Mongolia added to FTSE Country Watch List for ‘Frontier Market’ statusEconomy
Ulaanbaatar /MONTSAME/. The stock market of Mongolia has been added to the Watch List for ‘Frontier Market’ status by the FTSE Russell Group of the U.K.
The group categorizes markets into four main categories, from ‘Frontier’ to ‘Developed’ based on a range of technical criteria. Each year, the classification of countries’ markets are reviewed, and placed on a ‘Watch List’ prior to promoting or demoting the market from the current category.
The assessment is conducted by the FTSE Country Classification Advisory Committee consisting of experts in trading, custody, and investment management, and the Policy Advisory Board consisting of representatives of the leading global investors.
Mongolia was initially included in the Frontier Market category in 2012. However, due to certain factors such as the replacement of the T+3 system with the prepaid system, and the decision to abolish the Settlement Guarantee Fund that was established to cover settlement risks, the country’s market was demoted from the category in 2017.
In order to be re-promoted into the category, the Mongolian Stock Exchange has been carrying out works to bring the current settlement system to international standards, and create a favorable investment environment for investors.
More specifically, the T+2 system based on the Delivery versus Payment settlement mechanism was successfully introduced at the domestic stock market on March 31, 2020 by cooperating with market regulators and organizations specialized in infrastructure since 2017. As this was one of the main requirements of global investors, it resulted in favorable conditions to attract major institutional investors, increase trading activities, improve liquidity, and accelerate market development alongside having the Mongolian stock market be acknowledged internationally.