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added problem that its laws and regulations are often outdated and out of sync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.