economic stabilization” Valentin V. Oskolsky Chairman of the Board
Exchange activity on the Ukrainian Stock Exchange (USE) in 2000 was shown by active primary market trades in shares owned by the state and the bills of the Pension Fund of the Ukraine. The best market volume in 2000 was privatization. It was the main part of the exchange activity and consisted of 81% of general volume; in 1999 this figure was 29%.
The best months were March and November. For example, in November the USE traded 10% of the shares of the open jointstock company “Mykolaevsky glinozemny zavod” - the largest manufacturer of aluminum in Europe. Primary sale of the bills of the Pension Fund of the Ukraine consisted of 12% of general volume in 2000. (In 1999 it was 2%.) The secondary market consisted of 7% in exchange turnover. Volume on the secondary market depends on the economic situation. In the Ukraine the development and growth of the secondary
Future Outlook
market is prevented by the shadow economy. General exchange turnover in 2000 was US$ 42.8 million. We have made headway through the everyday grind and constant craving for modernization of the stock exchange technologies, legislation and diversified off-trade activities to allow us to be confident of our future. This is a perfect guarantee of the fact that the oldest and most developed stock exchange in the Ukraine will enjoy the pleasure of gaining new partners and friends.
educational activities in order to prepare specialists for the national capital market;
The goals of the USE for 2001 are: n n
to increase participation of the USE in money privatization by implementing the Law of Ukraine “On State Privatization Program for 2000-2002” and the Law of the Ukraine “On State Budget of the Ukraine for 2001”;
n
to further improve technologies for trading stateowned shares of privatized companies;
n
to promote the attraction of direct national and foreign investments in order to strategically develop important industry companies during the process of privatization;
n
to form a normative base for the starting of the trading of derivatives including the power sphere;
n
to implement an on-line trading system with uninterrupted quotations in electronic trading, information system of the USE; .
n
to participate in the development and improvement of Ukrainian securities legislation including the completion and approval of the USE normative documents according to new rules and the charter;
n
to promote the practical depository, clearing and settlement activity of the Ukrainian Depository;
n
to expand publishing, scientific, methodical and
to strengthen international cooperation with foreign stock exchanges, financial and depository organizations.
History and Development The Ukrainian Stock Exchange (USE) was registered by decree of the Cabinet of Ministers in 1991, in accordance with the law “On Securities and Stock Exchanges,” and began operating on 2 January 1992. In June 1997, the USE received its Certificate of Registration by the Securities and Stock Market State Commission (SCS), legalizing it as an institution. In 1998, the USE was given certification for selfregulation. The USE is the oldest and most developed exchange in the Ukraine, with regional offices in all major cities of the country and 135 registered brokerage offices. In order to fulfill the decrees of the President on privatization and funds borrowing, auctions for stateowned shares of public corporations (created in the process of privatization), trades on the secondary market and trades in bills were allowed and increased volumes of Exchange turnover two times. The number of transactions for securities trading rose 1.5 times. The number of issuers whose securities are listed exceeded 2,000, and the official department of listing was expanded to meet demand. Shares of the joint-stock company “Ukrrichflot” were listed on the USE and also in international markets.
Federation of Euro-Asian Stock Exchanges
71
Ukranian Stock Exchange The USE created many educational programs in association with the Slavonic University. Additionally, the USE developed relationships with the Frankfurt, Korea, Istanbul, Moscow and Kyrgyz Stock Exchanges along with the Austrian Options and Futures Exchange.
