Friday, September 30 2016 21:01
Karine Melikyan

Central Bank of Armenia initiates a number of measures aimed at developing market of financial derivatives 

Central Bank of Armenia initiates a number of measures aimed at developing market of financial derivatives 

ArmInfo. The Central Bank of Armenia (CBA) has initiated creation of a market of financial derivatives in the country in the context of stability and development of the financial market. Andranik Grigoryan, Head of the Financial System Stability and Development Department at the CBA, said at a press conference on September 30 that the Regulator and the EBRD have prepared a joint legislative package on development of the derivatives market.   

He said the current legislation does not differentiate the derivatives from other financial instruments, whereas some derivatives have a number of peculiarities and a different mechanism of regulation. "The new legislative package aims to fill this gap in line with international standards. This will allow not only the Armenian market participants, but also foreign investors to work with derivatives," he said, noting that part of the envisaged measures has already been approved by the Government and has been submitted for approval of the National Assembly.

At present, the range of the financial instruments on the Armenian market is limited not least because of the low demand and high expenses on their development and introduction. "The CB initiative is to design banking, corporate, and insurance derivatives aimed at further developing of the Armenian financial market," Grigoryan said.

To recall, earlier in March, Armenia and EBRD signed a memorandum on development of Armenian capital market. The EBRD and Armenia are working closely together and in March signed a Memorandum of Understanding about actions in partnership between the Bank and the CBA, including the reform of the derivatives market. Jacek Kubas, representing the EBRD Local Currency and Capital Market Development

Team and in charge of the programme, said: "This reform is very important for market participants, including the EBRD, as it will open the doors for hedging tools, including foreign currency and interest rate and allow banks and corporates to properly manage their risks, especially if they are heavy exporters like Armenian businesses to Russia. The draft law, providing for the enforceability of derivatives transactions, including netting, close-out netting and financial collaterals, amends over 17 laws and introduces over 15 new concepts into Armenia's financial legislation, including settlement finality.

The first introduction of derivatives in the Armenian financial market took place in early 2016. On January 27, 2016 during a special ceremony held at NASDAQ OMX Armenia the launch of exchange trading of the bonds issued by "LOAN PORTFOLIO SECURITIZATION FUND I" was announced. The first and the second issues of nominal coupon bonds of the Fund were listed and included in the secondary Bbond list of NASDAQ OMX Armenia.  They were also allowed to manual and REPO trading. The managing company of the emitter "LOAN PORTFOLIO SECURITIZATION FUND I" is Capital Investment Company. The market maker of the issue was Converse Bank. The Fund's bonds first issue (ISIN - AMLPSFB21ER2) for a total amount of USA 1,132,800, comprising 11,328 coupon bonds with nominal value of USD 100, coupon rate of 8.5% and maturity period of 36 months will be traded under LPSFB1 ticker symbol, while the second issue of bonds (ISIN - AMLPSFB22ER0) for a total amount of AMD 446,260,000, comprising 44,626 coupon bonds with nominal value of AMD 10,000, coupon rate of 15.0%, maturity period of 36 months will be traded under LPSFB2 ticker symbol. "This is an important day for the RA securities market, as we are witnessing the birth of a new financial instrument, which is unique and unprecedented in its structure, the number of beneficiaries, as well as financial flows scheme", noted NASDAQ OMX CEO Mr.  Konstantin Saroyan.

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