Final Report - World Bank...market in BiH and promote stock market investments ... Therefore, the workshop was conducted twice, one time in Banja Luka and one time in Sarajevo. Each

Draft Final Report: Advisory Services to Banja Luka Stock Exchange and Sarajevo Stock Exchange

W i e n e r B o r s e – C A P M E X C o n s o r t i u m P a g e | 1

Submitted by

Wiener Börse AG – Vienna Exchange

acting as Lead Company

in Consortium with

CAPMEX – The Capital Market Experts

CAPMEX Unternehmensberatung GmbH

2nd

April 2009

Final Report

Advisory Services to Banja Luka Stock Exchange and Sarajevo Stock Exchanges

- A Project financed by the FIRST Initiative, a World Bank administered Trust Fund -

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List of Content

List of Abbreviations ............................................................................................................................... 3 1 Introduction ......................................................................................................................................... 4 2 Project Activities and Progress ............................................................................................................ 5

2.1 Project Activities ..................................................................................................................... 5 2.2 Project Progress since the Start ............................................................................................. 9 2.3 Comparison of planned and used resources by month ....................................................... 10

3 Project Outcomes and Results .......................................................................................................... 11

3.1 Main Project Outcomes and Achievements ......................................................................... 11 3.2 Summary Table - Comparison of Planned and Achieved Results ......................................... 12

4 Project Management and Planning ................................................................................................... 14

4.1 Project Management ............................................................................................................ 14 4.2 Expert Input .......................................................................................................................... 15 4.3 Detailed Work Plan as delivered .......................................................................................... 16 4.4 Reporting .............................................................................................................................. 17 4.5 List of Project Deliverables ................................................................................................... 17

5 Recommendations for Follow-up Projects ........................................................................................ 18

5.1 Concerted Efforts to Manage Capital Market Development ............................................... 18 5.2 Capacity Building Support to BLSE and SASE ........................................................................ 18 5.3 Build-up of a BiH/Regional Capital Market & Corporate Governance Training Centre ....... 19

Annex A: List of Participants Workshop I – Banja Luka ........................................................................ 20 Annex B: List of Participants Workshop I – Sarajevo ............................................................................ 21 Annex C: List of Participants Workshop II – Banja Luka ....................................................................... 22 Annex D: Programme Workshop II – Banja Luka .................................................................................. 23 Annex E: List of Participants Workshop II – Sarajevo ........................................................................... 24 Annex F: Programme Workshop II – Sarajevo ...................................................................................... 25 Annex G: Ranking of Stocks for BiH Country Index .............................................................................. 26



List of Abbreviations

Throughout the Report, a number of abbreviations are used for convenience. Below is a list of the

meanings of these acronyms.

BATX Country Index Bosnia and Herzegovina

BiH Bosnia and Herzegovina

BLSE Banja Luka Stock Exchange

CAPMEX CAPMEX Unternehmensberatung GmbH – The Capital Market Experts

CEE Central East Europe

CG Corporate Governance

CMF Capital Market Forum

CMR Capital Market Representative

ECSPF Private and Financial Sector Development Department, Europe and Central Asia

Region, World Bank

EUR Euro

FBiH Federation of Bosnia and Herzegovina

FIRST FIRST Initiative

FR Final Report

IF Investment Funds

IFC International Finance Corporation

IR Inception Report

PIF Privatisation Investment Funds

QR Quarterly Report

RFP Request for Proposal

RS Republica Srpska

SASE Sarajevo Stock Exchange

StC Steering Committee

SEC Securities Commission

SEE South East Europe

TL Team Leader

ToR Terms of Reference

USD US Dollars

WB World Bank

WBAG Wiener Börse AG – Vienna Exchange

WS Workshop



1 Introduction

The Final Report describes the level of achievement to reach the project objectives based on the

activities carried out by the project team from 18th November 2008 until 2nd April 2009 in Banja Luka

and Sarajevo.

The main objective of this technical assistance project were to further enhance the transparency of

the capital market in Bosnia and Herzegovina by

increasing the institutional capacity of BSLE and SASE;

supporting the development of an integrated BiH stock market index;

supporting the development of structured financial products and derivatives;

by training BLSE and SASE staff as well as key capital market participants; and

skill enhancement in the area of data dissemination.

Additionally, the assignment performed an analysis of the potential benefits of concentrating

ownership in voucher privatized BiH companies in the framework of resolving corporate governance

weaknesses. Furthermore, the recommendations for the development of a single BiH stock market

index covering both exchanges will be used by BLSE and SASE to actively promote investments in BiH

companies, to promote the diversification of the financial system and last but not least to increase

the access to capital market financing of companies in Bosnia and Herzegovina. The data

dissemination output will help to increase capital market transparency and through the structured

products and derivatives recommendation the groundwork for the introduction of appropriate

hedging instruments was done.

Carrying out the activities and obtaining the expected output

In the inception phase of the project the Team Leader reviewed and fine-tuned the work plan

according to the needs of BLSE and SASE. Based on the findings of the inception stage the final

phasing of the project for carrying out the project activities and the degree of detail of each output

was agreed with the beneficiaries and presented to the Steering Committee for approval. All

activities were carried out according to plan.

