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Armenian parliament passes financial market laws

By Loretta  Martikian

Armenian parliament passes financial market laws

The Armenian parliament has passed a package of laws regulating the local financial markets and amendments to the law on the securities market, following close cooperation with the European Bank for Reconstruction and Development (EBRD). The EBRD welcomed the decision as a “milestone”.

The new law provides for the enforceability of derivatives transactions, including netting, close-out netting and financial collaterals, amends over 17 laws and introduces more than 15 new regulations to Armenia’s financial legislation, including settlement finality.

The EBRD provided technical cooperation to the Central Bank of Armenia for the drafting of the package. Experts, funded by the EBRD-managed Shareholder Special Fund, worked with the Central Bank on the legal reform. This project was also coordinated with, and supported by, the International Swaps and Derivatives Association (ISDA).

Mark Davis, EBRD Head of Office in Yerevan, said: “This decision marks a true milestone in Armenia’s reform efforts and confirms the country’s readiness to facilitate the further development of its capital markets. This pioneering step will help improve the investment climate in Armenia. We are grateful to the Central Bank for our fruitful cooperation and we look forward to working on many more exciting initiatives.”

Nerses Yeritsyan, Deputy Chairman of the Central Bank of Armenia, added: "We are very grateful to the EBRD for providing us with expertise and experience in the development of this important legal package. It represents a big step forward in creating the conditions in which our economy can move to a more sophisticated stage of development. Armenia has a strong sense of entrepreneurship and it is for lawmakers and regulators to enable these forces.”

The legal package adopted by parliament opens the door for hedging tools, including foreign currency and interest rates and allows banks and corporates to properly manage their risks. This is an important step to attract investors, including the EBRD.

The EBRD has worked closely with the Central Bank of Armenia to improve the functioning of capital markets in the country, strengthen the local capital market and increase local currency lending. The new law will contribute to the creation of a prospering derivatives market in Armenia. The EBRD, under a local currency and capital markets initiative, is working on similar projects in Georgia, Morocco and Ukraine.

2016 has also seen the extension of the EBRD SME Local Currency Programme to Armenia. This framework offers local small and medium-sized enterprises (SMEs) lending in local currency. In exchange for better access to affordable funding, Armenia has committed itself to continuing reforms to improve, broaden and deepen its local currency and capital markets.

The EBRD is a leading institutional investor in Armenia, having invested over €1.1 billion in 153 projects in the country’s financial, infrastructure, energy and corporate sectors, with 88 per cent of these projects being in the private sector.


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