Baghdad Stock Exchange

[fogarty]

I hope someone can tell me that this is a bad site to get info. but here it is.

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US demands audit of Baghdad Stock Exchange companies, Exchange to remain closed till 2004

By: Hussain Kubba (Bulletin Economics Editor)

Published date: 17/7/2003

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The Baghdad Stock Exchange will not open before the beginning of next year according to Thomas Wriges, an American broker now working for the CPA. Wrigles spoke to Iraqi brokers gathered on July 15 at the Conference Center on the invitation of the director of the BSE, Subhi Al-Azzawi.

Wrigles told some 40 brokers that the market will not open until the CPA was ready. Moves in preparation of the reopening of market include auditing the accounts of the listed companies as well as those of the broker firms.

Al-Azzawi told the brokers that listed companies have been requested to submit to the BSE their accounts for the first quarter of the year 2003. Normally, Iraqi companies are only required to publish their annual financial statement of the proceeding year. Some firms have already complied, Al-Azzai said. Analysts say that the move is a welcomed step in the direction of establishing a stricter regime of information disclosure as an essential prerequisite for a healthy development of the Iraqi capital market.

Brokerage firms have also been asked to submit their accounts for the first quarter of the year. The Supreme Audit Board will audit these accounts, one broker said.

In a separate but similar move, some 20 private banks in Iraq have been asked to submit their accounts for the first quarter of the year. According to one reliable source, the banks have also been asked to submit detailed lists of their clients accounts from no earlier than March 31.

The Borders Group, an American banking and financial consulting company based in North Carolina, is auditing this and other information. It is not clear why the CPA want to audit the banks, nor is it clear under what terms The Borders Group won the contract with the CPA.

Brokerage firms were also told that while they still maintained their seats at the Baghdad Stock Exchange, brokers would have to undergo training and re-qualifying examinations before trade reopened.

Some brokers present at the meeting noted that the meeting was co-chaired by a representative of Atlas Investment Group, which is a Jordanian based company, headed by Omar Al-Masry. This company is known to have expressed recent interest in the purchase of Iraqi shares. Its Palestinian representative, Said Mikhamra, who chaired the meeting, has had contacts with brokerage firms collecting information about the market.

The current rules of the BSE bar all non-Iraqis from acquiring stock at the market.

Wrigles told the meeting that the current rules regarding non-Iraqi investment in the market will be upheld during the first phase of market restructuring, which was expected to last for two years.

During the second phase, however, it will be open to international capital investment from the region and from the world at large. Wrigles said he envisages the BSE to become the fourth largest capital market in the world, which is a surprising prediction, though it could certainly be the largest in the region.

This is a vital piece of the American’s economic plan for Iraq. The BSE will be a vital instrument to attract investment into Iraq, in its various production and service sectors.

In the meantime, the CPA representative told assembled brokers that all trade outside the closed BSE is considered illegal. This has effectively put the lid on initiatives to create rival markets such as the one taken two weeks ago by Ameen Investment Inc., which is a subsidiary of the private Baghdad Bank.

“This move by the Baghdad Bank faltered anyway as most registered brokers boycotted invitations to attend trading sessions arranged in one of the halls of the bank,” one broker said, adding that only three deals were struck at the first such session and there were great doubts as to their validity.

Other brokers noted that with prices of stock skyrocketing since the end of the “liberation war,” it was nearly impossible to stop dealers and individual investors from doing trade outside the BSE.

“The longer the CPA delays the opening trade at the BSE, the more people will resort to trade outside the hall,” one broker said. “Investors and savers need to arrange their portfolios according to the new economic facts of life.”

Many small-time investors are in dire need for cash and they will be easy prey for those trading in stock outside the BSE. Old brokers point to the fact that trade outside the market is not to the advantage of buyers or sellers.

“It is only the middle man that makes the fat profit,” said one.

The reopening of trade at the BSE also seems to be delayed due to sheer logistics. The CPA has decided to move the BSE from its current premises. The current location, which is the property of the BSE and not the Ministry of Finance as some think, were looted but not completely destroyed. According to Azzawi, these headquarters could be refurbished in a short time. Moreover, the BSE has enough cash deposited at Rafidain and Rasheed Banks to accomplish the job. The CPA, however, remains adamant that the building is not suitable.

Wrigles told the assembled brokers that they need to find alternative accommodation. He justified his demand on account that the building is in a residential area. Alternative arrangements, such as housing the BSE in one of the private banks, raised some eyebrows at the meeting for fear of conflict of interest. Some brokers feel uneasy about generous offers for free accommodation provided by well-known Iraqi businessmen.

“The impartiality of the BSE requires it to use its own funds for providing suitable accommodation to the liking of the CPA,” one said.

Published date: 17/7/2003

Author: Hussain Kubba (Bulletin Economics Editor)

Sorry please delete brain fart this am.

Edited August 18, 2011 by fogarty

[pastorbigal]

Sorry please delete brain fart this am.

I hate it when that happens

[gman51]

By "brainfart" are you referring to the date of this article? I didn't notice it either until the end.

[abutchbaker]

Oh well another posting of news who knows the truth............

[redsand]

2003 was a good year...Yanks almost won the world series that year.

[FrankenSLI]

The things I could do with what I know now if it was still 2003.