FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2013
MONTENEGRO STOCK EXCHANGE
Strategic partnership with Borsa Istanbul
Mr. Gojko Maksimovic
Acting CEO
The previous year for Montenegro Stock
Exchange can be considered as a very
successful. In December 2013, Borsa Istanbul
became a shareholder and strategic partner
of Montenegro Stock Exchange. This event
represents a significant positive signal for the
Montenegrin capital market because of the fact
that one of the most powerful European stock
exchanges found an interest and recognized
the potential of Montenegrin capital market. In
addition to this strategic partnership, we can
also point out significantly greater realization of
secondary turnover compared to the previous
two years with the shares of Montenegrin
companies.
Furthermore throughout 2013, we had the
entrance - towards the significant purchasing
investment of securities from our market by
U.S. and other foreign funds, which certainly
gives the positive market’s signals. Overall
turnover realized in 2013 is approximately 31
million, which is about 5% lower than it was
in 2012. As the negative side of the market
we can mark a lack of debt securities, mainly
governmental bonds. Surely the results
HISTORY AND DEVELOPMENT FUTURE OUTLOOK
Montenegro Stock Exchange was established in
June 1993. Two years later, in 1995, Montenegro
Stock Exchange harmonized its business
activities with the Law on Stock Exchange, Stock
Exchange Activities and Agents. In December
2000, after taking authority from the Federal
Commission of Yugoslavia for the Securities
and Financial Markets, the Commission for
Securities of the Republic of Montenegro, after
determining the fulfilment of all the necessary
preconditions, has issued a business license
to the Montenegro Stock Exchange. Between
1994 and 2000, at the Montenegro Stock
Exchange trading was mostly realised with
gyro money and short-term securities, as these
were allowed by the existing legislation. The
first brokerage houses in Montenegro were
established in 1996. On 20 September 2001,
six Montenegrin financial institutions and the
Brokerage Business Association founded the
New Securities Exchange of Montenegro. In
the beginning of 2011, two Montenegrin stock
exchanges were integrated, through the merge
of the New Securities Exchange of Montenegro
to the Montenegro Stock Exchange. January
10, 2011 was the first working day on the single
Montenegro Stock Exchange. In December
2013, Istanbul Stock Exchange became a
shareholder of Montenegro Stock Exchange
by acquiring 24,38% of its capital. Currently,
Montenegro Stock Exchange has 11 members. Current situation in the capital market stimulated
our greater activity in the field of permanent
services improvement that we offered as the
best way to confront the crisis. The following
years will be very challenging for us. We
will try to make a greater impact in order to
increase the number of financial instruments
on Montenegro Stock Exchange through
more active role of the Government, primarily
in terms of raising the number and volume of
bonds emission, and by implementation and
introduction of treasury bills trading. This will
be possible by further transformation of certain
governmental and public enterprises into joint
stock companies and by introducing the sale
of a part of the capital by initial public offering
(IPO). In addition, we expect to increase the
number of financial instruments through the
affirmation of private companies (which have
high amounts of annual revenues) established
as a limited liability companies, to their
transformation into joint stock companies. In this
way, Montenegro Stock Exchange would get
its full role as a place of raising capital through
the formation of joint stock companies and
also would become available for the small and
medium enterprises, which their dissatisfaction
towards the expensive loans of commercial
banks in Montenegro are expressing for a
longer time. The big challenge for our capital
market is the process of Montenegro’s
achieved in the market would be significantly
better if we had more active state policy in this
area. As a negative feature of the previous year,
we can also point out the bankruptcy of the
biggest Montenegrin Aluminium plant because
unfortunately its shares were one of the “the
most wanted” shares among the household
sector during the time of investment boom. By
Company’s entrance into bankruptcy these
investments have lost their value.
accession to the EU. Accordingly, we will shortly
have the changes of capital market regulations
and its harmonization with the European
legislation (MiFID regulation). We hope that
mentioned implementation of the European
laws will bring positive effects to our market.
As our main task we have to solve the problem
of liquidity in the market through creation of
mechanisms of “borrowing” shares (primarily
pledged) and by introduction of market-makers.
Another key task will involve improvements in
regional cooperation with other stock exchanges
by means of possibility of creating a common
trading platform and on this basis, at least the
formation of “virtual” joint capital market. We
think that strategic partnership with Istanbul
Stock Exchange will help us to implement all
these planed activities and accelerate further
development of Montenegrin capital market.
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