Frequent interaction with BLSE and SASE ensured smooth and timely project implementation. We

hereby would like to explicitly thank BLSE and SASE for the very good cooperation and the great

support received!

This Final Report presents briefly the activities which were carried out as well as the project

achievements.



2 Project Activities and Progress

2.1 Project Activities

In full conformity with the Terms of References, the Technical Proposal and the decisions of the

Steering Committee the project team carried out all activities within the agreed work plan. Table 1

gives an overview of the project activities, the connected deliverables and the timing of the

implementation.

Table 1: Project Activities and Timing

Activity Expert(s) Deliverable(s) Date/Timing

Activity 1: Drafting the Inception report and on-site research

Hannes Takacs Wolfgang Pohn

Project Kick-off Meeting Detailed work plan Inception/Sector Analysis Report

11/2008 to 01/2009

Activity 2: On-site research mission, stakeholder discussions, data collection and analysis

Hannes Takacs Wolfgang Pohn Dennis Grubb Peter Brunner Florin Burnar

None [Input for Report, Handbook and Workshops]

11/2008 to 01/2009

Activity 3: Report Preparation “Analysis of the benefits of concentrating ownership of funds in privatized companies”

Dennis Grubb Wolfgang Pohn

Report “Analysis of the benefits of concentrating ownership of funds in privatized companies”

11/2008 -03/2009

Activity 4: Preparation of 1st

Draft Handbook and

recommendations for BLSE and

SASE

Hannes Takacs Florin Burnar Peter Brunner Wolfgang Pohn

1st

Draft Handbook 12/2008 – 02/2009

Activity 5: Design & delivery of

Workshop I


1 Workshop Banja Luka 1 Workshop Sarajevo

02/2009 03/2009

Activity 6: Design & delivery of

Workshop II


1 Workshop Banja Luka 1 Workshop Sarajevo

02/2009 03/2009

Activity 7: Preparation of Final Handbook version Activity 8: Presentation and

delivery of final handbook

Florin Burnar Peter Brunner Wolfgang Pohn

Final Handbook Version 02/2009

03/2009

Activity 9: Preparation of Draft Final Report Delivery of Draft Final Report

Hannes Takacs

Draft Final report 03/2009

30.03.2009

Activity 10: Incorporation of received feedback and preparation of Final Report Activity 11: Delivery of Final Report

Hannes Takacs Final Report 04/2009

30.04.2009



The Inception Phase focused on the successful project start, the conclusion of all work arrangements

to put the assignment into operation and to conduct a quick assessment of the project environment.

The Inception Phase itself consisted of two activities:

Activity 1: Drafting the Inception report and on-site research

Activity 2: On-site research mission, stakeholder discussions, data collection and analysis

Activity 2 was a parallel activity to number 1 as they findings of the on-site research mission, the

stakeholder discussions, the data collection and analysis were not only used for the Inception/Sector

Analysis Report, but also for all follow-up activities of the implementation phase, especially for

drafting the BiH capital market assessment, the Report and the Handbook.

As stipulated in the ToR the Inception/Sector Analysis Report had the following content:

i. Analysis of the capital market in Bosnia and Herzegovina, with focus on

a. Demand and supply side for securities;

b. Trading characteristics;

c. Intra-regional investment trends and investor demand in BiH market;

d. Pre-requisites for a common stock index;

e. Pre-requisites for the introduction of structured financial products and derivatives

as hedging instruments;

Furthermore, the report also addressed institutional and regulatory elements of a

medium-term strategy to develop the BiH capital market.

ii. Recommendations to BSLE and SASE management regarding the final structure of the

“Implementation Handbook for Index Management and Structured Financial Products”

iii. Detailed work plan for the assignment

Milestones of the Inception Phase were the submission of Inception Report and its approval by BLSE

and SASE.

Activity 3: Report Preparation “Analysis of the benefits of concentrating ownership of funds in

privatized companies”

Key Expert 1 prepared the Report “Analysis of the benefits of concentrating ownership of funds in

privatized companies” in Bosnia and Herzegovina in the light of voucher-privatization outcomes and

lack of corporate governance. The detailed content of the report was discussed and defined jointly

with representatives of World Bank and IFC during the Inception Phase of the project. On-site

missions took place and all key stakeholders were interviewed. A first draft of the report was

submitted end of January 2009.

Based on the feedback received from WB/IFC a revised final version of the report was submitted for

approval on 2nd April 2009.



Activity 4: Preparation of 1st Draft Handbook and recommendations for BLSE and SASE

The “Handbook for Index Management, Data Dissemination and Structured products” as defined in

the ToR consisted in reality of three handbook parts:

(a) Part I: Stock Market Index design and Management

(b) Part II: Data Dissemination

(c) Part III: Structured Products

The handbook parts and the conducted workshops will bring the management of BLSE and SASE in

the position to

decide on the next steps to implement a stock market index covering both capital markets

on an integrated basis and acting as benchmark for domestic as well as international

investors;

drive the development of structured financial products (e.g. certificates, ETFs, warrants)

improve data dissemination and how it can be applied to create a more transparent capital

market in BiH and promote stock market investments

have well trained employees in the areas index management, data dissemination and

structured products.

