CAPITAL MARKET IN

MONGOLIA

Contents

The current state of capital market development in

Mongolia

Regulatory frameworks relating to domestic capital

markets;

Major relevant policies that have been announced;

National development plans on capital markets

Key lessons learned on capital market development.

Authorities of the Financial market

Financial Regulatory Commission

- Insurance market

- Securities market

Microfinance market

Non-bank financial institutions

Savings and credit cooperatives

The Bank of Mongolia

Money market /Banks/

Structure of the Financial sector /billions MNT/

Capital market

Insurance

NBFI

SCC

Financial market

Percentage of GDP 16%2018

4.61%= 𝑨𝒄𝒕𝒊𝒗𝒆

𝑮𝑫𝑷

0.72%= 𝑨𝒄𝒕𝒊𝒗𝒆

𝑮𝑫𝑷

1.12%= 𝑨𝒄𝒕𝒊𝒗𝒆

𝑮𝑫𝑷

9.1%= 𝑴𝒂𝒓𝒌𝒆𝒕 𝑪𝒂𝒑𝒊𝒕𝒂𝒍𝒊𝒛𝒂𝒕𝒊𝒐𝒏

𝑮𝑫𝑷

Санхүүгийн зохицуулах хорооны товч танилцуулга

Securities market

514

Insurance market

140NBFIs

538

SCCs

275

Branches and

representatives

930

As of 2nd quarter of 2019, FRC regulates 2,397 professional entities including:

❖ securities firms, brokers and dealers, underwriters, investment funds, joint

stock companies;

❖ insurance companies and intermediaries;

❖ non-bank financial institutions;

❖ savings and credit cooperatives;

Financial institutions under FRC regulation

Capital market overview (MSE)

303 300 301 303 307

0

100

200

300

400

500

2015.II 2016.II 2017.II 2018.II 2019.II

Market capitalization /billion MNT/ Number of securities companies,total assets /billion MNT/

TOP 20 IndexNumber of listed companies

4.8%

4.1%

1408.5 1423.1 1497.7

2484.9

2604.8

0.4%

0.9% 0.8%

2.0%

3.2%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0

1,000

2,000

3,000

2015.II 2016.II 2017.II 2018.II 2019.II

15,023.81 12,274.16 12,660.44

19,961.46 20,785.21

2015.II 2016.II 2017.II 2018.II 2019.II

63 6261

54 5267.675.2

95.3 93.2 90.2

0

20

40

60

80

100

120

0

20

40

60

80

100

2015.II 2016.II 2017.II 2018.II 2019.II

Capital market overview (MSE)TOTAL VALUE OF SECURITIES

TRADED

SHARES TRADED VALUE

GOVERNMENT BOND TRADED VALUE

BILLION MNT

BILLION MNT

BILLION MNT

CORPORATE BOND TRANSACTION VALUE

BILLION MNTSHARES TRADED COMPOSITION

FOREIGN INDIVIDUAL

FOREIGN ENTITY

LOCAL ENTITY

LOCAL INDIVIDUAL

Securities traded at MSE

49.8

82.5

2010.II 2011.II 2012.II 2013.II 2014.II 2015.II 2016.II 2017.II 2018.II 2019.II

Stock /Billion MNT/

27.67.9

2010.II 2011.II 2012.II 2013.II 2014.II 2015.II 2016.II 2017.II 2018.II 2019.II

Government bond /Billion MNT/

Government securities traded in MSE and BOM (billion MNT)

240

3008.7

1979.31854.53 1824.8

2702.26

0 36.12

510.34280.45

630.2

0

500

1000

1500

2000

2500

3000

3500

2012 2013 2014 2015 2016 2017

The Bank of Mongolia MSE

Issued amount of Mortgage backed security, billion MNT

The current state of capital market development in

Mongolia

Regulatory frameworks relating to domestic capital

markets;

Major relevant policies that have been announced,

national development plans on capital markets

Key lessons learned on capital market development.

Regulatory frameworks relating to domestic

capital markets

Law on investment

Law on investment fund

Law on securities market

Regulations on Issuing and Trading of Government securities

(BOM and MOF)

Draft Laws To Be Revised

Law on the Legal Status of the Financial Regulatory Commission

Law on Non-Bank Financial Institutions

Law on Savings and Credit Cooperative

Draft Laws To Be Amended

Law on Insurance

Law on Insurance Intermediaries

Driver's Insurance Law

Law on Investment Fund

Law on Agricultural Products and Commodity Exchange

Comprehensive list of amendments in current laws in force and new

draft laws to be approved was sent and it was referred in the “Main

Direction of Improvement in Legislation of Mongolia by 2020”

FRC Activities: Legal Reforms of Capital Market

Law on Securities Market

Major relevant policies that have been announced,

national development plans on capital markets

The National Program to develop Mongolia’s financial market until 2025

Sustainable development plan 2030

Key lessons learned on capital market

development Mongolian capital market is underdeveloped and it does not play a

leading role in long term financing

Corporate bond financing is almost non existing

There is a need to implement policy measures in order to develop a secondary market

Need to pay attention in developing the corporate governance of joint stock companies

Need to introduce securities market settlement systems in line with international standards