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments
Currency Real Time Information
Monday-Friday Equity Market 11:00-14:00 n/a Automated, Depository Link, Data dissemination, Reporting Facilities, WAN Primary Market, Price Fixing Yes Stocks, bonds, state treasury notes, bills, certificates of deposit, warrants, certificates of investment funds and companies, options and futures Local Last price, Last volume, Total volume, Listed company announcements
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
72
Yes T+5 Yes Physically Transaction by transaction Yes, Full DVP Yes No No/Yes Banks and others
Federation of Euro-Asian Stock Exchanges
Structure & Regulations Legal Not-for-profit company Regulation Self Securities Market Regulations Regulatory Institutions, the Exchange and market participants jointly Trading Rules Exchange, Government Institutions Surveillance No Corporate Actions Centralized Trading Halts Regulations Yes Investor Protection No
Foreign Participation Foreign Investors Investment Limitations Repatriation
Restricted No limitations No
Taxes Cash Dividends Interest Income Capital Gains
n/a n/a 30% local investors
“The oldest and most developed stock exchange in the Ukraine” Contact Information Contact Person: E-mail: Web-site:
Hanna Yatsyuk
[email protected] www.ukrse.kiev.ua
Ukranian Stock Exchange Minimum Listing Requirements Requirements Minimum Assets Last fiscal year income (or summary income for the last 3 years) # of issued shares (with nominal price under 0.25 UAH) # of shareholders holding 100 shares and more (or total # of shareholders) Maximum correlation of total creditor indebtedness to total assets Maximum share of authorized capital at disposal of non-managing staff Minimum average income ratio (net income/ total assets) for the last 3 years Minimum share of issue sold on quotation level K-3 of the USE before the allowance to enter official quotation is granted (except public securities)
K-1 Official Euro 1,000,000 Euro 200,00 (Euro 500,000) 2,000,000
K-2 Official Euro 400,000 Euro 80,000 (Euro 220,000) 1,000,000
5,000 and more (not less than 5,500) 0.3
2,000 and more (not less than 2,200) 0.3
n/a
35%
35%
n/a
10
10
n/a
1%
1%
n/a
2000 Volume vs Market Capitalization 2000 16 14 12 10 8 6 4 2 0 Jan Feb Mar Apr May Jun Jul Market Capitalization ($ mil)
n/a n/a
n/a
Official 2000 Statistics
18
1,050 1,025 1,000 975 950 925 900 875 850 825 800 775 750
K-3 Free Market n/a
Aug Sep Oct Nov Dec Volume ($ mil)
Total Volume
Total Volume
Average Daily Volume
Average Daily Volume
Market Capitalization
(# Shares Millions)
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 # of Companies Listed/Traded
6.17 69.68 108.29 29.70 12.18 12.52 22.89 32.27 11.20 22.87 162.38 5.79 495.94
1999
0.7718 5.8063 9.8445 2.2846 0.7428 0.6260 2.2893 2.9337 0.6999 1.2704 14.7615 0.6437 3.19
0.09 0.19 1.10 0.22 0.09 0.05 0.11 0.14 0.09 0.06 1.47 0.10 0.28
853.95 855.39 1,011.77 1,012.41 1,018.04 1,018.68 1,019.17 1,019.17 1,019.22 1,021.40 1,021.68 1,022.51 1,022.51
Index
#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
5-Year Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization (US$ Millions)
2000
0.72 2.33 12.08 2.89 1.45 1.09 1.09 1.51 1.47 1.12 16.18 0.91 42.85
1996
1997
1998
1999
2000
205
222
229
240
244
4,002.5
1,568.8
675.5
869.5
1,165.3
717.6
400.9
25.5
793.5
765.7
103.3
91.2
1,015.3
739.4
949.0
2.81
1.50
2.67
2.88
2.76
0.4 2,300.0 40.0 0.18 #N/A 42.4
0.3 757.0 11.3 0.26 #N/A 45.3
3.8 540.2 7.1 0.69 7.9 48.1
869.5 487.8 6.7 0.91 7.4 50.6
3.4 642.7 8.7 0.66 5.9 54.0
Total Volume (US$ Millions)
Total Volume (# Shares Millions)
Average Daily Volume 1998
(US$ Millions)
Average Daily Volume 1997 1996 180 190 #200 210 220 Listed/Traded 230 240 250 1996-2000 of Companies