The handbook parts were prepared by the Key Experts 2, 3 and 4 as stipulated in the technical

proposal.

Activity 5: Design & delivery of Workshop I

Workshop I focused on the “Design and Implementation of a BiH Market Index and Structured

Financial Products”. The target group for the tailor-made workshops were the employees of BLSE

and SASE. Therefore, the workshop was conducted twice, one time in Banja Luka and one time in

Sarajevo. Each workshop lasted for 1/2 day and in average 8 employees of each exchange

participated.

Aim of the workshop was to train the personnel of BLSE and SASE in index design and management,

data dissemination, ETFs and structured financial products. The detailed workshop curriculum was

defined during the Inception Phase and agreed upfront with the project beneficiaries. The

workshops were held by the key experts who also drafted the handbook.

Activity 6: Design & delivery of Workshop II

Target group for the Workshop II “BiH Market Index and Structured Financial Products” were

selected capital market participants in Bosnia and Herzegovina, mainly SASE and BLSE members

interested in issuing and/or trading innovative financial instruments. The key participants were

selected jointly by BLSE, SASE and the project team based on pre-agreed criteria. Instead of one

workshop as requested in the ToR the project team conducted the workshop twice, one time in

Banja Luka and one time in Sarajevo.



Aim of the workshop was to train at least 5 key capital market participants in structured financial

products to bring them in the position to provide under a medium-term perspective hedging

instruments to investors based on the BiH stock market index. But in reality more than 40

representatives of the BiH capital market participants, mainly exchange members, participated in

the workshops and were trained.

Furthermore, a part of the workshop focused on investor protection, as one of the major

prerequisites for a safe, reliable and transparent capital market in BiH. The Workshops were

conducted by the Team Leader and the Key Experts.

Activity 7: Preparation of Final Handbook Version

Based on the feedback received by BLSE and SASE on the draft of the Handbook the Key Experts 2, 3

and 4 incorporated the requested changes and prepared the final version of the Handbook.

Activity 8: Presentation and delivery of Final Handbook

The final version of the Handbook was presented to BLSE and SASE in February 2009.



2.2 Project Progress since the Start

In general it can be said that all project activities were implemented in time and all project

objectives were achieved as listed in the Table 2 below.

Table 2: Status of activities and progress achieved

Activity Status

Activity 1: Drafting of Inception Report and on-site research 100% completed

Inception report submitted and approved

Activity 2: On-site research, stakeholder meetings, data/document collection and analysis

100% completed

Activity 3: Report preparation “Analysis of the benefits of concentrating ownership of funds in privatized companies”

1st

Draft submitted Feedback received

Final version under preparation, which will be submitted in the first week of

April 2009 as agreed

Activity 4: “Preparation of 1st

Draft Handbooks and recommendations for BLSE and SASE

100% completed all handbooks delivered and approved

Activity 5: Design and delivery of Workshop I to employees of BLSE and SASE in

Banja Luka

Sarajevo

100% completed all workshops conducted

24.02.2009

10.03.2009

Activity 6: Design and delivery of Workshop II to members and project stakeholders in

Banja Luka

Sarajevo

100% completed all workshops conducted

25.02.2009

11.03.2009

Activity 7: Preparation of Final handbook version Completed

Activity 8: Presentation and delivery of final handbooks

100% completed

Part A: Index: delivered

Part B: Data dissemination: delivered

Part C: ETFs and Structured Products: delivered

Activity 9: Preparation of Draft Final Report 100% completed

Activity 10: Incorporation of feedback/preparation of final report open

Activity 11: Delivery of Final report [final revised version] open



2.3 Comparison of planned and used resources by month

Strict in line with the Technical Proposal the expert input was 184 working days in total for all

proposed team members. From the foreseen 184 working days 67 were delivered in Banja Luka and

73 in Sarajevo. The table below shows the utilisation of planned and used resources by project

month.

Expert Project Month

Total 11/08 12/08 01/09 02/09 03/09 04/09

Team Leader Hannes Takacs

planned 7 10 12 11 9 2 51

used 7 10 12 11 9 2 51

remaining 0 0 0 0 0 0 0

Expert 1 Dennis Grubb

planned 6 11 0 0 0 0 17

used 6 11 0 0 0 0 17

remaining 0 0 0 0 0 0 0

Expert 2 Florin Burnar

planned 5 8 7 8 5 0 33

used 5 8 7 8 5 0 33

remaining 0 0 0 0 0 0 0

Expert 3 Peter Brunner

planned 5 8 7 8 5 0 33

used 5 8 7 8 5 0 33

remaining 0 0 0 0 0 0 0

Expert 4 Wolfgang Pohn

planned 6 12 12 12 3 0 45

used 6 12 12 12 4 0 45

remaining 0 0 0 0 0 0 0

TOTAL

planned 29 49 43 39 22 2 184

used 29 49 43 39 22 2 184

remaining 0 0 0 0 0 0 0

All activities were conducted according to the work plan as agreed during the inception phase of the

project. No shift of resources took place and thanks to the good cooperation with SASE and BLSE as

well as the great support received all outputs were delivered in time.



