Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Indicator Baseline Original Target Values (from approval documents) Formally Revised Target Values Actual Achieved at Completion or Target Years Indicator 1 : Increased issuance of corporate bonds Value quantitative or Qualitative) 1.9% 3.8% 14.1% Date achieved 10/04/2011 12/31/2015 07/01/2016 Comments (incl. % achievement) Outstanding amount of corporate debt to 2010 Non-oil GDP Indicator 2 : Increased number of listed companies Value quantitative or Qualitative) 2 8-10 5 Date achieved 10/04/2011 12/31/2015 07/01/2016 Comments (incl. % achievement) Number of listed companies Indicator 3 : Improved price transparency quantitative or Qualitative) 0% 90% 100% Date achieved 10/04/2011 12/31/2015 07/01/2016 Comments (incl. % achievement) Ratio of competitive transactions / total equity (non-block transactions) (b) Intermediate Outcome Indicator(s) Indicator Baseline Original Target Values (from approval documents) Formally Revised Target Values Actual Achieved at Completion or Target Years Indicator 1 : Ratio of market participants electronically linked to market infrastructure (trading, clearing and settl Value (quantitative or Qualitative) 0% 100% 100% Date achieved 10/04/2011 12/31/2015 07/01/2016
G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 07/09/2011 Satisfactory Satisfactory 0.00 2 02/09/2012 Satisfactory Satisfactory 0.00 3 10/08/2012 Satisfactory Satisfactory 0.45 4 01/09/2013 Satisfactory Satisfactory 1.96 5 10/24/2013 Satisfactory Satisfactory 3.41 6 06/11/2014 Satisfactory Moderately Satisfactory 4.24 7 11/22/2014 Satisfactory Moderately Satisfactory 4.75 8 05/18/2015 Moderately Satisfactory Satisfactory 6.18 9 11/10/2015 Satisfactory Satisfactory 8.38 10 06/29/2016 Satisfactory Satisfactory 11.74 H. Restructuring (if any) Restructuring Date(s) Approved PDO Change ISR Ratings at Restructuring Amount Disbursed at Restructuring in USD millions Reason for Restructuring & Key Changes Made DO IP 05/06/2015 MS S 6.18 I. Disbursement Profile
Independent Evaluation Group (IEG) of the WBG. Completion and Learning Review CPS Period: FY11 – FY14. June 30, 2015. WBG. Project Information Document (PID) Concept Stage: Capital Markets Modernization Project. November 30, 2010. WBG. Project Appraisal Document on a Proposed Loan in the Amount of $12 Million Equivalent to the Republic of Azerbaijan for the Capital Markets Modernization Program (CMMP). February 10, 2011. WBG. Implementation Status and Results Reports: Capital Markets Modernization Project (P120321). Sequence 1-10 WBG. Aide Memoires for Capital Markets Modernization Project (P120321). Dated June 2011; June 2012; March 2013; February, September 2014; February, October 2015. WBG. Loan Agreement (Capital Markets Modernization Project) between the Republic of Azerbaijan and the International bank for Reconstruction and Development. September 22, 2011. WBG. Restructuring on a Proposed Project Restructuring of Capital Markets Modernization Project Loan IBRD-80240. Board Approval: April 29, 2015. WBG. Azerbaijan Systemic Country Diagnostic. June 3, 2015 WBG-IMF. Financial Sector Assessment Azerbaijan. November 2015. The Economist Intelligence Unit, Country Risk Service. Azerbaijan. London, UK. August 2016. State Committee for Securities (SCS) PIU. Project Operations Manual, Capital Markets Modernization Project. December 24, 2012 WBG. Azerbaijan Partnership Program Snapshot. April 2015. WBG. Doing Business 2008. September 26, 2007. Doing Business 2009. September 10, 2008. Doing Business 2010: Reforming through difficult times. September 9, 2009. Doing Business 2011: Making a difference for entrepreneurs. November 4, 2010. Annex 10. Borrower’s ICR COMPLETION AND RESULTS REPORT
BSE Baku Stock Exchange NDC National Depository Center CAS Country Assistance Strategy ORAF Operational Risk Assessment CMMP Capital Markets Modernization Project Framework CPS Country Partnership Strategy PAD Project Appraisal Document EBRD European Bank for Reconstruction and PID Project Information Document Development PIU Project Implementation Unit ECA Europe and Central Asia POM Project Operation Manual EU European PQ Prequalification Financial Sector Reform and Strengthening PPP Public-Private Partnerships Initiative RVP Regional Vice President FSMA Financial Markets Supervision Authority of SBD Standard Bidding Documents the Republic of Azerbaijan SCS Committee for Securities GDP Domestic Product SECO Swiss State Secretariat for IBRD International Bank for Reconstruction and Economic Affairs Development USAID United States Agency for ICR Implementation Completion and Results International Development Report WBT World Bank Treasury IC SSS Individual Consultant Single Source Selection IDA International Development Association IFC International Finance Corporation ISDS Integrated Safeguard Data Sheet LAP Listing Advisory Program Context of the project initiation phase: Economic reforms which were implemented in the Republic of Azerbaijan during the recent years determined the economic system functioning on the basis of free market relations. Fundamental institutions of the market economy, including, legislative framework fixing new economic relations, public institutions regulating such relations and private entrepreneurs, which are the main subjects of new economic systems have been formed. During this period price and exchange rate policy had been liberalized, large scale privatization program implemented and favorable environment for the
