Azerbaijan, Baku, Nov. 26 / Trend I.Khalilova /
The Azerbaijani State Securities Committee plans to offer in 2011 the market new market instruments, including the conduct of repo transactions with investment securities and secured mortgage bonds, Committee Chairman Rufat Aslanli said at a press- conference at the headquarters of the New Azerbaijan Party (NAP).
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.
"Currently, the Baku Stock Exchange (BSE) develops corresponding trading platform and special arrangements for trade to carry out these operations," Aslanli said. "Work is completed on a legal basis and the rules of holding repo transactions with investment securities have been submitted for approval to the Justice Ministry."
The Committee's objectives include the introduction of new instruments, preparation of the trading platform and working with potential issuers and participants.
Repo transactions, Aslanli said, 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.
According to Aslanli, 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," Aslanli said.
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 0.8 manat to $1 Nov. 26.