FTSE Group says Mongolia can be admitted back into frontier market watchlist

A letter outlining how Mongolia could be admitted back into the FTSE frontier markets watchlist was delivered to CEO of the Mongolian Stock Exchange (MSE) Kh.Altai from Christopher Woods, the managing director of governance and Policy at FTSE Russell.

MSE was removed from the FTSE Russell frontier markets watchlist following a review in September due to the delay with compliance with the requirements.

MSE was added to the FTSE Russell frontier markets watchlist in 2012 as a result of the adoption of the T+3 settlement system, which refer to the settlement dates of security transactions that occur on a transaction date plus three days.

Woods outlined how it as unfortunate that Mongolia was removed from the watch list but said MSE had an opportunity to be listed again on the watchlist.

According to MSE, Mongolia had never officially qualified as a frontier market due to the shift from T+3 settlement system to prefunded system and the dissolving of the settlement guarantee fund that was designed to protect the market from systemic settlement failure.

In April, the chairman and CEO of MSE met with FTSE Russell officials to discuss the situation that Mongolia may potentially be removed from the FTSE frontier markets watchlist. Following the meeting, MSE made it a priority to implement T+2 settlement system and delivery-versus-payment mechanism.

“Unfortunately, FTSE Russell made its decision at their September review to remove Mongolia from the watchlist due to the delay with compliance with the requirements and upon consideration that the reimplementation of T+2 settlement system is unlikely in the near future. Although it is disappointing, there is a possibility to be re-included on the FTSE frontier markets watchlist if Mongolia adopts necessary changes before their next review in March 2018. MSE encourages all market participants to treat the compliance with FTSE requirements and potential inclusion into the watchlist as a top priority,” MSE stated on their website.