‘TRADE DEVELOPMENT BANK’ STARTED PRIMARY SECURITY MARKET TRADING

The trading ceremony for public offering – by Trade Development Bank LLC (TDB) - in the primary market, took place on 18 May 2023. The event was attended by T. Tserenbadral (Vice-Chair, FRC), G. Enkhtaivan (Deputy Governor, BoM), Kh. Altai (CEO, Mongolian Stock Exchange), R. Koppa (Chairman, Board of Directors, TDB), O. Orkhon (CEO, TDB), and other officials. In his opening speech, T. Tserenbadral stated ‘In recent years, the capital market has been developing and its value reached MNT 9.0 trillion for the first time in Mongolia’. This was attributed to cooperation between the FRC, infrastructure organizations, government agencies, investors, and the private sector. Comprehensive policy measures have been adopted and implemented to:

• enhance the capital market,
• incentivize domestic firms to procure long-term financing through the capital market,
• update the regulatory environment of the capital market to align it with international standards,
• revamp infrastructure, and
• introduce principles of the T+2 settlement system and Delivery versus Payment (DvP).

These efforts were to expand the range of services and products offered by the capital market.

As reflected in Parliament’s ‘Strategy to Reduce Loan Interest Rate’ within the framework of the ‘Developing the capital market and reducing financing costs by creating competition’ initiative, various measures have been introduced to reduce securities trading and settlement commissions of infrastructure organizations. Additionally, policies have been put in place to support issuers and investors, such as:

• proposals and initiatives to amend relevant laws, and
• regulations to grant tax credits and exemptions.

These efforts included:

• increasing expenses (incurred in connection with the issuance of publicly traded securities) by 20% and deducting them from taxable income under the Law on Corporate Income Tax,
• exempting the income of investment funds from taxation, and
• reducing the dividend tax of public companies by 50%.

Recent adoption by Parliament of the Law on Amendments to the Banking Law has provided significant impetus to establishing proper governance for commercial banks. and forming a publicly controlled and transparent banking sector. This decision is also crucial for development of the capital market. A total of three systemic banks have successfully completed the issue of IPOs. The TDB is to be congratulated, and wishedsuccess in the primary market trading.

The TDB intends to gather a sum of MNT 83.5 billion through a public offering of 5 % of its shares; which amounts to 2,530,047 shares, at a price of MNT 33,000 per share.