SSC Celebrates Anniversary in Isolated Circle

Today Baku hosts international conference "Regulation of Capital Markets in the new era: Review of the regulatory institutions and the market." The event is timed to the 15th anniversary of the establishment of the State Securities Committee (SSC).

Turan could not obtain information about the details of the conference, which was attended by over 100 representatives of regulators and professional participants of the securities market , and academia from 15 countries , due to the fact that the agency reports was not allowed into the courtroom. Perhaps SSC did not wish to see the festivities criticizing this subject's activity. The hero of the day, to put it mildly, had something to criticize.

The decree on the establishment of the regulatory and supervisory authority for the securities market has been signed by the President of Azerbaijan December 30, 1998. By that time, the country's only functioning market for government bonds as a result of privatization created about 1,000 joint-stock companies, whose shares are acquired about 70 thousand people.

Despite the fact that today there are over 2,100 issuers of securities in the country and has not formed a transparent capital market, since , according to economists, it is not adapted to the economic system. The bulk of the issued in the country of investment securities accounted for by the state, which in turn are not a means of circulation. Over 70 % of the securities market is a segment of the government securities that is dominated by notes of the Central Bank.

The growth of the corporate sector is due to the financial companies (banks and non-bank financial institutions, insurance and leasing companies), the capital of which special requirements apply. In the secondary market shares of the turnover is much inferior to the informal market, which affects the low level of transparency. As shown, for the 15 years of the SC has not achieved increase in the securities market supply and demand. On the market there are practically no alternative investments. Non-financial companies, which according to the criteria of financial statements which do not withstand any criticism, do not go to the capital market to attract investment. It will not be amiss to say that in these circumstances, the listing of BSE has only one bank, and hence no market index. Investors are unable to obtain reliable information about the value of securities, resulting in widespread manipulation of them.

Under these conditions, the SSC can not cope with the controlling function. For example, the stock market should release information about OTC and insider trading. However, the BSE since the promulgation of regulations, rules governing the publication of this information, and does not fulfill these requirements. Annual reports are published by no more than 5 % of non-financial companies. Not all companies are the general meeting of shareholders. SSC never applied to the courts to protect the rights and interests of investors.

Under pressure from international organizations and institutions (EU, World Bank , etc.) , a bill aimed at harmonizing local legislation of the securities market and corporate governance in companies with European standards. However, the Conservatives have strong positions in the government, and are widely represented in business and not interested in increasing the transparency of the market. Therefore, the bills on the securities market, amending the Civil Code and the Administrative Offences are lost in the corridors of government.

Despite the measures taken by the automation of procedures for transactions with the Central Bank, the infrastructure of the capital market is poorly developed. Central Depository has only one branch in the country, and brokers (14 companies) operate exclusively in Baku. There is not even the association of professional participants of securities. - 08C-