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DEVELOPING SECURITIES MARKET IN KYRGYZSTAN: PROBLEMS AND PRIORITIES
Nurbek ELEBAEV
Nurbek Elebaev, Ph.D. (Econ.), Managing Director of the Niet-Araket Financial Consulting Company, Chairman of the Board of Directors of the Kyrgyz Stock Exchange (Bishkek, Kyrgyzstan)
I. Past and Present
The securities market took shape in the country as a result of mass privatization, which started in 1994, although such concepts as shares, shareholders, joint stock companies, bills and bonds had come into economic usage somewhat earlier. Pilot or model privatization began in 1990, and in 1993 the government was already issuing and placing debt securities in the form of government treasury bills, notes and bonds. At that time, however, their use was fairly limited. People knew very little about them and had not yet awakened to the importance of their acquisition.
Such an awareness began to grow and to take hold of human minds in the process of mass privatization, when every citizen received a certain number of privatization coupons and was faced with the dilemma of whether to sell them or to invest them in the shares of newly established corporations.
The most active and enterprising people explored the new possibilities on their own and plotted their own investment course, but the majority were still in doubt and required guidance. Hence the objective need to develop the infrastructure of the securities market. Newly launched specialized investment funds, brokers and registrars were stepping up their activities in the country. By the beginning of 1995, the republic already had over 20 investment funds and dozens of brokers and dealers. This process culminated in 1994 in the establishment of the Kyrgyz Stock Exchange as an organized market, which began officially operating as an exchange on 25 May, 1995. It started out with active trade in privatization coupons through its Coupon Trading Center, and in the second half of 1995 began successfully dealing in shares, with total transaction volumes exceeding 600 thou soms by the end of the year.
At that time, the Stock Exchange operated not only as an organizer of trading, but also as a clearing and depository system under a “two in one” arrangement typical of incipient markets with small trading volumes.
In October 1997, on the initiative of the Stock Exchange and a number of banks and brokerage firms, a Central Depository was set up in the country as an independent institution for safekeeping and maintaining records of securities traded on the stock exchange and…………………..
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