Last week, the Mongolian Stock Exchange (MSE) announces the resumption of government domestic securities trading. Here's how it works…

📜 A Brief History

Initially in 2012, the government securities trade through the Bank of Mongolia. In 2015, some securities start trading on the MSE. By March of that year, the MSE trades ₮80 billion in government securities. Daily trading volumes grow from ₮10-₮20 million to ₮1.5 billion. However, open trading stops in 2017.

📝 8 Years Later: ₮60 Billion Quarterly

This time, the MSE resumes trading government securities from April 16. The goal is to provide a high-liquidity financial instrument and establish a benchmark interest rate for the market. 4 trading sessions take place each month between April and June, with ₮5 billion traded per session, totaling ₮60 billion for the quarter.

📌 Key Features

• Timing: 2 sessions take place mid-month and two at the end.
• Securities Types: Discount and coupon securities are offered, with discount TCOs maturing in 26 to 52 days.
• Market Impact: This activates the securities market, attracts more companies to issue securities, and allows investors to compare returns and assess risk.

🐾 Changes in Buyers

Previously, commercial banks mainly buy government securities. Now, individuals and investment funds can also participate, with the process being more transparent. 10 years ago, banks hold ₮2.2 trillion in government securities.

Taken together… The resumption of domestic government securities trading is a step forward. It is interesting to see how participation, returns, and impact develop.