In September 2012, Mongolia was placed on the FTSE Watch List for possible classification as a Frontier Market and we, the market participants and professionals, were delighted for this opportunity of our market to be designated as eligible Frontier market. However, Mongolia is still Unclassified within the FTSE Country Classification Scheme due to the pre-funded settlement cycle and absence of Delivery versus Payment mechanism. FTSE Russell informed its intention to remove Mongolia from the Watch List due to the limited progress over recent years against the outstanding criterion requirements, as reported previously.
In relation to this, the representatives of the Mongolian Stock Exchange JSC - Chairman N.Manduul and CEO Kh.Altai, held a meeting with officials of FTSE Russell London in April 2017 and requested their consideration for retaining Mongolia on the Watch List at the September 2017 Annual Review and voiced the commitment to taking all reasonable measures to readopt T+3 settlement cycle.
In order to meet the requirements for Frontier Market status, MSE formed a working group consisting of the Clearing House, Central Securities Depository and Mongolian Association of Securities Dealers and is actively working towards revising the rules and regulations required for the readoption of the T+3 settlement cycle and the introduction of Delivery versus Payment (DvP) mechanism and continuously reporting the progress of its implementation to the FTSE Russell Country Classification Advisory Committee through conference calls.
The most recent update to the FTSE Russell Committee was given on the August 8th, 2017 and following the meeting, MSE notified the market participants the need to have the settlement rules and regulations approved by the relevant authorities urgently. The retention of Mongolia on the Watch List will be decided by the Annual Country Classification Review in September 2017.
FTSE Russell is one of the two leading global providers of benchmarking, analytics and data solutions for investors and if Mongolia achieves Frontier market status, this would open doors of the Mongolian capital market to international institutional investors with approximately 3.5 trillion US dollars capital under management.
MONGOLIAN STOCK EXCHANGE