3 Project Outcomes and Results

3.1 Main Project Outcomes and Achievements

The Terms of Reference listed quite in detail the expected main outcomes from which the activities

were derived. Based on the findings of the Inception Phase and the discussions with the

beneficiaries and key project stakeholders following main outcomes were achieved:

Increased knowledge level, based on the delivered advise and the provided training, of SASE and BLSE employees in

o index design and management o data dissemination o structured products and exchange traded funds

8 employees of SASE and 6 employees of BLSE were trained in abovementioned subjects

Management of SASE and BSLE is in the position to decide on next steps to implement a stock market index covering both markets on an integrated basis, acting as benchmark for domestic and international investors based on the received coaching, advice, training and handbooks.

The pre-requisites for the introduction of the BiH country index were indentified and discussed with BLSE and SASE. Most of the pre-requisites, i.e. FIX protocol in place, ISIN codes (BLSE) and data availability via Reuters-Thompson, haven been established during the project life cycle, which builds the fundament for the calculation and management of the proposed index.

It was fixed that the BiH Stock Market Index will be a capitalization-weighted price index, calculated and released in real-time. It is estimated that the BiH country index will be in place within approximately six months from project completion. A shortlist of stocks, which are potential constituents of the BiH index, was prepared by the project team. Currently, negotiations between SASE and BLSE are going on regarding the final composition of the index. It the intension of all stakeholders to calculate a trade-able index, which will not only serve as benchmark but also an underlying for structured products.

14 key capital market participants in Sarajevo and 28 in Banja Luka were trained in structured financial products and will be in the position to provide, in the medium-term (within 24 months of project completion, depending on financial market situation), hedging products to investors based on the new BiH stock market index.

Based on the received advice and training SASE and BLSE are ready to drive the development of a structured financial products market based on the stock market index (realisation is very much depending on the impact of the global financial crisis)

SASE and BLSE employees have a thorough understanding of data dissemination and how they can apply it to create a more transparent capital market in BiH and promote stock market investments. Furthermore, Reuters-Thompson agreed during the project cycle to disseminate SASE and BLSE data starting with April 2009.

Generally, it can be said that the long-term outcomes of the project will very much depend on the

follow-up measures taken by SASE and BLSE, and the market participants.



3.2 Summary Table - Comparison of Planned and Achieved Results

Planned Results Outputs/Outcomes Overall Verifiable Indicators Current Status

Result 1: Technical/policy knowledge transfer and increased knowledge level among SASE and BLSE employees in

o index design and management o data dissemination o structured products

Training of employees took place, handbooks were delivered, and workshops were conducted.

SASE and BLSE employee work on subject areas


Reuters Thompson signed up as data vendor for BLSE and SASE and will start data dissemination in April 2009

100% achieved

Result 2: At least 5 employees of SASE and 5 employees of BLSE trained in index design/management, data dissemination and structured products

Training of employees took place Workshops were conducted at BLSE

and SASE


Thorough understanding of exchange employees of subject areas

Reuters Thompson signed up as data vendor

100% achieved

Result 3: Management of SASE and BSLE is in the position to decide on the next steps to implement a stock market index covering both markets on an integrated basis and acting as benchmark for domestic and international investors

Management briefing on next steps to implement BiH stock market index

Ongoing discussions between SASE and BLSE management regarding composition of Index

Short list/ranking of potential index constituents

Proposed structure of index 100% achieved

Result 4: State-of-the-art stock market index and country benchmark established for the entire BiH market (capitalization-weighted price index, calculated and released in real-time) within approximately six months from project completion, which will contribute significantly to the integration of the securities market based on the assumption that SASE and BLSE data are available from at least one major data vendor (e.g. Reuters, Bloomberg...) and ISIN codes for stocks are introduced and assigned.

Handbook Index Design/ Management Employees are trained and capable to

design and manage country index Employees are trained and capable to

start data dissemination activities ISIN codes assigned to BLSE listed

stocks by WM Daten FIX protocol for data dissemination

implemented Currency denomination of index fixed:

BAM/EUR, USD Name of country index: BATX

Short list of potential index constituents

Contract with Reuters Thompson to disseminate the stock market data from SASE and BLSE

Data availability on Bloomberg FIX protocol on trading system

level in place ISIN codes for BLSE listed stocks

are in place

Final level of achievement will be seen within 6

months from project

completion at the beginning of

November 2009 as stipulated in

the ToR



Planned Results Outputs/Outcomes Overall Verifiable Indicators Current Status

Result 5: At least 5 key capital market participants trained in structured financial products market and in the position to provide, in the medium-term (within 24 months of project completion), hedging products to investors based on the stock market index.