Prepare new rules and procedures for CSD on its participants‘ structure that allows custodians and investment firms to access CSD 1.3.1 Prepare new rules and procedures for CSD 10 23/02/15 Draft internal procedures on registry keeping services 1.3.2 Draft procedures on registry keeping 11 15/08/14 Draft procedures for dematerialized securities 1.3.3 procedures on conversion of certificated securities into dematerialized securities 12 03/04/14 Recommendations on the transfer of functions on registration of securities liens from SCS to CSD, including business procedures 1.3.4 Recommendations report on the proposed approaches for the transfer of lien registration from SCS to CSD 13 24/11/14 Draft procedures for CSD in managing information security 1.3.5 procedures ensuring the security of accounts 14 23/02/15 Draft risk-management and internal technical-audit procedures for the new CSD 1.3.6 Risk management and internal technical audit procedures for CSD (name is different in the work plan) 15 23/02/15 The CSD’s ability to provide services 1.3.7 Feasibility report on the CSD’s ability to provide the services mentioned under activity 1.37 16 24/11/14 Review the CSD’s ability to act as share registry for investment funds 1.3.8 Feasibility report on the CSD’s ability to provide services mentioned activity 17 28/04/15 This deliverable was changed to “Report on how Investment Funds Asset Managers can provide fund administration services for
investments funds” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. Provide capacity building to newly formed CSD 1.3.9 Completion of around 10 training sessions on the operations of the newly formed CSD through CMTC. 18 08/10/15 IT system needs of the consolidated capital market infrastructure 1.4.1 Report on the assessment of the IT system requirements for the consolidated capital market infrastructure 19 24/06/13 Develop functionality for the required IT systems 1.4.2 Presentation of the parameters for the required IT systems’ functionality on the main infrastructure components: trading, depository, registry, clearance-settlement and surveillance. 20 24/06/13 Draft the technical specifications for IT system and bidding documents 1.4.3 ToR for acquiring the integrated IT systems for the consolidated capital market infrastructure. 21 24/10/13 Assist PIU with selecting the appropriate system(s) and consult SCS for selection of appropriate system(s 1.4.4 Provide assessment report for each of the proposed IT systems during the IT procurement 22 23/02/15 Oversee the system installation and testing 1.4.5 Assessment report on the testing results of the selected and installed systems prior the ownership transfer. 23 May 2016 The deadline for this deliverable was changed due to prolongation of the project life span till 1 July 2016. The change was confirmed by parties in additional contract signed with the Consultant on 1 February 2016
Analyze the market risk for revised settlement procedures. 1.5.1 Risk assessment report of revised settlement procedures 24 24/11/14 Review of various options for clearance and settlement procedures 1.5.2 Recommendations report on procedures 25 15/08/14 Identify the extent of a required settlement guarantee fund, including sources of funding, such as fees, letters of credit and/or insurance 1.5.3 Identify the extent of a required settlement guarantee fund 26 23/02/15 Roadmap for reforming the current pre-pay / pre-deliver system 1.5.4 Road map containing recommendations for reforming current pre-pay / system into a system on payment and delivery post-trade, implemented together with risk-reducing mechanisms. 27 24/10/13 Devise the required rules to implement the roadmap and revise business processes and procedures 1.5.5 Draft rules to implement the roadmap, including revised business procedures (Rule Book) 28 08/10/15 Recommendations on the CCP capacity of the CSD 1.5.6 Assessment report on the CCP capacity of the newly established CSD 29 24/10/13 Review the fee schedules and incentives for trade 1.6.1 Recommendations report including proposed fee structure on eliminating financial incentives for pre-arranged trades 30 24/06/13 Definition and use of “address sales” and provide 1.6.2 Draft revised legislation to cover the gaps 31 24/06/13 deliver