(# Shares Millions)
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Federation of Euro-Asian Stock Exchanges
73
Yerevan Stock Exchange “The Yerevan Stock Exchange (YSE) was established on 31 May 1993 and has operated successfully for the last seven years as the main capital market institution in Armenia.” Dr Sedrak Sedrakian President
History and Development The Yerevan Stock Exchange (YSE) was established on 31 May 1993 and has operated successfully for the last seven years as the main capital market institution in Armenia. The total number of YSE shareholders is 112, representing the largest banks in Armenia (including the branches of two foreign banks), legal entities and foreign individuals (from Russia, the USA, France, England, Italy, Canada, Iran, Hong Kong, the Ukraine and Georgia). In 1996, the YSE began listing and trading shares on its floor. Since then, the number of companies listed has reached 96, of which 14 were listed during 1999. At the beginning of 2000, the 96 companies are represented as follows: the industrial sector, 70%; the financial sector, 28%; and the service sector, only 2%. At the beginning of 1997, the distribution of the shareholders was in favour of the financial sector, however for almost two years there has been a tendency toward increases in the industrial sector and a decrease in the financial sector.
Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Yes Physically Netting Yes, Full DVP Yes, wholly owned Yes Yes Individuals, Institutional Investors
Structure & Regulations Legal
Special status within the law Regulation n/a Securities Market Regulations n/a Trading Rules Exchange, Shared regulatory responsibility Surveillance Yes Corporate Actions n/a Trading Halts Regulations Yes Investor Protection n/a
Foreign Participation Foreign Investors Investment Limitations Repatriation
Yes n/a n/a
Taxes Cash Dividends Interest Income Capital Gains
n/a n/a n/a
In October 2000 the YSE closed temporarily due to a government decree that mandated a sweeping restructure of the capital market. A targeted date for the reopening of the Exchange has not yet been announced.
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Monday-Friday 10:00-16:00 n/a Automated, Reporting Facilities, WAN Call Auction, Continuous Auction, Primary Market Yes Stocks Local n/a
Clearing & Settlement Central Depository Period 74
Yes n/a
Federation of Euro-Asian Stock Exchanges
Yerevan Stock Exchange
Contact Information Contact Person: E-mail: Web-site:
Armine Hakobyan
[email protected] www.yse.org
Yerevan Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue Free Float Minimum # of Shareholders Minimum Years of Positive Financial Results # Times Dividends Distributed in Last 3 Years Listing Agreement with Central Depository Prospectus Required Special Requirements
Quoted Segment n/a n/a 25% 250 1 n/a no yes n/a
Total Volume
2000-Monthly Volume vs Index 49 48 47 46 45
0.12 0.10 0.08
44 43 42 41 40 39
0.06 0.04 0.02
Volume (US$ Millions)
Dec
Oct
Nov
Sep
Aug
Jul
Jun
Apr
May
Mar
Jan
Feb
0.00 Index
(# Shares Millions)
2000
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 Market Capitalization ($ millions) 1996-2000 Market Capitalization ($ millions)
0.0008 0.0007 0.0000 0.0003 0.0000 0.0000 0.0029 0.0036 0.0003 #N/A #N/A #N/A #N/A
Total Volume
Average Daily Volume
Average Daily Volume
Market Capitalization
(US$ Millions)
(# Shares Millions)
(US$ Millions)
(US$ Millions)
0.005 0.014 0.006 0.001 0.000 0.000 0.054 0.120 0.002 #N/A #N/A #N/A #N/A
0.00004 0.00003 0.00000 0.00002 0.00000 0.00000 0.00014 0.00016 0.00002 #N/A #N/A #N/A #N/A
0.0002 0.0007 0.0002 0.0001 0.0000 0.0000 0.0027 0.0052 0.0001 #N/A #N/A #N/A #N/A
24.52 24.27 24.27 24.40 24.60 24.15 24.34 24.66 24.75 #N/A #N/A #N/A #N/A
