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Mongolian stock exchange set to introduce new securities law
Publishing Date30 Mar 2012 1:18pm GMTIssue/SupplementMJ 30/03/12AuthorMining JournalMongolia's parliament is set to introduce a new securities law in its spring session that it hopes will boost foreign investment, especially from companies seeking to unlock the vast natural-resources potential.
John Viverito, from law firm Gibson, Dunn & Crutcher’s Singapore office, helped to draft the new law and also represented the Mongolian Stock Exchange (MSE) in establishing a strategic partnership with the London Stock Exchange Group to modernise the MSE.
He said he was hopeful there would not be many changes to the draft.
“With proper review, they will understand that this new law will bring the Mongolian Stock Exchange and its legal infrastructure on par with other markets throughout the world,” he told Mining Journal, referring to bourses in London, Hong Kong, Toronto and Australia.
Companies operating in Mongolia are not required to list in the country, but the new law will offer those with Mongolian assets the option to list on the stock exchange instead of listing offshore.
“It will be complementary to what’s going on offshore, but eventually I think we will see a tremendous amount of listings and massive capital raising exercises on the Mongolian Stock Exchange itself,” said Mr Viverito.
He noted that Kazakhstan’s Stock Exchange grew from a market capitalisation of about U$1 billion in 2000 to U$100 billion within about eight years.
Mr Viverito said his company was working with a number of clients keen to list in the country. “The lion’s share of our work now is related to mining and oil & gas. Oil & gas is really at an earlier stage of development than even the mining sector, but we see a lot of promise there.”
The size of domestic investment is relatively small at the moment in the country, but it is increasing rapidly and while trading on the MSE is not huge, that is partly because every trade has to be fully funded prior to execution, a condition that is set to change according to the new draft securities law.
“Once we have that, I think that we are going to see a growing number of people becoming involved in the domestic market.
He noted that every Mongolian citizen is due to get shares in Erdenes Tavan Tolgoi, owner of the world’s largest untapped coking-coal deposit, when the company undertakes its IPO. The company, worth an estimated US$10 billion, is looking at a multi-jurisdictional listing in Mongolia, London and perhaps Hong Kong in the third quarter of this year.
Hong Kong does not yet recognise Mongolia as a jurisdiction for listed companies, but the new law is hoping to change that.
“At the gala dinner at Mines and Money, we did get a chance to chat with representatives of the Hong Kong Stock Exchange and they’re very excited about the opportunities relating to Mongolia and basically to facilitate listings,” said Mr Viverito.
John Viverito, from law firm Gibson, Dunn & Crutcher’s Singapore office, helped to draft the new law and also represented the Mongolian Stock Exchange (MSE) in establishing a strategic partnership with the London Stock Exchange Group to modernise the MSE.
He said he was hopeful there would not be many changes to the draft.
“With proper review, they will understand that this new law will bring the Mongolian Stock Exchange and its legal infrastructure on par with other markets throughout the world,” he told Mining Journal, referring to bourses in London, Hong Kong, Toronto and Australia.
Companies operating in Mongolia are not required to list in the country, but the new law will offer those with Mongolian assets the option to list on the stock exchange instead of listing offshore.
“It will be complementary to what’s going on offshore, but eventually I think we will see a tremendous amount of listings and massive capital raising exercises on the Mongolian Stock Exchange itself,” said Mr Viverito.
He noted that Kazakhstan’s Stock Exchange grew from a market capitalisation of about U$1 billion in 2000 to U$100 billion within about eight years.
Mr Viverito said his company was working with a number of clients keen to list in the country. “The lion’s share of our work now is related to mining and oil & gas. Oil & gas is really at an earlier stage of development than even the mining sector, but we see a lot of promise there.”
The size of domestic investment is relatively small at the moment in the country, but it is increasing rapidly and while trading on the MSE is not huge, that is partly because every trade has to be fully funded prior to execution, a condition that is set to change according to the new draft securities law.
“Once we have that, I think that we are going to see a growing number of people becoming involved in the domestic market.
He noted that every Mongolian citizen is due to get shares in Erdenes Tavan Tolgoi, owner of the world’s largest untapped coking-coal deposit, when the company undertakes its IPO. The company, worth an estimated US$10 billion, is looking at a multi-jurisdictional listing in Mongolia, London and perhaps Hong Kong in the third quarter of this year.
Hong Kong does not yet recognise Mongolia as a jurisdiction for listed companies, but the new law is hoping to change that.
“At the gala dinner at Mines and Money, we did get a chance to chat with representatives of the Hong Kong Stock Exchange and they’re very excited about the opportunities relating to Mongolia and basically to facilitate listings,” said Mr Viverito.
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