Azerbaijan, Baku, Dec. 22 / Trend I.Khalilova /
The Azerbaijani Ministry of Justice registered the new rules governing the new market instruments, in particular to conduct repo operations with investment securities, chairman of the Azerbaijani State Securities Committee Rufat Aslanli said. The second instrument is secured mortgage bonds. They will be put into circulation after the law is adopted.
"After publishing new rules in the code of regulations, they will enter into force, Aslanli said. We form the legal base for new instruments to enter the market. On the other hand, we create the appropriate platform for their free circulation on the stock market.
"The Baku Stock Exchange (BSE) has already developed e-trading system to trade with these tools," Aslanli said.
A mechanism of their keeping in the national depositary center was developed. An e-interface was created between depositary and trade institutes.
At present, both legislative and institutional platforms were prepared to use new market tools, he said.
"We are working with potential issuers and participants. I hope that the trade will be conducted with both tools after the rules come into power," he said.
So far, repo and reverse repo transactions were carried out with notes of the Central Bank of Azerbaijan (CBA), but under the new rules, the securities market participants will be able to conduct repo transactions among themselves on stocks and bonds.
Repo transactions are provided for portfolio investors, mainly banks and other financial institutions to solve their problems with short-term liquidity. But, now the central bank uses repurchase operations with the purpose of efficient management of money in circulation, and therefore the activity of the treatment notes of the CBA on the stock market is high.
Other companies will also be able to conduct repo transactions for the operational management of its liquidity.
Regarding the second instrument - a secured mortgage bonds, there was developed a legal framework - the draft law "On mortgage bonds", whose adoption is possible at the next session of Parliament. The government is now considering the bill.
Unlike the mortgage bonds issued today, this is more structured tool that puts certain requirements to fulfill the obligations of risk management.
To date, the Azerbaijan Mortgage Fund (AMF) under the CBA had issued three issues of mortgage bonds. The first issue of 55 million manat was posted in 2009, the second issue of 75 million manat is placed at 68 million manat and the remaining part may be placed by late 2010, Aslanli said. A few days ago the State Committee registered the new issue of mortgage bonds on 60 million manat.
The official exchange rate is 0,7987 manat to $1.