Index
42.6 42.4 42.4 43.5 47.8 47.8 47.4 47.9 47.9 #N/A #N/A #N/A
5-Year Statistical Comparison 1996-2000 Category # Companies Traded Market Capitalization (US$ Millions)
1996
1997
1998
1999
2000
9
54
82
95
105
2.7
15.9
17.7
24.9
24.7
0.0360
1.0889
0.7852
0.9719
0.0019
0.0091
0.1479
0.0789
0.0960
0.0003
0.0001
0.0043
0.0032
0.0004
0.0001
0.0000 39.7 #N/A 0.01 #N/A 452.0
0.0006 47.7 #N/A 0.07 #N/A 498.0
0.0003 36.1 #N/A 0.04 #N/A 520.0
24.9169 43.6 #N/A 0.04 #N/A 520.0
0.0000 47.9 #N/A #N/A #N/A #N/A
Total Volume
2000
(US$ Millions)
Total Volume
1999
(# Shares Millions)
Average Daily Volume
1998
(US$ Millions)
Average Daily Volume
1997
(# Shares Millions)
1996 -
Free Market n/a n/a n/a n/a 1 n/a no yes n/a
Official 2000 Statistics
2000 Monthly Volume vs Index 0.14
Regulated Segment n/a n/a 15% 100 1 n/a no yes n/a
5
10
15
20
25
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
Federation of Euro-Asian Stock Exchanges
75
Zagreb Stock Exchange
In 2001 we expect slower GDP growth than in 2000. Analysts’ estimate is that the GDP will grow in 2001 at a 3.2% clip. Industrial production will be higher. After high price rises in 2000, we expect the stabilization of prices in 2001 at about 4% by the end of the year.
Letter from the General Manager “After high price rises in 2000, we expect the stabilization of prices in 2001 ” Marinko Papuga General Manager
In 2001 a relatively stable exchange rate for the HRK is expected in relation to the EURO. With regard to the US$, we expect the HRK to appreciate in accordance with EURO gains against US currency. The current deficit is expected to be around 5% of the GDP in 2001.
Future Outlook
Public finances will face the problem of transfer to state funds in 2001 and despite a lower budget, a significant deficit is expected.
“In 2001 a relatively stable exchange rate for the HRK is expected in relation to the EURO”
External debt could cross the US$ 10.5 billion level by the end of 2001. Unemployment is still very high (21%) and is not expected to fall before 2H 2001.
We expect more government bonds and other fixed income instruments to be introduced on the market in 2001, as well as the final decision about the start of pension reform.
The major equity event of 2001 will be the second round of Croatian Telecom’s privatization. It is planned that 21% of the company will be privatized through an IPO in the first half of the year. The ratio between the domestic and foreign tranche of the issue is expected to be 10/90%. After the IPO, a further 14% is scheduled to be privatized.
History and Development
“We expect the HRK to appreciate in accordance with EURO gains against US currency”
The ZSE currently has 51 members. Prerequisites for ZSE
Podravka, the largest food processing company in Croatia, has promised a GDR listing for 2001. The process of restructuring finished at the end of 2000, and the company should be ready to be listed on an international market. Zagrebacka Banka, one of the largest Croatian banks, may be a very interesting story due to a market rumors of a potential take-over.
76
Interest rates will likely remain stable with small chance for reduction after new tax reforms are introduced. An expansion of credits is expected, a healthy sign as they have been declining since 1998.
Federation of Euro-Asian Stock Exchanges
The Zagreb Stock Exchange (ZSE) was incorporated in 1991 as a joint-stock company by 25 commercial banks and insurance companies. Today, the ZSE has 34 shareholders who in turn elect a nine-member supervisory board for two-year terms. The supervisory board appoints the Manager of the Exchange who is in charge of the strategic planning and day-to-day operations of the Exchange.
