Mongolia’s securities market hits a new milestone with the launch of over-the-counter (OTC) trading, with its operations to be overseen and managed by the self-regulated Mongolian Association of Securities Dealers (MASD) on a platform developed by AND Systems LLC.
The Financial Regulatory Commission issued a resolution on December 9, 2020 to enable the regulatory framework for the OTC market in Mongolia, by which MASD is legally in charge of overseeing its operations. In accordance, MASD drafted and presented a detailed set of regulations for the OTC market to the FRC, which were approved and officially adopted by FRC’s decree on July 1, 2021. A call for tender for the system development of the OTC trading platform was issued in May 2021, during which AND Systems LLC was selected to develop the platform.
On September 3, 2021, 5 corporate bonds of 3 issuers amounting to MNT 16.5 billion in total were fully subscribed by professional investors on the primary market issuance and the secondary market trading for these bonds began on September 7, officially launching OTC trading.
The historical first security to be traded on the OTC market was the MNT 15 billion “Moncon Bond” underwritten by Golomt Capital. This was immediately followed by two other issuances, MNT 500 million corporate bond by Gerel Finance NBFI underwritten by Apex Capital and MNT 1 billion corporate bond by Business Invest Development NBFI underwritten by Ulzii & Co.
Issuing securities on the OTC market for professional investors saves time and cost for the issuer and enables fundraising in a short amount of time. In addition, OTC trading creates a secondary market for privately placed issuances for professional investors where there is more liquidity and transparency.
The OTC trading platform was developed by AND Systems LLC, and is linked to the Mongolian Central Securities Depository’s registry and settlement systems. The trading platform was developed to become a comprehensive system that has digitized the whole process of registration, issuance, trading and settlements of securities. The platform also allows for trading via a chat system among market participants, and submitting and monitoring security issuance applications, publishing disclosure information by the security issuers are all done online, a first in Mongolia. In addition, the platform has many additional features such as a bond price and interest calculator. All of the aforementioned features will save investors time and cost, and offer an investor-friendly trading platform, available to professional investors through their respective security brokers at www.otc.mn.
The Financial Regulatory Commission of Mongolia (FRC) is a parliamentary authority for regulation and supervision of the non-bank financial markets. FRC is Mongolia’s (non-bank) financial markets regulator and will be in charge of the general regulations for the operations of the OTC market. It is mandated to supervise and regulate the non-bank financial sector and is responsible for promoting stable and sound financial markets.
The Mongolian Association of Securities Dealers was established in 1995 and is the first FRC-approved self-regulated organization in the Mongolian securities market. As of date, the Association has 67 members and works to promote the development of Mongolia’s financial market.
The Mongolian Central Securities Depository is a 100% state-owned securities infrastructure organization that provides centralized securities depository, registration, transfer of securities ownership rights and trade settlement services in the Mongolian securities market.
AND Systems LLC is a pioneering fintech solutions developer in Mongolia’s information technology and software industry. Since its establishment, the company launched inclusive financial services solutions based on technology such as LendMN and SuperUP and has become a globally known technology developer.
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For Mongolian press release: link here