recommendations indicated under activity 1.6.2. Recommendations for integrating C&S of limited off-market transaction 1.6.3 Feasibility report on integrating clearance and settlement operations of the limited off-market transactions. 32 15/08/14 Review the definition and use of non-trade transfers 1.6.4 Draft revised legislation to cover gaps in negotiated trade transfer. 33 24/06/13 Recommendations on approaches to order placement and trading rules for thinly-traded securities that will promote depth and better price discovery 1.6.5 Recommendations report on the placement and trading rules for thinly securities 34 24/11/2014 Support SCS and review laws and regulation 2.1.1 Recommendations and international expertise (cases) during the discussions of the Draft Law, as required. 35 30/01/13 Revisions to the legislation and international standards 2.1.2 The list of the laws and regulations requiring amendment including the scope of the amendments to ensure the maximum compliance with IOSCO principles. 36 30/01/13 Inventory of implementing regulations supporting Law on Securities 2.2.1 The list of the new implementing regulations and revisions to the existing legislation the new law. 37 30/01/13 Draft/comments on the required new implementing regulations 2.2.2 Draft and 16 high-priority implementing regulations 38 24/10/13 This deliverable was changed to “Draft and deliver high-priority implementing regulations” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the
Consultant. Revisions to existing regulations to conform to new Law 2.2.3 Draft and deliver remaining implementing regulations 39 15/08/14 This deliverable was changed to “Completion of remaining implementing regulations” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. Review, analyze the risks and opportunities 2.3.1 Review/ development of agreed rules for BSE 40 28/04/15 This deliverable was changed to “Review/development of agreed for BSE” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. Additional regulation for BSE 2.3.2 Additional regulation for BSE to ensure compliance with new Securities Market Law 41 07/10/15 This deliverable was changed to “Additional rules for BSE to ensure compliance with new Securities Market Law” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. Recommendations and Guidelines related to the role that banks will play in the new settlement model 2.3.3 Recommendations and Guidelines related to the role that banks will play in the new settlement model imposed by the new draft legislation 42 24/11/14 This deliverable was changed to “Report on Recommendations and Guidelines related to the role that banks will play in the new settlement model imposed by the new draft legislation ” by the
Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. accounting and tax treatment for shares sold above nominal value 2.4.1 Recommendations report on the proper accounting and tax treatment for shares sold above nominal value 43 03/04/14 Implement “tax transparency” of investment funds 2.4.2 Recommendations report on the “tax transparency” implementation of investment 44 03/04/14 Reinstate the tax waiver on dividend and interest income from bonds 2.4.3 Recommendations report on the tax waiver on dividend and interest income from bonds 45 15/08/14 Provide tax incentives for companies to list their securities on the BSE 2.4.4 Recommendations report on the tax incentives for companies to list their securities on the BSE 46 03/04/14 Analyze pooled investment by insurance companies 2.5.1 Report on feasibility of pooled investment by insurance companies 47 15/08/14 Drafting the regulations on capital adequacy of the market participants. 2.6.1 Draft the regulations on capital adequacy of the market participants. 48 03/04/14 Drafting regulations on risk management & requirements of the market 2.6.2 Draft regulations on risk management systems and prudential requirements of the market participants. 49 24/10/13 Drafting regulations on reporting procedures of the market participants 2.6.3 Drafting regulations on the prudential reporting procedures of the market participants 50 24/10/13 Assessment report on the modality of attracting local and foreign issuers to the 3.1.1 Assessment report on the modality of attracting local and foreign issuers to the listing 51 10/04/13 This deliverable was changed to “Listing Advisory Programme (LAP)
contract with the Consultant. Provide recommendations for developing the corporate bond market 3.3.1 Recommendations report for developing the corporate bond market 56 28/04/15 This deliverable was changed to “Recommendations report for developing the corporate bond market, to be included in a report on initial screening of at 4 companies” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. Support LAP Activities – 2nd LAP Progress Report 3.3.2 List of best Azerbaijani corporate candidates for corporate debt offering 57 07/08/15 This deliverable was changed to “List of best Azerbaijani Corporate candidates for corporate debt offering to be included in 2 nd LAP Progress report” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. Develop Presentation Materials for LAP Team and Coordinate with Agencies 3.4.1 Published educational materials describing the role of the capital markets and opportunities for corporate issuers 58 15/08/14 Develop and publish educational materials on IPO 3.4.2 Published educational materials describing the benefits of good corporate governance and profitability 59 23/02/15 This deliverable was changed to “Published educational materials on IPO” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant.
