A. BACKGROUND 

The Government of Mongolia has received a credit from the International Development Association toward the cost of the Strengthening Fiscal and Financial Stability Project (SFFSP), and it intends to improve fiscal policy and sustainability in a mineral-based economy, protect the poor and vulnerable, and restore confidence in the financial sector. The Ministry of Finance (MOF) will be responsible for the implementation of the project, including overall coordination, results monitoring. 

The Mongolian financial system is dominated by the banking sector. Banks account for about 95 percent of total financial system assets. They are highly concentrated and competition remains limited, with the top five banks accounting for 67 percent of the total financial system assets. 

Banks often enter into repo transactions with the Bank of Mongolia (BOM) or other banks for short-term financing purposes. Such local repo transactions mostly relate to the sale and repurchase of government bonds and securities issued by the BOM. Mongolian government bonds or the BOM securities are issued for a short term so the duration of repo transactions accordingly matches the maturity of relevant securities. 

Given that Mongolian securities market is still at an early stage of its development, its liquidity is low. Only shares and bonds are publicly traded - there is no established trading of any other types of financial instruments, including derivative instruments or depositary receipts. Therefore, transactions such as securities repurchase, swap or lending transactions are rarely tested though not prohibited in Mongolia. Accordingly, Mongolian legal framework does not take into account or address specific characteristics or operations of the financial derivative or repurchase transactions. 

The main advantage of developing legal framework for OTC derivatives and repurchase agreements in Mongolia is that it will attract foreign investors as well as aid development of securities market by distributing risk across investors and banks and financial institutions. Domestic banks can quickly raise capital at a lower rate by participating in ISDA and GMRA master agreements, which in turn will lead to faster economic growth.

B. OBJECTIVE OF THE ASSIGNMENT 

The main objective of this assignment is to conduct comprehensive research on the existing legal framework for OTC derivatives and other hedging instruments and their application in Mongolia, and identification of legal and practical issues concerning enforcement of financial collateral as well as its resolution proposal. 

C. SCOPE OF THE WORK 

Key responsibilities of the National Consultant will include the following matters, but not limited to: 

1. To study current legal framework and application of derivative instruments and other OTC transactions in Mongolian market. The Study shall comprise at least following contents:

   • Background information on derivatives and OTC market in Mongolia in terms of volume, participants and current state of those markets;

   • Analysis and review of the current legislation and regulation applicable directly or indirectly to a) derivatives; and b)  repos in Mongolia;

   • Application of the GMRA and the ISDA Master Agreement in Mongolia and its enforceability;

   • Identification of necessity for Derivatives legislation in Mongolia.

2. Prepare an Inception report describing the findings of the analysis and the recommendations for submission to BOM.

3. Prepare a legal Concept Paper 

   • Prepare a concept paper that, on the basis of the Inception Report, describes possible areas for improvement and serves as the basis for the development of relevant amendments and legal framework in relation to the derivatives;

   • Present the Concept Paper to the BOM, answering all questions that may be raised, providing additional comparative information where necessary, and revising the Concept Paper on the basis of comments received from the BOM.

4. Draft legislation to implement the changes suggested by the Concept Paper: 

   • Prepare a draft of the legislation necessary to implement recommendations developed in the Concept Paper. The draft legislation will include  a set of recommended amendments to the existing legislation in addition to standalone legal provisions as well as relevant research documents required by the Law on Legislation of Mongolia;

   • Conduct meetings with the BOM to explain the Legal Framework and its implementation through the Draft Legislation, and revise the Draft Legislation as necessary following these meetings and on the basis of comments from the BOM.

5. Present the finalised draft legislation 

   • Prepare and present the final Draft Legislation incorporating all earlier comments; and

   • Prepare, if instructed by the BOM, a concise explanatory commentary document on the Draft Legislation describing its rationale, operation and the required means of implementation.

6. Prepare a detailed final report (the “Final Report”) summarizing the progress of the project for the BOM: 

   • Previous deliverables (the Inception Report, Concept Paper, and the final form of the Draft Legislation), a detailed roadmap describing all other implementing measures which will be necessary to fully implement the Legal Framework, an assessment of the effectiveness of the implemented legislation and regulation, and any recommendations to improve the effectiveness of future such assignments.

D. DELIVERABLES

The National Consultant shall submit the following DELIVERABLES in Mongolian and English to the BOM: 

Deliverable:                         Deadline:

1. Inception Report                 Within eight weeks of assignment start 

2. Concept Paper                         Within 16 weeks of assignment start 

3. Draft Legislation (preliminary form) Within 5 months of assignment start (revised versions to follow as project progresses)

4. Draft Legislation (final form)         Within  6 months of assignment start 

5. Final report                 Within 7 months of assignment start

E. CONSULTANT’S QUALIFICATIONS

To be considered eligible candidates should have all the eligibility criteria listed below:

   o Education: A suitable candidate should have a post-graduate degree in Law, Economics, Finance, or a related field(s). Double major in Law and economics is an advantage. 

   o Experience: A candidate should have at least 10 years of professional experience with at least three years of specific experience in banking/financial sectors. Deep knowledge of and experience in repo and derivatives market is strongly preferred. 

   o Language skills:  Professional English and Mongolian in writing and speaking.

   o Other skills:  Excellent interpersonal skills with the ability to function effectively and collaboratively in a team environment; proficiency in PC based applications such as Word, Excel and data management, and have excellent web research and navigation skills. 

G. CONTRACT DURATION 

The consultant work is expected to commence in October 2019 and the total duration of the assignment is seven months. If any task is completed and approved by the Client within the agreed-upon timeline, consultant should complete the tasks without any additional cost.  

If you possess the above qualifications, please submit following documents via email to procurement@sffs.mn:

    1. Cover letter indicating why she/he considers her/himself suitable for the position,

    2. Detailed CV highlighting relevant skills/experience,

    3. Copy of diplomas or certificates and,

    4. 2 reference letters from previous last two employers no later than 17:00, October 01 2019.

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

 The consultant will be selected in accordance with the World Bank’s Procurement Regulations for IPF Borrowers (July 2016).

Further information can be obtained at the address below during office hours: 8:30 to 17:30 hours (local Ulaanbaatar time) or procurement@sffs.mn.

 Attn: Ms.Bayarmaa L, Procurement specialist,  

Project Implementation Unit

The World Bank – Strengthening fiscal and financial stability project,

Room #205, Negdsen undestnii 8/2, 4th khoroo, Chingeltei District, Ulaanbaatar, Mongolia

Tel: +976-70120582

70120582