Workshops conducted - training of exchange members took place in Sarajevo and Banja Luka

Handbook on Structured products and Exchange Traded Funds was delivered to workshop participants via SASE and BLSE

List of participants of BLSE member workshop (provided as Annex)

List of participants of SASE member workshop (provided as Annex

100% achieved

Result 6: SASE and BLSE ready to drive the development of a structured financial products market based on the stock market index (realisation is very much depending on the impact of the global financial crisis)

2 Workshops for BLSE and SASE employees in structured products and exchange traded funds conducted

Handbook on structured products and exchange traded funds

Pre-requisites and steps required by SASE and BLSE presented and discussed at workshops

Trained personnel at SASE and BLSE with in-depth understanding of steps required by exchange

Handbook Structured Products

Handbook Exchange Traded Funds

List of SASE participants of workshop I

List of BLSE participants of workshop I

100% achieved

Result 7: SASE and BLSE employees with understanding of data dissemination and how they can apply it to create a more transparent capital market in BiH and promote stock market investments

Workshops conducted on data vending and dissemination

Training of exchange employees took place in Sarajevo and Banja Luka

Handbook Data Dissemination SASE and BLSE employee work on

subject area

Handbook Data Dissemination

FIX protocol implemented Data distribution via Reuters

Thompson will start in April 2009

100% achieved



4 Project Management and Planning

4.1 Project Management

The project management structure was discussed in detail with the project beneficiaries Banja Luka

and Sarajevo Stock Exchange and both entities have nominated their respective members of the

Steering Committee as well as responsible project managers and specialists for project delivery at

the project kick-off meetings in Banja Luka and Sarajevo.

The Members of the Steering Committee were:

Entity (in alphabetical order) Member of the Steering Committee

Banja Luka Stock Exchange Mr. Milan Božid, CEO BLSE Mr. Nebojsa Vukovic

Sarajevo Stock Exchange Mr. Zlatan Dedid, CEO SASE Mr. Almir Mirica

WBAG-CAPMEX Consortium Mr. Hannes Takacs

World Bank Mr. Haris Mesinovic Mr. Tarik Sahovic

As planned that the first meeting of the Project Steering Committee took place in Banja Luka on 28th

January 2009 in the premises of Banja Luka Stock Exchange and the second StC meeting on 21st April

2009 in the premises of Sarajevo Stock Exchange in Sarajevo..

The nominated Project Managers of the project beneficiaries are:

Institution (in alphabetical order) Project Manager

Banja Luka Stock Exchange Mr. Nebojsa Vukovic

Sarajevo Stock Exchange Mr. Almir Mirica

Furthermore, each beneficiary has nominated module leaders for following project areas:

Project Area Contact Persons/Specialists of Beneficiary (in alphabetical order)

Consolidation of BiH capital market

Mr. Milan Božid, CEO BLSE Mr. Zlatan Dedid, CEO SASE Mr. Edin Secerovic, Director SASE Mr. Nebojsa Vukovic, BLSE

Report on Mr. Almir Mirica, SASE Mr. Nebojsa Vukovic, BLSE

Index Development and Management Mr. Almir Mirica, SASE Mr. Slavisa Risovic , BLSE

Data Dissemination Mr. Tahir Taslaman, SASE Mr. Igor Timarac, BLSE

Structured Products Mr. Almir Mirica, SASE Mr. Slavisa Risovic , BLSE



Project Client: World Bank ECSPF, Europe and Central Asia Region

Project Steering Committe

representatives from

Banja Luka Stock Exchange and Sarajevo Stock Exchange

Team Leader

Hannes A. Takacs

(51 w/d)

Key Expert 1

Dennis Grubb

(17 w/d)

Key Expert 2

Florin Burnar

(33 w/d)

Key Expert 3

Peter Brunner

(33 w/d)

Key Expert 4

Wolfgang Pohn

(50 w/d)

The project management structure, as already defined in the Technical Proposal, is shown below.

Overall project management was carried out by the Team Leader supported by the nominated

experts. Each expert was assigned to specific activities/tasks with clear defined goals as planned in

the Technical Proposal and restated in the Inception Report.

Full support was provided by the management and personnel of Banja Luka Stock Exchange,

Sarajevo Stock Exchange and especially by World Bank and IFC representatives, which contributed

significantly to the overall project success. Thank you!

4.2 Expert Input

No changes took place on the level of expert input. As stipulated in the Technical Proposal the input

was 184 working days in total for all proposed team members.

Expert On-site days Off-site days Total number of working days

Team Leader: Hannes Takacs 40 11 51

Key Expert 1: Dennis Grubb 15 2 17

Key Expert 2: Florin Burnar 20 13 33

Key Expert 3: Peter Brunner 20 13 33

Key Expert 4: Wolfgang Pohn 45 5 50

Total working days 184

From the foreseen 184 working days 67 were delivered in Banja Luka and 73 in Sarajevo as planned.

Draft Final Report: Advisory Services to Banja Luka Stock Exchage and Sarajevo Stock Exchange

Wiener Bor se – CAPMEX Consor t ium P a g e | 16

4.3 Detailed Work Plan as delivered

The work plan was revised, discussed and agreed with the project beneficiaries Banja Luka Stock Exchange and Sarajevo Stock Exchange during the

Inception Period of the assignment and is based on the received feedback. The total number of working days foreseen for the project is 184 as

stipulated in the Technical Proposal, thereof 67 working days were delivered in Banja Luka and 73 working days in Sarajevo as shown in the table.