foreign stocks (MTF) on the BSE guidelines for local sponsors for trading in foreign stocks (MTF) on the BSE ” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. Recommendation/ educational materials/manual for ABS sponsors 3.5.6 Recommendations on introduction of Assets Backed Securities 66 23/02/15 Recommendations on how capital markets can support projects 3.6.1 Recommendations report on the project financing through securities market 67 28/04/15 Recommendations on how capital markets can support state companies 3.6.2 Recommendations on how Capital Market can support state companies 68 23/02/15 Recommendations on how capital markets can support privatization 3.6.3 Recommendations on how capital markets can support privatization 69 23/02/15 Review current government support to private sector development 3.7.1 Recommendations report on development of instruments to support government funding for the private sector 71 24/11/14 Conduct a training assessment for all levels of SCS staff 4.1.1 Training assessment report 71 30/01/13 Devise and provide a training program 4.1.2 Curricula for all subject matter categories of staff and all levels 72 03/04/14 Conduct in-house training for SCS staff 4.1.3 Around 30 training sessions for SCS staff 73 07/08/15 Conduct a 4.1.4 Conduct around 10 train-the-trainers 74 28/04/15
program for the training sessions programs Identify external training opportunities for SCS staff 4.1.5 Identified external training opportunities 75 27/05/13 Devise and provide a knowledge management system 4.1.6 Establish information portal and searchable database within SCS intranet 76 24/10/13 Review the SCS’s internal systems, policies, structures and procedures 4.2.1 Recommendations report with proposed time based road map for SCS ‘ s internal systems , structures and procedures realignment 77 28/04/15 Review the SCS’ current procedures and practices of decision-making 4.2.2 Recommendations report on SCS’s current procedures and decision making 78 15/08/14 Review the SCS’ current market surveillance policies and systems 4.3.1 Recommendations report on SCS’s interim market surveillance policies and procedures 79 28/04/15 Review the SCS’ market enforcement capacity and revisions to enforcement procedures 4.3.3 Recommendations report on SCS enforcement capacity and revisions to enforcement procedures 81 07/08/15 Review the current systems used for reporting by market participants 4.3.4 Recommendations report on improvement of the current systems of reporting by market participants 82 07/08/15 Automation of the disclosure of public information and reports to the regulator 4.3.5 Report on module descriptions, parameters for the automated disclosure of public information and reports to the regulator. 83 24/10/13 Promote the Azeri market to 4.4.1 Conducting 2 regional conferences every 84 30/01/13 Two international
International Investors year and 2 international conferences overall. conferences have been supported technically and financially. Financial support for regional conferences has been provided. Assist SCS in conducting annual financial surveys 4.5.2 Financial support for annual financial literacy surveys 85 03/04/14 Prepare a communications plan for SCS 4.5.4 Communication plan for SCS 87 24/10/13 Recommendation/ educational materials/manual for ABS sponsors 4.5.5 Review and update the SCS’s website 88 23/02/15 Assessment training programs propose a model for the training center 4.6.1 Assessment report of the current situation and presentation of the proposed model for the training center 89 18/3/13 Strategic business plan for establishing training center 4.6.2 Business plan for the training center 90 24/10/13 Conduct needs assessment and identify demand for training programs 4.6.3 Recommendations report on the training programs (such as certification programs, regulatory trainings, trading trainings, mini-MBA with concentration in finance, etc.) 91 03/05/13 Developing a self-study kit on securities trading (capital market ) 4.6.4 Around 3-4 training programs and curricula for more general public based on the agreement with SCS on the recommendations for the task 4.6.3. At each training session approximate number of participants will be around 10 to 15 92 July 2015 This deliverable was changed to “Developing a self-study kit on securities trading (Capital market)” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant.