“Interest rates will likely remain stable with small chance for reduction after new tax reforms are introduced”
Zagreb Stock Exchange membership include compliance with the Securities Law, CROSEC requirements and ZSE rules. A seat on the ZSE currently costs HRK 100,000 (approximately US$ 13,000). Members are required to comply with the rules and regulations of the ZSE and must register at least one licensed broker.
Foreign Participation Foreign Investors Investment Limitations Repatriation
Allowed, no restrictions No limitations No restrictions
Taxes Cash Dividends
Individuals Corporations
15% without holding tax Exempt from corporate tax
Interest Income
Individuals
15%, 25% or 35% depending on the level of income with the exception of interest paid on deposits in banks, savings banks and savings loan associations Not clear. Corporate tax rate is 20%
Practices and Procedures Trading Days Hours Market Segmentation System Mechanisms Market-Maker/Specialists Instruments Currency Real Time Information
Monday-Friday 10:00-16:00 Equity (Quotation I, Quotation II, Quotation TN), Fixed Income Automated, Remote Access, Remote Login, WAN Continuous Auction No Stocks and bonds Local Best bid/ask, Last price, Last volume, Total volume, Order book
Corporations Capital Gains
Individuals
15%, 25% or 35% depending on the level of income 20%
Corporations
Clearing & Settlement Central Depository Period Registered Settlement Clearing DVP Clearing Institution Risk Sharing Margin/Lending Custodians
Yes T+4 Yes Book Entry Netting No, one day or more difference between payment and delivery Yes Yes No Banks
“ We expect more government bonds and other fixed income instruments to be introduced on the market in 2001”
Structure & Regulations Legal Commercial company Regulation Self Securities Market Regulations Regulatory Institutions without Exchange Trading Rules Exchange Surveillance No Corporate Actions Independent agents Trading Halts Regulations Yes Investor Protection No
Contact Information Contact Person: E-mail: Web-site:
Mr. Marinko Papuga
[email protected] www.zse.hr
Federation of Euro-Asian Stock Exchanges
77
Zagreb Stock Exchange Minimum Listing Requirements Requirements Years of Business Activity Capitalization of Issue
Quotation II 3 for shares ECU 2 mil.
Quotation TN 1 no
Free Float Minimum # of Shareholders # Prior Years Audited Financial Accounts Applicant
Quotation I 3 for shares - ECU 10 mil. for bonds ECU 1 mil. 25% no 3 issuer
10% 80 3 issuer
Prospectus Required Freely transferable securities Whole class of securities to be listed
yes yes yes
yes yes yes
no no 1 issuer, or member of ZSE no yes yes
2000 Monthly Volume vs Index
Official fficial 2000 Statistics Total Volume
2000-Monthly Volume vs Index
Volume (US$ Millions)
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
500 400 300 200 100 0 Mar
25 20 15 10 5 0 Jan
1,000 900 800 700 600
Feb
50 45 40 35 30
Index
2000
(# Shares Millions)
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total
1996-2000 Market Capitalization ($ millions) 1996-2000 Market Capitalization ($ millions)
0.31 0.45 0.72 0.26 1.40 0.31 0.11 0.90 0.23 0.28 0.72 0.53 6.23
10.27 14.93 27.18 8.93 45.22 16.99 4.01 7.34 11.97 8.58 15.64 13.82 184.89
(# Shares Millions)
0.02 0.02 0.03 0.01 0.07 0.01 0.01 0.04 0.01 0.01 0.03 0.03 0.03
Average Daily Volume
Market Capitalization
(US$ Millions)
(US$ Millions)
0.57 0.75 1.18 0.50 2.15 0.81 0.19 0.33 0.57 0.39 0.74 0.73 0.75
Category # Companies Traded Market Capitalization
2,676.95 2,790.27 2,951.24 2,469.89 2,474.69 2,572.76 2,414.57 2,378.82 2,386.21 2,325.66 2,491.74 2,711.77 2,711.77
Index
779.3 849.2 952.3 834.5 876.8 834.7 792.5 829.1 823.7 849.8 904.8 890.0
1996-2000
1996
1997
1998
1999
2000
66
77
50
61
105
2,974.1
4,245.6
2,925.3