The commencement date of the project was 18th November 2008 and the contractual project duration was six months.

WORK PLAN November 2008 December 2008 January 2009 February 2009 March 2009 April 2009 Total Total

Home BL Sar. Home BL Sar. Home BL Sar. Home BL Sar. Home BL Sar. Home BL Sar. Home BiH w/d

Hannes Takacs

2 - 5 5 5 - 2 5 5 1 5 5 1 5 3 - - 2 11 40 51

20.-21. - 24.-28. 8.-12. 1.-5. - 8.-9. 26.-30 19.-23. 16. 23.-27. 9.-13. 4. 16.-20 10.-12. - - 21.-22.

Dennis Grubb

1 - 5 1 5 5 - - - - - - - - - - - - 2 15 17

20. - 24.-28. 20. 1.-5. 8.-12. - - - - - - - - - - - -

Florin Burnar

- - 5 3 5 - 7 - - 3 5 - - - 5 - - - 13 20 33

- - 24.-28. 10.-12. 15.-19. - 12.-20. - - 9.-11. 23.-27. - - - 9.-13. - - -

Peter Brunner

- - 5 3 5 - 7 - - 3 5 - - - 5 - - - 13 20 33

- - 24.-28. 10.-12. 15.-19. - 12.-20. - - 9.-11. 23.-27. - - - 9.-13. - - -

Wolfgang Pohn

1 - 5 2 5 5 2 5 10 - 12 2 - - 3 - - - 5 45 50

20. - 24.-28. 16.-17. 1.-5. 8.-12. 8.-9. 26.-30 12.-23. - 2.-12. 24.-26.

- - 10.-12. - - -

TOTAL 4 0 25 14 25 10 18 10 15 7 27 5 1 5 16 0 0 2 44 140 184

Project meetings

Kickoff meetings: Sarajevo (24.11.) and Banja Luka (01.12.)

Steering Committee Meeting: 28.01.2009 @ 13:00 in Banja Luka

Final StC Meeting: 21.04.2009 @ 13:00 in Sarajevo

Workshops

In total 4 Workshops for BLSE and SASE staff as well as for exchange members were conducted on below listed dates:

Workshop I: Banja Luka: 24.02.2009 Sarajevo: 10.03.2009 Participants: Exchange employees

Workshop II: Banja Luka: 25.02.2009 Sarajevo: 11.03.2009 Participants: Exchange members & authorities

The specific workshops dates were defined jointly with BLSE and SASE at the 1st Steering Committee Meeting in January 2009.

Inception Report: Advisory Services to Banja Luka Stock Exchange and Sarajevo Stock Exchange


4.4 Reporting

The reports required and their submission dates were defined during the project´s Inception phase.

All reports were submitted in English. According to the ToR following reports were delivered in time:

Report Submission date

Inception Report 1st bi-monthly report to WB (=Inception Report) 2nd bi-monthly report to WB 1st Quarterly report to StC (= Inception Report) Draft Final Report Final Report

21.01.2009 21.01.2009

18.03.2009 21.01.2009

30.03.2009 30.04.2009

A Draft Final Report was submitted one month before project end and a Final Report, which includes

the received feedback at the end of the project. An overview of all project deliverables is given in the

table below.

4.5 List of Project Deliverables

Activity Deliverable(s)

Activity 1: Drafting the Inception report and on-site

research

Inception Report

Activity 2: On-site research mission, stakeholder

discussions, data collection and analysis

None [Input for Report, Handbook and Workshops]

Activity 3: Report Preparation “Analysis of the

benefits of concentrating ownership of funds in

privatized companies in the light of voucher-

privatization and lack of corporate governance

thereof”

Report “Analysis of the benefits of concentrating ownership of funds in privatized companies in the light of voucher-privatization and lack of corporate governance thereof”

Activity 4: Preparation of 1st Draft Handbook and

recommendations for BLSE and SASE

1st Draft Handbook

Activity 5: Design and delivery of Workshop I 1 Workshop Banja Luka 1 Workshop Sarajevo

Activity 6: Design and delivery of Workshop II 1 Workshop Banja Luka 1 Workshop Sarajevo

Activity 7: Preparation of Final Handbook version Activity 8: Presentation and delivery of final

handbook version

Final Handbook version

Activity 9: Preparation of Draft Final Report Draft Final Report

Activity 10: Incorporation of received feedback and

preparation of Final Report

Activity 11: Delivery of Final Report

Final Report


W i e n e r B o r s e C o n s o r t i u m P a g e | 18

5 Recommendations for Follow-up Projects

5.1 Concerted Efforts to Manage Capital Market Development

For the development of the capital markets in Bosnia and Herzegovina concerted efforts are critical

to manage the development efforts and initiatives. Thereby a number of structural enablers can be

considered to develop the BiH capital markets.

Establishment of Capital Markets Forum (CMF) and of a Capital Market Representative (CMR)

It is of utmost importance that all capital market development efforts and initiatives in BiH are

coordinated and managed. Therefore, we propose either to implement a capital market forum with

representatives from FBiH and RS and/or to nominate a well qualified, neutral, domestic or

international senior person as BiH Capital Market Representatives. As international experiences (e.g.

in Austria) have shown a CMR can contribute very much support the development of the capital

markets and align the interests of the market participants.

