ANNUAL REPORT JUNE 2010
FEDERATION OF EURO-ASIAN STOCK EXCHANGES
NASDAQ OMX ARMENIA
2009 was a challenging but still quite
successful year for NASDAQ OMX Armenia.
Armen Melikyan
Chief Executive Officer
Bringing difficult times to most businesses across
the world, 2009 was a challenging but still quite
successful year for NASDAQ OMX Armenia. While
trading in equities remained low throughout the
year, trading in other exchange markets grew
significantly. Thus, corporate bonds, the best
performing market of the year, was up 4.7 times
to US$ 27.6 million. Government bonds trading
was also active demonstrating growth in value
traded of 43% and in the number of trades of
135%, and the repurchase agreements (repo)
market showed an activity exceeding US$ 13
million during its first year after launch in
December 2008. Currency trading remained
traditionally high at nearly US$ 1.1 billion.
Even though fears of uncertainty and reduced
investor interest did not fade globally throughout
the year, 2009 nevertheless saw the first ever IPO
in Armenia, carried out by Artsakh HydroPower
Plant, which is now listed on NASDAQ OMX
Armenia. In addition, during the year the
exchange listed four new issues of corporate
bonds and expects more to come in 2010. At the
year-end exchange market capitalization stood at
the equivalent of around US$ 140 million
declining by only 1.7% since the end of 2008 – a
relatively good performance considering the
lingering effects of the global financial crisis.
HISTORY AND DEVELOPMENT
NASDAQ OMX Armenia (formerly Armenian
Stock Exchange, Armex, renamed on 27
January 2009) is the only stock exchange
currently operating in Armenia. Armex was the
successor of the Association of Securities
Market Participants, which was established in
Armenia in 1997, and was initially registered
the Securities Commission of the RA on 13
February 2001, as a self-regulatory
organization. In November 2007, according to
the newly adopted “Law on Securities Market”,
Armex was reorganized into an open joint
stock company.
Until 1 January 2006, Securities Commission of
RA was the competent state authority to
regulate the activities of capital market
including the stock exchange in Armenia.
However, with the enactment of a new law
introducing unified regulatory authority for the
financial market, the regulatory and supervisory
powers of the Commission were transferred to
the CBA.
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Positive were also the developments on NASDAQ
OMX Armenia membership side: nine new
members were admitted during the year bringing
the total number of members to 27. launch of this new second pillar pension system
is expected to boost the activity in the capital
market promoting the issue of new financial
instruments and bringing in institutional investors.
In 2009, NASDAQ OMX Armenia was also active
in organizing many different kinds of events,
including seminars, trainings, and study tours.
These were targeted to various stakeholder
groups – investment companies and banks, listed
companies, journalists – and aimed at sharing
international expertise and implementing state-of-
the-art standards of respective activities in
Armenia. General public and especially younger
audiences were also in focus, with initiatives
promoting awareness about capital markets and
their importance in building a strong national
economy. In 2010, as the recovery gets underway both
globally and locally, NASDAQ OMX Armenia will
continue to be proactive in its relations with the
capital market stakeholders. One area of focus
will be to introduce new technology for both the
exchange and the central depository business, to
put in place the foundation for continued growth.
There will also be continuous efforts to increase
awareness of the capital market in Armenia and
support market participants in meeting the
awakening demand for quality financial
intermediation and capital market services.
Through such processes NASDAQ OMX Armenia
realizes its primary objective – to maintain a fair
and effective marketplace where good companies
can raise capital and where investors can make
well-informed decisions while being properly
protected. Our commitment for 2010 is to
continuously and consistently strive to achieve
this objective.
Becoming the full owner of the Central Depository
of Armenia in June 2009, NASDAQ OMX Armenia
kept concentrating on improving the depository
and clearing services – primarily through
continued automation and optimization of
business processes. The Depository also worked
closely with the Government of Armenia to design
and prepare the implementation in 2011 of the
mandatory fully funded pension system, a
cooperation that will continue this year. The
Since 15 November 2005, foreign currency
trading was introduced on Armex, which
proved to be in demand: volumes of FX trading
to date greatly exceed those of other
instruments. On 14 December 2005, the first
publicly traded corporate bonds were listed at
Armex, and as of December 2008, 13 bond
issues were traded on the stock exchange –
most of them having market makers. In early
2008 government bonds trading was launched,
as well as status of market-maker for
government bonds was introduced. By the end
of 2008, Armex introduced new market for
REPO (repurchase agreements), as well as a
mechanism for manual trades.
NASDAQ OMX Armenia is currently part of the
NASDAQ OMX Group. In November 2007
members of CDA and Armex transferred their
shares to the CBA, and OMX Group acquired
100% thereof. After in late February 2008,
NASDAQ completed its combination with OMX,
NASDAQ OMX Armenia became an entity fully
owned by NASDAQ OMX. On 5 June 2009,
NASDAQ OMX Armenia became the owner of
the 100% of the shares of the Central
Depository of Armenia.
FUTURE OUTLOOK
In 2010, NASDAQ OMX Armenia plans to:
• continue improving the technical
infrastructure of the stock exchange and the
central depository;
• continue expanding the range of services
provided to listed companies and trading
members;
• carry on with efforts to promote initial public
offerings of equities in the Armenian market;
• launch T+3 settlement mechanism, which
will enable exchange trading without pre-
deposition of securities and cash;
• establish a Guarantee Fund to increase
investor protection;
• organize study tours for investment
companies and banks to facilitate introduction
of international best practices in Armenia;
• conduct study tours and seminars for
journalists covering financial market;
• continue efforts towards increasing public
awareness of the Armenian securities market.