REQUEST FOR EXPRESSION OF INTEREST

The Financial Regulatory Commission (FRC) of Mongolia regulates and supervises non-bank financial markets, including: the capital market, insurance market, non-banking financial institutions and saving and credit cooperatives. Although the share of these markets in the economy is not so high, their importance is significant and they have shown rapid growth in recent years. For example, total market capitalization reached MNT2.6 trillion in 2018; the highest level to-date in Mongolia. Moreover, the total assets of insurance companies and non-banking financial institutions increased by 30.0% and 32.7% respectively in 2018. And saving and credit cooperatives’ total assets exhibited their highest growth in ten years, with an increase of 30%.

Medium-term policies in the financial sector aim to ensure: sector stability, increase financial inclusion, improve regulation and supervision mechanisms, and develop a balanced multi-sector financial structure (instead of one-dominant one). To implement these policy objectives, the FRC has been working to strengthen the capacity of financial institutions, establish a risk-based supervisory framework, and shift from a supervisory-only authority to an organization which also supports sustainability and development of financial markets by implementing research-based policies.

In order to establish a risk-based supervisory framework, the FRC has been developing an off-site supervision approach, which evaluates risks among regulated financial institutions based on their financial statement indicators. However, besides financial statements, it is important to consider factors such as market and economic conditions, in order to conduct a risk assessment and to assess the impact of factors on the capacity and operations of financial institutions.

Accordingly, the FRC is offering a contract for an interested research institution to take on the assignment to evaluate risks of regulated markets and undertake econometric studies on the impact assessment of factors which influence capacity of participants in financial markets and identify ways to mitigate risks.

OBJECTIVE OF THE ASSIGNMENT

The main objective of this assignment is to identify risk factors and to evaluate risks of financial markets: including the capital market, insurance market, non-banking financial institutions, and saving and credit cooperatives. The work will include research on the impact assessment of factors which influence the capacity of participants in financial markets. The results will include policy recommendations to mitigate risks (based on the assessment) and to introduce evaluation methodology and provide instructions for FRC’s staff in order to conduct risk evaluation consistently.

SCOPE OF THE WORK

The consultancy team will conduct structural macro-econometric modelling research on the assessment of risk factors (which influence financial markets and the capacity of market participants) and ways to mitigate risks. The team will provide a report (containing all review materials, risk assessment methodology, outcomes and recommendations) and training for FRC staff on developing an assessment approach (which will be used for further risk assessment of regulated markets).

The work of the team will be divided into two related and parallel activities, namely: ‘Phase 1: Research and analysis’ and ‘Phase 2: Preparing deliverables and reports’. The team shall undertake the following list (not exhaustive) of activities and associated tasks:

Phase 1: Research and analysis.

    1. A contract implementation plan including concise descriptions of activities, timelines and deliverables of the ToR - shall be prepared by the team within five working days of commencement of the consultancy service.

    2. Analysis of the current situation and risks of the financial market in Mongolia (excluding the banking sector) and research on international best practices for risk assessment of the financial market.

    3. Identification of risk factors and shocks - which could impact the financial markets of Mongolia - and the capacity of market participants.

    4. Design a risk assessment model and evaluation methodology.

    5. Collect data and assess risk factors which influence financial markets and the capacity of market participants.

    6. Provide introductory training on common financial market risk factors and risk assessment methodologies.

    7. Prepare and present report - on Phase 1 - to the FRC.

Phase 2: Preparing deliverables and reports

    8. Submit report of assessment outcome and methodology, and receive feedback from the FRC.

    9. Make policy recommendations to mitigate risks.

   10. Provide training for FRC staff on developing a risk assessment approach, to be used for risk assessment of regulated markets.

   11. Provide a file of materials used for risk assessment, and any other related files which will be needed for use in risk assessment.

   12. Update and finalize the report reflecting assignments of Phases 1 and 2, and feedback from the FRC.

   13. Perform other tasks as reasonably requested by the FRC.

DELIVERABLES

All drafts deliverables should be discussed with relevant officials of the FRC and incorporate their comments; as appropriate in order to improve the quality of the deliverables. The team shall prepare and present the following deliverables to the FRC.  

Phase 1: Research and analysis

    1. A contract implementation plan shall be submitted to the FRC within five working days of commencement of the contract.

    2. Report on Phase 1 (tasks 1-7) must be submitted no later than ten weeks after commencement of the consultancy service.

    3. Training materials on the risk factors and risk assessment methodologies must be submitted no later than a week after the introductory training in Phase 1.

Phase 2: Preparing deliverables and reports

    4. Report of assessment methodology, outcome and policy recommendations, must be submitted to the FRC within a month after the complete of Phase 1.

    5. Final report, reflecting assignments of Phases 1 and 2 and feedback from the FRC, must be submitted to the FRC no later than the last day of contract.

    6. Training materials and manuals, which cover instructions of risk assessment must be submitted to the FRC no later than the last day of the contract. These materials will be used by the FRC staff to assess risks of the regulated markets on a constant basis.

    7. All other materials including reference files, data, estimation output, and run files (used for estimation) etc.

    8. With respect to this assignment, the team may also deliver other written outputs consistent with the scope of work, as reasonably requested by senior management of the FRC.

CONSULTANCY TEAM’S QUALIFICATIONS AND/OR SELECTION CRITERIA

The Research institution should meet the following qualification requirements:

    1. At least 5 years of experience of conducting research on market research, policy impact evaluation, forecasting, and economic and financial analysis of feasibility studies;

    2. Registered entity in Mongolia;
    
    3. The key experts team should consist of at least a team leader and two members.

A consulting firm will be selected in accordance with the Consultant’s Qualification-based Selection method set out in the World Bank’s Procurement Regulations for IPF Borrowers (issued July 2016,revised November 2017 and August 2018) and which can be found at www.worldbank.org.

If you possess the above qualifications, please submit the following documents no later than 17:00, June 24, 2019:
       - Expressions of Interest;
       - Company introduction along with a copy of state registration certificate;
       - Evidence of specific experience and qualification information of the firm relevant to the assignment.

Email submissions will be accepted in Low Resolution files (each) up to 3 MB only. Expressions of Interest should be clearly marked “Consultancy service (consultancy firm) for undertaking studies on the impact assessment of  factors which influence the capacity of participants in financial markets  and ways to mitigate risks, Reference number: SFFSP/C4/CS/020.

The submitted documents will not be returned to the applicants. Please be noted that incomplete applications would not be considered for evaluation. Only selected candidates will be contacted. Detailed terms of reference can be requested from procurement@sffs.mn.

Address for submission of Expression of Interest: Attention to Ms.Bayarmaa L, Procurement Specialist, Strengthening Fiscal and Financial Stability Project, email: procurement@sffs.mn.
Address: Room #204, Negdsen undestnii 8/2, 4th khoroo, Chingeltei District, Ulaanbaatar, Mongolia. Tel: 70120582.

70120582