26.08.2013, The New Securities Markets Law Overview, G.Saruul
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Transcript of 26.08.2013, The New Securities Markets Law Overview, G.Saruul
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn
THE NEW SECURITIES MARKETS LAW OVERVIEW
Saruul Ganbaatar, Deputy CEO, Mongolian Stock Exchange
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn
NEW SECURITIES MARKETS LAW
1
the New Securities Markets Law was approved on May 24th
2013 with an effective date of January1st 2014.
• creates an enabling regulatory environment for further
development of the securities market
• follows the adoption of the revised Company Law in 2011
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn
KEY FEATURES
3
exchange to set the standards of listed futures and options contracts
regulatory framework for depositary receipts
global and Mongolian DR-s
an important and established concept in common law jurisdictions
"nominal holder“ is regulated entity
who is registered as depositor/custodian of a given security
who is not the beneficial owner of such security
"beneficial owner" is "real" owner of the security
who is entitled to enjoy the rights and benefits attached to such security
DISTINGTION
BETWEEN
NOMINAL AND
BENEFICIAL
OWNERSHIP
increases the range of tradable securities to include derivatives (options, futures),
depositary receipts and warrants
over-the-counter trading of securities is expressly permitted
INCREASED
LIQUIDITY
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn 4
detailed IPO procedure and stringent requirements on issuers and their advisors, sanctions
for non-compliance
detailed disclosure requirements in prospectus
• financial information, related parties, business plan and forecast, investment risk
disclosures
• Statements to be verified by independent authorized auditors and legal professionals
depositary receipts to be issued by depositors for accessing foreign markets, while
underlying securities are held by custodian
dual listing opportunities for both Mongolian in overseas and overseas companies in
Mongolia
INVESTOR
PROTECTION
CAPITAL RAISING
OPPORTUNITIES
KEY FEATURES
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn
KEY FEATURES
3
insider information is information not publicly available, which may substantially affect
the price of the security
holders of inside information are prohibited from trading in the securities or inducing other
to trade
prohibition of fraudulent trading, artificial pricing, misleading clients, etc.
INSIDER
DEALING AND
MARKET ABUSE
ongoing disclosure requirements
• semi-annual and annual financial reports
• changes to the management, influential shareholding structure
• shareholding meetings
• share transactions by the issuer and insiders
• operational updates and press releases
mandatory facilitation of disclosure information via issuer’s, exchange’s and FRC’s websites
INCREASED
MARKET
TRANSPARENCY
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn
KEY FEATURES
3
introduction of detailed set of regulations governing regulated activities
conditions and requirements to be imposed
risk management requirements
procedures for advertisements, for provision of services to clients, for appointing
suitable governing persons, for preparing and maintaining records, for opening
branch offices, for disclosing connected persons transactions, etc.
REGULATED
ACTIVITIES
AND DETAILED
REGULATIONS
securities clearing activities
matching trades and managing settlement risk
securities settlement activities
delivery-versus-payment
rolling settlement process
securities ownership registry activities
central securities depositories
• nominee ownership records of members
custodian banks
• nominee and beneficial ownership records of banks clients
CLEAR
DEFINITION OF
POST TRADING
ACTIVITIES
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn
KEY FEATURES
3
custody is safeguarding of securities and providing services connected with exercising of
legal ownership rights
services to be conducted by banks and/or securities depositories
CUSTODY
SERVICES
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn
CLEARING, SETTLEMENT, CUSTODY MODEL SPECIFICS
SETTLEMENT FEATURES
CLEARING
• net clearing for cash and gross clearing for securities settlement
• multilateral trade matching among participants
• Facilitate domestic settlement at the moment
• goal is to expand up to cross-border and international settlement types with the
introductions sub-custodian banks
• securities settled through the CSD, but cash is paid through MongolBank payment
system, which in turn is handled through select clearing banks
• securities are delivered in dematerialized form based on cash settlement through
DVP model on single currency
• securities borrowing and lending are likely to be legalized with the passage of the
new Securities Markets Law
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn
RISK MANAGEMENT
MARKET RISK
CREDIT & SETTLEMENT RISK
price risk is managed through the utilization of:
daily price bands
dynamic and static circuit breakers
counterparty risk
Know Your Client
collateral management
quality collateral only (i.e. cash)
mark-to-market throughout the trading day
central Systemic Risk Management
Settlement Guarantee Fund
MONGOLIAN STOCK EXCHANGE l www.mse.mn
Client Broker MSE
SCHCD Clearing
Bank
Bank
Of
Mongolia
Order T+0
Execution T+0
Trade T+0
Trade
Execution T+0 O
nlin
e
Re
al T
ime
Fu
nd
req
uire
d
T+
0 T
+1
T+0 16:00
T+1 9:00
Funds required per
Broker
Confirmation of
Funding requirements
Funding T+3
MSE LOOKING TO THE FUTURE: POST TRADING ENVIRONMENT CURRENT MODEL
MONGOLIAN STOCK EXCHANGE l www.mse.mn MONGOLIAN STOCK EXCHANGE l www.mse.mn l 11
Tra
din
g
Po
st-
Tra
din
g
Client International
Broker
Dealer
Local
Broker MSE
Order T+0
Execution
Information T+0
Order T+0 Trade T+0
Trade
Execution T+0
Trade T+0
Execution
Global
Custodian
T+
0 T
+1
T
+2
Instr
uctio
ns
Se
ttle
me
nt
Co
nfirm
atio
n
Central
Clearing
Member
Settlement
Center
Local
Custodian
Bank of Mongolia
Funding Cash
T+3
Funding Cash
T+3
T+
1 T
+2
Pre
-Ma
tch
ing
Give Up
T+1
T+2
SCHCD
MSE LOOKING TO THE FUTURE: POST TRADING ENVIRONMENT CURRENT MODEL