FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2013
GEORGIAN STOCK EXCHANGE
2012 turned out to be the year of significant
political changes in Georgia.
George Loladze
Chairman of the Supervisory Board
2013 was not an easy year for Georgia both
from political and economic perspectives. After
winning in late 2012 of parliamentary elections
by new ruling coalition - Georgian Dream - the
process of transition of political power has
extended for about a year, and naturally, during
HISTORY AND DEVELOPMENT
Equity securities first appeared in Georgia in
1991 after the declaration of independence
that signaled the beginning of market-oriented
reforms. A vast majority of the newly established
joint-stock companies were owned by a rather
small number of private shareholders and
trading in these shares was relatively inactive.
With the launching of the Mass Privatization
Program in 1994, approximately 1,300 state-
owned enterprises were organized as joint-
stock companies, creating about half a million
individual private shareholders. However, during
a five-year period (1994-1999), the lack of an
appropriate legal framework and organized
market infrastructure seriously impeded the
secondary trading of these shares and any
over-the-counter market activity was nearly
nonexistent.
The Georgian Stock Exchange (GSE) was
founded in 1999 by a group of Georgian
securities market professionals, leading banks,
investment and insurance companies. It is the
only organized securities market in Georgia.
Designed and established with the assistance
of the United States Agency for International
Development (USAID) and operating within the
legal framework of corporate and securities
laws drafted with the assistance of American
and German experts, the GSE can assert that
it is designed and operated to comply with
“global best practices” and offers an attractive
investment environment to foreign investors.
Official trading at the GSE began in March 2000.
The number of companies admitted for trading
at the GSE trading system increased gradually
and by the end of 2004 reached 277. Practically
all of these companies are former state owned
and operated companies transformed into joint-
stock companies and then privatized.
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this ‘cohabitation’ period, most of investors
preferred to be in ‘standby mode’. However,
this process is successfully completed and
country is now in stable development phase.
In new Government’s plans important place
is devoted to further improvement of the investment environment and implementation
of the pension reform. This provides serious
grounds for optimism and new momentum for
development of the Georgian securities market.
In the end of November, 2006 Bank of Georgia
(GSE:BOG), the company listed at the GSE
since 2001, concluded successful IPO at the
London Stock Exchange Main Market and
through issuance of GDRs raised circa US$ 160
ml. The bank is the first Georgian company ever
and the second bank from the CIS since 1999
listed on the London Stock Exchange. FUTURE OUTLOOK
In 2007 the remote trading system was
practically implemented at the GSE. • Further improve remote trading system for
brokerage companies;
In 2008 significant amendments were made in
Georgian legislation, GSE Charter and Rules
ensuring GSE demutualization, stock-exchange
membership for various licensed financial
institutions, including remote membership for
respective foreign entities. In May, 2010 the
official stock exchange indicator - GSE index
(GSX) was introduced. GSX is published on a
daily basis at the GSE website. • Establish electronic links between stock
exchange, central depository, brokerage
companies, banks and securities registrars;
In November, 2010 the Georgian Central
Securities Depository - the 99% subsidiary of
GSE - completed fundamental amendments to
its self-regulation rules inspirited by intention
of one of the largest global custodians to start
operations in Georgia. In the end of 2010
the National Bank of Georgia adopted new
regulation according to which the procedure
of public offering in Georgia of the securities
admitted for trading at the eligible foreign
exchanges is dramatically simplified.
In March 2011 an agreement was signed
between GSE and Bloomberg, one of the
largest data vendors, regarding GSE real time
and end-of-day data dissemination.
In 2014 the Georgian Stock Exchange plans to:
1. Make important changes in its trading system
and trading rules so as to increase the efficiency
of trading and increase the liquidity of the
market:
• Introduce partially guaranteed trading of
securities.
2. Launch a new web-site for the GSE, which
along with traditional statistics will provide
corporate reports database for the companies
who are admitted to the trading system.
3. Finalize upgrade of the Georgian Central
Securities Depository clearing and settlement
system, thus increasing efficiency of operations
for large institutional investors and global
custodians.