The Capital Market Representative, created as an independent level, will be responsible for

representing capital market needs at a high level, including planning, channelling, counselling, and

driving all necessary changes.

The CMR should

Develop policies, concepts and projects concerning capital market

Exert influence over initiatives that affect capital market

Integrate and consolidate actions to support entire capital market infrastructure

Eliminate inconsistencies and barriers limiting capital market growth

Coordinate and speed-up change processes

Improvement levers on infrastructure, demand and supply side

One of the tasks of the CMF, managed by the CMR, is to identify improvement levers and e.g.

Prepare a capital market development plan with detailed measures

Push for aligned actions of market players

Support the implementation of liquidity provision system

Support share-issue privatisation (e.g. telecom)

Investor education

Marketing to stimulate demand

Development of action plans

5.2 Capacity Building Support to BLSE and SASE

The BiH capital market infrastructure is heavily fragmented mainly based on the fact that due to

historic reasons two Exchanges, two Central Securities Depositories and two Securities Commissions

are operative. Even though both exchanges are very well managed and very reliable it can be said

that economies of scale can hardly be reached based on the market specifics. As it is currently not

feasible to consider a full integration and/or alignment of the capital market infrastructure, especially

of the two exchanges, we propose to support BLSE and SASE with focus on

Joint capital market information platform

Joint business development and marketing activities

Joint educational initiatives



Market harmonization

Stimulation of retail demand for domestic shares

Introduction of a liquidity provision system

Remote membership/cross-entity trading

The potential improvement levers were ranked based on

their potential capital market impact and

the estimated ease of implementation,

as shown in the graphic below.

© CAPMEX 2008

5.3 Build-up of a BiH and/or Regional Capital Market and

Corporate Governance Training Centre

Based on the feedback received during project implementation and the discussion at similar projects

in South East Europe it can be said that there is a great demand for capital market and corporate

governance education. Up-to-now Zagreb Stock Exchange tries to implement a capital market

training centre in Croatia, but no concerted efforts are made to leverage the outcomes by

implementing a regional capital market and corporate governance centre. It is proposed that the

World Bank Group takes here a leadership roles as capital market education is and will be a main

driver to restore investor confidence.



Annex A: List of Participants Workshop I – Banja Luka

Workshop I for Exchange Employees - BLSE

Date: 24.02.2009

Place: Banja Luka Stock Exchange

Participants:

1. Mr. Milan Bozic,

2. Mr. Darko Lakic,

3. Mr. Boris Tusinski,

4. Mr. Marko Stijak,

5. Mr. Igor Timarac,

6. Mr. Nebojsa Vukovic



Annex B: List of Participants Workshop I – Sarajevo

Workshop I for Exchange Employees - SASE

Date: 24.02.2009

Place: Sarajevo Stock Exchange

Participants:

1. Zlatan Dedid, General Manager

IT Department:

2. Tahir Taslaman

3. Aner Buco

Legal affairs:

4. Edin Šederovid

5. Nedim Mukid

Trading & Surveillance:

6. Almir Mirica

7. Goran Kahvedžid

8. Dino Bojid

9. Nejra Kadid

10. Sanja Perid



Annex C: List of Participants Workshop II – Banja Luka

Scanned copy of the participation list.

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Annex D: Programme Workshop II – Banja Luka

Time Topic

13.00 - 13.15 Welcome Address by Mr. Milan Bozic, CEO, BLSE

13.15 - 13.30 Financial Crisis and its potential effects on the economy

13.30 - 14.00 The BiH Country Index – Design, Management and Products

Q&A

14.00 – 14.20 Data Dissemination as Service for Investors and Liquidity Driver

Q&A

14.20 – 14.35 Break

14.35 – 15.00 Structured Products

Q&A

15.00 – 15.20 Investor Protection

App. 15.20 End of Workshop



Annex E: List of Participants Workshop II – Sarajevo

Scanned copy of the participation list.

List of Participants

Workshop at Sarajevo Stock Exchange - 11.03.2009

Name Organisation Signature

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Annex F: Programme Workshop II – Sarajevo

Time Topic

12.00-12.15 Welcome Address by Mr. Zlatan Dedic, CEO, SASE

12.15 – 12.40 Financial Crisis and its potential effects on the economy

12.40-13.20 The BiH Country Index – Design, Management and Products

Q&A

13.20 – 14.00 Structured Products

Q&A

14.00 – 14.20 Break

14.20 – 15.00 Data Dissemination as Service for Investors and Liquidity Driver

Q&A

15.00 – 15.20 Investor Protection

app. 15.20 End of Workshop



Annex G: Ranking of Stocks for BiH Country Index

Ranking by turnover (traded volume in Euro) and market capitalisation for the period February

2008 – January 2009

ExchangeCompany Sector

1 8SASEFabrika duhana Sarajevo dd Sarajevo 1,70 6,1% 154,112 2,2% Food, Beverage & Tobacco

