A. BACKGROUND

Mongolia has received a credit from the International Development Association (IDA) for implementation of the Strengthening Fiscal and Financial Stability (SFFS) project. The Financial Regulatory Commission (FRC) is a beneficiary of the Project and is implementing activities under sub-component #C4. The main objective of the Sub-component is strengthening the institutional capacity of the FRC. 

Although 31 years have passed since the establishment of the capital market in Mongolia, its level of development is weak; akin to a ‘frontier market’ compared to regional financial markets.  This undermines intermediation in the financial sector, and hampers development of opportunities to attract funding for long-term projects and programs, through the capital market. All of which adversely affects the scope for increasing economic growth.

Mongolia's economic growth reached 17.5% in 2011 due mainly to the mining sector; regionally and globally. Mining companies listed on the Mongolian Stock Exchange (which make up the TOP-20 index) have risen sharply. As a result, the number of foreign and domestic investors, and professional brokers investing in the Mongolian stock market, has increased significantly.  

However, since 2012, the country’s capital market value and liquidity ratios have been declining; due to: falls in commodity prices internationally, decreased foreign direct investment, and a general slowdown in economic growth.

The legal environment of the stock market - a basic condition for its development has been improved, and effective supervisory and regulatory systems created. But, a number of issues adversely affect development of the capital market, including:

• weak development of stock market infrastructure (such as insufficient cooperation between the payment, settlement and trading systems, and professional intermediaries), 
  
• lack of risk-based supervision and regulation mechanisms, and 
• insufficient professional investors etc. 

Therefore, there is a need to develop policy and regulatory recommendations to increase the participation of institutional investors. This to be based on the results of a study of constraints affecting the base of institutional investors in the capital market. With the objectives to increase market demand, support the supply of goods and services, and to increase access to products and services within the stock market. 

Based on the above, the Commission is seeking to hire an experienced national consultant to provide support to study and analyze constraints affecting the activities of institutional investors in the capital market. The Consultant is also required to draft recommendations for related laws, amendments, and/or repeal of other laws related with expanding the institutional investors' base. 

B. OBJECTIVE OF THE ASSIGNMENT

The main objectives of the assignment are to study and analyze constraints affecting the increased activities of institutional investors in the capital market, and to make policy and regulatory recommendations based on the research results. Prior to the drafting of the recommendation, the Consultant will (based on international best practices) analyze the capital market legislation and regulations related to institutional investors. 

C. SCOPE OF THE WORK

The tasks of the Consultant include, but are not limited to:

Task: Draft recommendation 

1. Inception report along with a Contract implementation plan;
   
2. Review current laws and regulations of the capital market (associated with the institutional investors base in the capital market). Provide comments and recommendations for amendments (along with rationales and appropriate references) in line with international best practices. Due attention to be devoted to the work and publications of IOSCO, IMF, World Bank, and any other international sources of information on regulation and legislation;
3. Complete a comparative review of the law and regulations - related to institutional investors in at least two other countries (to be selected in consultation with the Client);
4. Develop recommendation/s and suggestion/s for related laws, amendments, and/or repeal of other laws related to attracting institutional investors to the capital market;
5. Prepare a final report;
6. Perform other related duties as assigned.

D. DELIVERABLES 

The Consultant shall perform the following activities as set forth in the Terms of Reference and submit the relevant studies and work reports to the International Cooperation Department in paper and electronic forms. 

1. Contract Implementation Plan; 
   
2. Basic research on the current situation of institutional investors;
3. Comparative review of at least two countries of laws and regulations related to institutional investors;
4. Recommendation/s and proposals on related laws, regulations, amendments, and repeals in connection with improving relevant law and regulation related to institutional investors;
5. Final report.

E. CONSULTANT’S QUALIFICATIONS AND/OR SELECTION CRITERIA

The Consultant shall satisfy the following requirements and skills:

Education: The Consultant should have a postgraduate or higher degree in finance and economics, business administration concentration in business law and/or investment; 

Experience: The Consultant should have at least eight years’ experience; with knowledge of methods and techniques required for developing capital market policy documents (preferably with evidence of previous related work). Previous experience in a similar consultancy works/projects working with partnership of government or government agencies will be an advantage;

Language skills: The Consultant shall be fluent in Mongolian and English;

Work skills: 

• Extensive knowledge of the capital market legal framework;
• Advanced analytical skills and research ability;
• Well-organized and ability to work independently; 
• Ability to advise others, and work collaboratively within a team environment

F. SUPERVISION AND REPORTING

The Consultant will report directly to the Director of the International Cooperation Department of the Commission and work under direct day-to-day supervision of the Director of the Commission’s Securities Market Department.

The following reporting requirements apply:

• Contract implementation plan: submitted to the Client within five working days of the contract being signed; 
  
• Progress Reports: monthly - once the contract has been signed describing accomplishments and progress, and to be accompanied by the developed materials; 
• Final Report: not later than 10 working days after the contract is completed; describing accomplishments in full, and to be accompanied by the completed version of the developed materials. 

G. CONTRACT DURATION

The duration of the consultancy will be five months and will start in September 2022. The consultant is expected to work off-site during the consultancy period. Upon signing the contract, the selected consultant will start the provision of services and will complete their duties within the period specified in the contract. In accordance with the agreement between the parties, the work specified in the terms of reference shall be completed and presented to the Client. 

H. INSTITUTIONAL ARRANGEMENTS

The Commission will provide office space (work desk, meeting room, etc.) and assign a coordinator to work with the Consultant to facilitate their work at the Commission (meetings, visits and other communications with government agencies, officials, and market players, etc.). The Commission's Securities Market Department will provide management and organizational support for the day-to-day work of the Consultant. 

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