Choice of company to restructure stock exchange on September 15

The State Property Committee is yet to announce its choice of the company to restructure and privatize the Mongolian Stock Exchange, following the tender announcement two weeks ago. Unconfirmed reports say five of the 10 applicants are now in the running for the final selection.

They include KOSPI from South Korea, the Nasdaq(USA)-Mosdaq consortium, the London Stock Exchange, and the Deutsche Borse Group from Germany. The first two are believed to be the front runners but one has to wait until September 15 for the final announcement.

Whoever is chosen will have its plate full to develop the small Mongolian capital market into a world class player, ready to cater to demands on its resources as mining takes off. At present share transaction accounts for 2-3% of the GDP, and 4-5% of total investment. The international norm for both is 50%.

Handing over the job of developing a country’s stock market to foreign institutions has not always been successful. Mongolia has the added problem that its laws and regulations are often outdated and out of sync with present-day practices. The Ministries of Finance, Justice and Internal Affairs and the Financial Regulatory Authority will have to work harder on this aspect so that the country’s choice can work without hindrance.