Developing a self-study guide on Corporate Bonds 4.6.5 Attracting the trainers and identifying the trainers for each program 93 July 2015 This deliverable was changed to “Developing a self-study guide on corporate bonds” by the Amendment No 1, dd 15 Oct 2014, to the lump sum contract with the Consultant. Start the train the trainers for the local trainers 4.6.6 Conducting the “Train the trainers” program for local staff 94 30/05/14 Prepare the marketing plan of the center and promote the center 4.6.7 Marketing plan of the center and its execution 95 30/07/13
2,000 AZN AZN 2,000,000.00 5 Prokredit BOKT ASC signed Debt 400 AZN AZN 400,000.00 6 Finans Lizing ASC signed Standard Debt 1,200 USD 500.00 USD 600,000.00 Debt 600 USD 500.00 USD 300,000.00 Debt 600 USD 500.00 USD 300,000.00 Debt 500 USD 500.00 USD 250,000.00 7 FinEx Kredit BOKT ASC signed Standard Debt 800 USD 500.00 USD 400,000.00 Debt 900 USD 500.00 USD 450,000.00 Debt 390 USD 500.00 USD 195,000.00 8 Finoko BOKT ASC signed Debt 750 USD USD 750,000.00 70,000 AZN 10.00 AZN 700,000.00 9 Turanbank ASC signed Standard 43,440 AZN AZN 47,002,080.00 2,773 AZN AZN 3,000,386.00 10 Embawood MMC signed Standard Debt 10,000 AZN AZN 10,000,000.00 11 Nikoil Bank ASC signed Standard Debt 5,000 USD USD 5,000,000.00 12 Unileasing QSC signed Standard Debt 5,000 USD USD 5,000,000.00 0 0 0
12 2/25/2015 Baku State University Finance and finance management (seminar) 27 13 3/10/2015 Azerbaijan Economy University students Investment management (Master 10 14 3/11/2015 Azerbaijan State Economy University students Capital Markets financing, instruments, participants (seminar) 17 15 3/17/2015 Azerbaijan State Economy University students Finance and finance management (seminar) 32 16 4/1/2015 Azerbaijan Economy University students Corporate finance 10 17 4/2/2015 Azerbaijan State Economy University students Foreign exchange 10 18 4/13/2015 Baku University Investment management 16 21 4/15/2015 Baku Business University students Capital Markets financing, instruments, participants (seminar) 14 2.6. Capital Markets Information System: The tender for supply and installation of Capital Markets Information Systems was announced on 18 April 2014 within works and goods category. The two stage bidding selection method was used for this procurement. According to the TOR the winning vendor should have developed the following systems: Trading system, Depository system, Clearing system, Market surveillance system, Broker front end system Install appropriate hardware and network infrastructure supporting the operation of the systems, including Disaster Recovery Centre in Sumgait City, 35 km from Baku. The main requirement to the platform was full integration, but modularity on database level, with usage of industry standard protocols, allowing integration to RTGS (AZIPS systems). The Platform should have been designed in the open architecture manner enabling incorporation of broker trading functionality by users. KOREA EXCHANGE was selected the winner of the tender and on 13 January, 2015 the contract was signed and the integrated trading/post-trading/surveillance platform (branded CETA AZERBAIJAN) was launched on the 17th Feb 2016. The platform performs according to the expected indicators since the official launching ensuring automation of all major processes at the local capital market trading and The platform enabled major placements including USD 100 mln public bond offering by State Oil