The Istanbul Stock Exchange and the Federation of Euro-Asian Stock Exchanges, jointly with the OECD Centre for Co-operation with Non-Members, have launched a programme for the development of capital market legislation and of project financing in Eurasian transition economies. It involves the countries of the New Independent States and of the Black Sea Economic Co-operation.

With the aim of establishing a mechanism for systematic exchange of experience among Eurasian transition economies in the development of the legal and institutional infrastructure for capital markets, this project will:

• review the progress in Eurasian transition economies in developing the legal frameworks for functioning capital markets;
• compare the approaches that the various countries have taken or are about to take in such relevant areas as shareholder protection, securities legislation (types of securities), corporate finance system (bank-based as in Germany or market-based as in US and UK), stock market structure (single exchange or multiple markets); regulations governing financial intermediaries, disclosure requirements, accounting and auditing standards, capital adequacy requirements for banks, anti-fraud regulations (insider-trading, etc.), regulation of custody and settlement systems, enabling statutes and supervision of self-regulatory bodies;
• select areas for further study and formulate best practices in these areas;
• discuss the operational aspects of introducing and implementing such best practices in Eurasian transition economies;
• identify approaches suitable for all or at least several Eurasian countries;
• comment on the institutional and administrative requirements for implementing capital market regulations.

The results of these analyses will be reflected in a report that elaborates on relevant systems and principles in such a way that these commentaries can be transformed into legislative language and become building blocks for Eurasian countries' capital market legislation. In this way, the programme can contribute to the development of modern capital market structures in the participating countries and thus contribute to the eventual integration of Eurasian capital markets.

Project financing - that is, the designing of a project so that the required equity, loans and credits into it are financed from the cash flows generated by it - offers transition economies an opportunity of off-balance of payments financing of commercially viable projects. It may also provide access to external credits and investments despite balance of payments problems which have led to restrictions on export credit financing and insurance for most transition economies.

• familiarise participants from Eurasian transition economies with the concept, features and modalities of project financing;
• identify qualifying criteria and suitable types of projects for this mode of financing;
• develop approaches towards promoting and facilitating project financing;
• identify the role of local equity financing and of local stock markets in this respect;
• explore opportunities for co-operation among participating transition economies in facilitating project financing, especially where a project involves several countries

Future work is likely to concentrate on developing financing schemes for "model projects" identified as most promising in the region. In this context, particular emphasis should be placed on possibilities of raising financing on Eurasian and international capital markets for suitable projects, including possibilities of listing project companies on Eurasian stock exchanges. The Group will explore whether and how these projects can be insulated from the country risks of transition economies so that they may be perceived as good underwriting propositions despite the risk concerns associated with transition economies.

Developing such "model schemes" would best take place in two sector specific sub-committees which would meet twice in 1999 and once in 2000. The group conclusions could be reflected in reports to be published and presented to a higher level conference in the second half of 2000.

On top

[ Back to main page ]