Overview of the capital market regulation of Mongolia
1) The primary laws and regulations governing the Mongolian capital market, the hierarchy of these regulations
The Mongolian capital market is governed by the following primary laws and regulations:
- Law on Securities Market
- Civil Code of Mongolia
- Company Law of Mongolia
- Law on Investment
- Law on Asset-backed Securities
- Law on Investment Funds
- Banking Law of Mongolia
- Law on Central Bank (Bank of Mongolia)
- Law on the Legal Status of the Financial Regulatory Commission
The hierarchy of these regulations is as follows:
- The Constitution of Mongolia
- International treaties to which Mongolia is a party;
- Laws passed by the State Great Khural (Parliament);
- Regulations and guidelines issued by regulatory bodies:
- Financial Regulatory Commission (FRC)
- Bank of Mongolia (Central Bank)
- Ministry of Finance
If an international treaty to which Mongolia is a party contains provisions that contradict national laws, the provisions of the international treaty shall prevail. (Article 2.2 of the Law on the Securities Market)
The Law on Securities Market is the primary law regulating the issuance, registration, trading, and other activities related to securities in Mongolia. It provides the fundamental framework for the capital market, while other laws and regulations complement and provide more specific guidelines for different aspects of the market.
2) Regulatory bodies responsible for overseeing the capital market, their specific roles and responsibilities, and independency
The primary regulatory bodies responsible for overseeing the Mongolian capital market are:
a) Financial Regulatory Commission (FRC)
The FRC is the main regulator for the non-bank financial sector, including capital markets. Its key responsibilities include:
Regulating and supervising non-bank financial institutions;
Approving rules, procedures, and guidelines for the financial market;
Granting, suspending, and revoking licenses for financial services;
Monitoring activities of license holders;
Setting regulatory service fees;
Resolving disputes among market participants; and
Approving and monitoring ethical rules for FRC employees.
The FRC was established in 2006 as an independent regulator. Its funding consists of funds allocated from the government budget, regulatory service fees collected from licensees and registered entities, and other income generated from legal activities. However, this partial reliance on government funding may compromise the FRC’s independence.
For further information, please contact V. Bolormaa, GRATA International Law Firm Partner at bvolodya@gratanet.com or +976 70155031.
GRATA International in Mongolia is part of the global law firm, which has offices in 20 other nations. This legal material is not a thorough examination of any particular problems; rather, it is meant to provide general knowledge. Before making any decisions, the reader should consult a professional for advice that is suitable to their situation (s). Any consequences or damages resulting from the use of this legal information are not our responsibility.