2,513.9
2,386.2
234.3
340.4
145.5
77.3
12.0
1.2
2.8
1.8
2.7
0.2
1.15
1.69
0.71
0.01
0.57
0.0 #N/A 14.1 0.08 #N/A 5.5
0.0 1,002.1 11.1 0.08 #N/A 6.3
0.0 711.6 #N/A 0.05 #N/A 6.2
2,513.9 715.3 #N/A 0.03 #N/A 7.6
0.0 823.7 #N/A 0.07 #N/A 8.2
Total Volume (US$ Millions)
Total Volume
1999
(# Shares Millions)
Average Daily Volume
1998
(US$ Millions)
Average Daily Volume
1997
(# Shares Millions)
1996
78
(US$ Millions)
Average Daily Volume
5-Year Statistical Comparison Statistical Comparison 1996-2000
(US$ Millions)
2000
-
Total Volume
2000 Statistics
1,000
2,000
3,000
4,000
5,000
Federation of Euro-Asian Stock Exchanges
Index Market P/E Ratio Turnover Ratio Dividend Yield (%) Currency/US$
IASC International Accounting Standards Committee n
The International Organization of Securities Commissions (IOSCO) recommended that IOSCO members should permit incoming multinational issuers to use the core standards for cross-border offerings and listings, supplemented in certain areas where considered necessary to address outstanding issues.
n
The Basel Committee on Banking Supervision announced support for efforts to harmonize accounting practices internationally and for standards developed by IASC.
n
The European Commission announced proposals that would require all listed companies in the European Union to use International Accounting Standards by 2005.
n
IASC was restructured by the appointment of trustees and a new International Accounting Standards Board (IASB). The IASC Trustees, whose 19 members represent 6 continents and 14 countries, are responsible for appointing the IASB, for oversight and for fundraising. The IASB has sole responsibility for working toward a single set of high quality accounting standards that national bodies around the world can broadly support. The IASB has 12 full-time members and 2 part-time members.
International Accounting Standards Committee
Sir David Tweedie Chairman
The International Accounting Standards Committee (IASC) is an independent, private sector body whose objectives are to: n
develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in the world’s capital markets and other users make economic decisions;
n
promote the use and rigorous application of those standards; and
n
bring about convergence of national accounting standards and International Accounting Standards to high quality solutions.
The successful development of and convergence toward high-quality internationally accepted accounting standards will provide direct benefits to auditors, users, preparers and regulators of financial information and statements. More generally, the availability of common and more reliable financial data should facilitate international investment and reduce the cost of capital worldwide. Accounting costs for multinational firms operating in different jurisdictions will be reduced with the narrowing and eventual elimination of national differences. Regulators will benefit from the greater consistency and quality of information.
IASC is delighted to be associated with the efforts of FEAS to promote the development of stock exchanges in the region. IASC has been represented at a number of meetings of FEAS and looks forward to further cooperation as we go forward together into the twentyfirst century. FEAS adopted guidelines in 1998 to standardize and harmonize rules and regulations of the FEAS region. Among other things, these include interim report formats for issuers, with previously approved annual and consolidated reporting formats. These guidelines are based on International Accounting Standards. IASC welcomes this move that will help to reduce the cost of capital for companies listed on FEAS member exchanges, make it easier for those companies to raise foreign capital and protect investors.
