Stock Exchange Licenses to be Awarded in April

By Kyaw Hsu Mon 12 January 2015

RANGOON — Burma’s Ministry of Finance will begin issuing licenses for financial services on the Yangon Stock Exchange—set to open in October—in April, according to Deputy Finance Minister Maung Mg Thein.

“We’re going to start calling on companies from four services to seek securities exchange licenses,” the deputy minister announced on Saturday at the offices of the Union of Myanmar Federation of Chambers and Commerce Industry.

Licenses will be granted to underwriting, brokerage, dealing and consulting firms based on investment and clean-spending criteria. Applications will be available on Jan. 19, and interested firms must submit materials to the ministry’s Security Exchange Working Commission by Feb. 27, the deputy minister said.

Maung Mg Thein estimated that about 10 public companies are currently in compliance with all requirements and ready to apply, though several other institutions could be included. The list of companies likely to be approved could include Forest Joint Venture Company, Myanmar Thilawa SEZ Holdings, Myanmar Citizens Bank and Yoma Strategic Holdings, according to a financial analyst.

Brokerage firms are required to commit to a 7 billion kyat (US$7 million) initial investment before applying, while dealing, underwriting and consulting firms must invest 10 billion, 15 billion and 30 million kyats, respectively.

The stock exchange, which is being developed by the Central Bank of Myanmar (CBM) and two Japanese partners, is expected to be a major advancement in Burma’s financial field; offering stability to what has long been an unregulated and volatile investment landscape.

CBM’s partners, Tokyo Stock Exchange and Daiwa Securities Group, will own a 49 percent share in the $32 million investment. Daiwa, a Tokyo-based investment firm, has been active in Burma since 1996, when it teamed up with state-owned Myanma Economic Bank—which until 2013 was subject to US sanctions—to create the Myanmar Securities Exchange Center, Burma’s sole organized stock market.

Economists have welcomed the development of a more sophisticated trading center, though some have warned that the costs are too steep for Burma’s underdeveloped financial institutions. Senior consultant to Burma’s ministry of Commerce, Maung Aung told The Irrawaddy that the ministry ought to take a more prudent approach to allow for a diverse and inclusive marketplace.

“We understand that the amount [of capital required to apply] is in line with international norms, but as an initial step in Burma it’s too much,” he explained. Even the 7 billion kyat benchmark for brokers, he said, is too high and should begin at a lower rate, adding that, “as a developing country, there will be many challenges.”