history and development - Georgian Stock Exchange

history and development - Georgian Stock Exchange

GEORGIAN STOCK EXCHENGE: HISTORY AND DEVELOPMENT
Equity securities first appeared in Georgia in 1991 after the declaration of independence that
signaled the beginning of market-oriented reforms. A vast majority of the newly established
joint-stock companies were owned by a rather small number of private shareholders and trading
in these shares was relatively inactive. With the launching of the Mass Privatization Program in
1994, approximately 1,300 state-owned enterprises were organized as joint-stock companies,
creating about half a million individual private shareholders. However, during a five-year period
(1994-1999), the lack of an appropriate legal framework and organized market infrastructure
seriously impeded the secondary trading of these shares and any over-the-counter market
activity was nearly nonexistent.
The Georgian Stock Exchange (GSE) was founded in 1999 by a group of Georgian securities
market professionals, leading banks, investment and insurance companies. It is the only
organized securities market in Georgia. Designed and established with the assistance of the
United States Agency for International Development (USAID) and operating within the legal
framework of corporate and securities laws drafted with the assistance of American and
German experts, the GSE can assert that it is designed and operated to comply with “global
best practices” and offers an attractive investment environment to foreign investors.
Official trading at the GSE began in March 2000. The number of companies admitted for trading
at the GSE trading system increased gradually and by the end of 2004 reached 277. Practically
all of these companies are former state owned and operated companies transformed into jointstock companies and then privatized.
In the end of November, 2006 Bank of Georgia (GSE:BOG), the company listed at the GSE
since 2001, concluded successful IPO at the London Stock Exchange Main Market and through
issuance of GDRs raised circa US$ 160 ml. The bank is the first Georgian company ever and
the second bank from the CIS since 1999 listed on the London Stock Exchange.
In 2007 the remote trading system was practically implemented at the GSE.
In 2008 significant amendments were made in Georgian legislation, GSE Charter and Rules
ensuring GSE demutualization, stock-exchange membership for various licensed financial
institutions, including remote membership for respective foreign entities. In May, 2010 the
official stock exchange indicator - GSE index (GSX) was introduced. GSX is published on a
daily basis at the GSE website.
In November, 2010 the Georgian Central Securities Depository – the 99% subsidiary of GSE –
completed fundamental amendments to its self-regulation rules inspirited by intention of one of
the largest global custodians to start operations in Georgia. In the end of 2010 the National
Bank of Georgia adopted new regulation according to which the procedure of public offering in
Georgia of the securities admitted for trading at the eligible foreign exchanges is dramatically
simplified.
In March 2011 an agreement was signed between GSE and Bloomberg, one of the
largest data vendors, regarding GSE real time and end-of-day data dissemination.