During 2000, several significant advances occurred, including the following:
For more information about IASC and International Accounting Standards, please contact:
Sir David Tweedie Chairman
International Accounting Standards Committee 166 Fleet Street London EC4A 2DY United Kingdom telephone +44 (20) 7353-0565 fax +44 (20) 7353-0562 e-mail
[email protected] web site http://www.iasc.org.uk
Federation of Euro-Asian Stock Exchanges
79
FIBV International Federation of Stock Exchanges International Federation of Stock Exchanges
HC Lee President
up over time in response to market needs. The poll taken at the FIBV Annual Meeting underscored the willingness of member exchanges to meet these selfregulatory costs; to do so is a commercial imperative. In 2000, the FIBV commissioned two industry-wide studies with a view to providing market operators with the necessary management tools to assert their competitiveness and to improve their performance, both in relative as well as objective terms. These studies were on the following topics: “Price Discovery and the Competitiveness of Trading Systems,” September 2000
In most of the world, operators of stock exchanges experienced another good or even a remarkable business year, even as many indices ended up falling, often dramatically. It is most fortunate that commercial, demographic and technological trends continue to channel business toward securities exchanges. The growth in trading activity continued, even as the number and size of new introductions slowed. Managers’ focus has been on reworking their own bourses as successful, competitive enterprises, whatever their corporate form. One does not have to work in a demutualized, listed exchange to feel the competitive commercial pressures in financial services. While the majority trend is towards demutualization as the preferred business model, many FIBV members have compelling reasons not to proceed with such a change in corporate form - at the same time, these bourses are also joining in the commercial dynamism overtaking the entire industry. In this entrepreneurial environment, it is worth remembering that price discovery is the cumulative result of many processes launched well before it occurs and continuing on afterwards. Among other things, most stock exchanges assume responsibility for: listing of companies; surveying the price formation on markets for its fairness; re-disseminating financial information; disseminating market prices; matching each counterparty to a trade; accrediting firms for access to the central marketplace and monitoring the open positions and solvency of those firms; assuring the respect of business practices; investment in IT to assure the proper functioning and development of the market; being accountable to the regulatory authorities and to users of markets; and today offering shareholder value to owners of demutualized bourses. These business processes are constantly occurring; their interaction composes a regulated financial market. The value of these mutually reinforcing activities is the quality of the market itself, as was reaffirmed at the 2000 Annual Meeting in Brisbane. There are costs associated with these activities which, taken together, enable the financial market to operate wholly and efficiently. These diverse stock exchange tasks require many talents, and they have been built 80
Federation of Euro-Asian Stock Exchanges
“The Value Chain in Financial Markets,” April 2000 Hosted by the Istanbul Stock Exchange, the FIBV held its 3rd Global Emerging Markets Conference and Exhibition. Some 800 participants came to the threeday event, which featured information on exchange organization and management; news on market outlooks and on individual listed corporations in these countries; and a fair for IT companies and market service providers. The Secretariat is currently implementing new, harmonized market statistics for measuring trading volumes, spreads, and market capitalization. This involves a good deal of work for members as they redo their numbers, but the testing period is over and gradually the statistics that the FIBV publishes will be clearer and more authoratative. At the General Assembly held in Brisbane, the Valencia Stock Exchange was admitted for membership, bringing the total worldwide to 55. The theme of the plenary session at the Annual Meeting was the state of exchange trading systems and price discovery. Other topics discussed were international cooperative regulation, ways of generating new revenues, and senior management’s business priorities at this time of rapid change. In November 2000, members sent representatives to a workshop in Stockholm on the questions associated with investor education programs. Members and outside business representatives involved in this field debated the different ways of going forward with this work, inside exchanges and elsewhere. Clearly, great stakes have been built up for societies around the world in their capital markets, and education of investors will help make this all work better. The FIBV represented the stock exchange industry at meetings of numerous organizations: the Joint Exchange Task Force, the International Options Market Association, the OECD, among others. At the request of members and in order to improve their business performances, the FIBV Secretariat also spoke to government officials around the world about the workings of stock exchanges.