2 11SASEBosnalijek d.d. Sarajevo 1,61 5,8% 113,346 1,6% Pharmaceuticals

3 28BLSERafinerija nafte a.d. Bosanski Brod 1,36 4,9% 31,539 0,4% Oil & Gas

4 2SASEBH Telecom d.d. Sarajevo 1,32 4,8% 1.273,034 18,1% Telecommunication

5 5BLSETelekom Srpske a.d. Banja Luka 1,22 4,4% 248,326 3,5% Telecommunication

6 12BLSENLB razvojna banka a.d. Banja Luka 1,10 4,0% 103,528 1,5% Banking

7 9SASEEnergoinvest d.d. Sarajevo 1,03 3,7% 135,655 1,9% Industrial Engineering & Machinery

8 19SASEABS BANKA D.D. Sarajevo 0,80 2,9% 48,649 0,7% Banking

9 22SASEHidrogradnja d.d. Sarajevo 0,79 2,9% 40,440 0,6% Construction

10 1SASEJP Elektroprivreda BIH dd Sarajevo 0,75 2,7% 1.704,586 24,3% Electric Utilities

11 31BLSEBirač a.d Zvornik 0,75 2,7% 25,680 0,4% Mining & Metals

12 34SASEEnergopetrol dd Sarajevo 0,67 2,4% 22,725 0,3% Oil & Gas

13 93SASEVranica d.d. Sarajevo 0,66 2,4% 4,002 0,1% Construction

14 40SASEIK Banka dd Zenica 0,63 2,3% 18,445 0,3% Banking

15 77SASESipad komerc dd Sarajevo 0,57 2,1% 5,709 0,1% Construction

16 25BLSERiTE Gacko a.d. Gacko 0,53 1,9% 38,791 0,6% Electric Utilities

18 51SASEIngram dd Srebrenik 0,47 1,7% 12,097 0,2% Construction Materials

17 55SASERudnik Zeljezne rude d.d. Vares 0,47 1,7% 10,951 0,2% Mining & Metals

19 3SASEJP Elektroprivreda HZHB Mostar 0,47 1,7% 579,087 8,2% Electric Utilities

20 39BLSERafinerija ulja a.d. Modriča 0,46 1,6% 19,840 0,3% Oil & Gas

21 57BLSEVitinka a.d. Kozluk 0,42 1,5% 10,455 0,1% Food, Beverage & Tobacco

22 14SASESarajevo osiguranje dd Sarajevo 0,42 1,5% 69,403 1,0% Insurance

23 59BLSEŽeljeznice RS a.d. Doboj 0,38 1,4% 9,642 0,1% Industrial Transportation

24 16SASESarajevska Pivara dd Sarajevo 0,38 1,4% 53,749 0,8% Food, Beverage & Tobacco

25 13BLSEUniCredit Bank a.d. Banja Luka 0,38 1,4% 85,979 1,2% Banking

26 42BLSEBobar banka a.d. Bijeljina 0,38 1,4% 16,333 0,2% Financial Services

27 27SASERudnik soli Tusanj dd Tuzla 0,37 1,3% 34,586 0,5% Mimning & Metals

32 88SASERMU Kamengrad dd Sanski Most 0,28 1,0% 4,336 0,1% Mining & Metals

28 24BLSEHidroelektrane na Trebišnjici a.d. Trebinje 0,34 1,2% 39,323 0,6% Electric Utilities

29 44SASEGP ZGP dd Sarajevo 0,32 1,2% 14,638 0,2% Construction

30 49SASESolana dd Tuzla 0,30 1,1% 12,534 0,2% Other Industrial Goods (Saline)

Ranking

TO / Cap

Capitalization

Ultimo Jan. 09

[mln EUR]

Average Turnover

Feb. 08 - Jan. 09

[mln EUR]

Rank Company Code Exchange Shares FFF RF Price Cap. BAM Cap. EUR Weight

1 Telekom Srpske a.d. Banja Luka TLKM-R-A BLSE 491.383.755 0,25 0,33 1,28 51.890.125 26.484.012 24,90%

2 BH Telecom d.d. Sarajevo BHTSR SASE 63.457.358 0,10 0,34 23,85 51.457.572 26.263.243 24,69%

3 JP Elektroprivreda BIH dd Sarajevo JPESR SASE 30.354.369 0,10 0,47 27,18 38.776.492 19.790.993 18,61%

4 Fabrika duhana Sarajevo dd Sarajevo FDSSR SASE 1.037.473 0,75 0,47 76,22 27.874.358 14.226.692 13,38%

5 Bosnalijek d.d. Sarajevo BSNLR SASE 5.843.276 0,75 0,47 13,24 27.271.153 13.918.825 13,09%

6 Rafinerija nafte a.d. Bosanski Brod RNAF-R-A BLSE 262.914.061 0,25 1,00 0,17 11.108.119 5.669.432 5,33%

208.377.819 106.353.197 100,00%

Simulation BATX - Bosnian Traded IndexClosing prices of March 06, 2009

Documents

Final Report - World Bank...market in BiH and promote stock market investments ... Therefore, the workshop was conducted twice, one time in Banja Luka and one time in Sarajevo. Each