Via The Financial Times, an update on the continued development of the Mongolian Stock Exchange:

“…Mongolian yak butter futures, anyone?

This week the London Stock Exchange said it had agreed a “strategic partnership” with the Mongolian Stock Exchange.

The what?

Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world – one established only in 1991?

Actually yes. The LSE is, together with the Canadian exchanges operated by TMX Group, the biggest home to mining and energy company listings in the world.

And Mongolia has vast untapped reserves of coal, copper and gold, as investors and prospectors are realising. Mongolia is the latest frontier market du jour, as FT colleague Geoff Dyer explains in a piece this week reported from Ulan Bator.

A piece we ran in October had this headline: “Laugh if you like, but Mongolia is a serious play”.

Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment.

While this includes physical infrastructure in the form of roads and railways, financial infrastructure is also an important project of the technocratic, Beijing-educated government.

The prime minister has over the past year repeatedly stressed the need to deepen the capitalisation of the Mongolian Stock Exchange, in part through privatising state-owned assets and listing them on both the Hong Kong and the Mongolian exchange.

The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now. That includes a stock exchange that by global standards is third-rate today, although it does already have 358 company listings, according to Mondo Visione, which tracks these things.

D. Sugar, chairman of the Mongolian State Property Committee, which owns the Mongolian bourse, said the London exchange would help create “a new capital markets infrastructure worthy of Mongolia’s increasing significance on the world stage”.

The agreement provides for the usual technical assistance and advice. But it also stipulates, interestingly, that the LSE will “appoint a management team at the Mongolian Stock Exchange to oversee its development and privatisation”.

MillenniumIT, the Sri Lankan company that the LSE bought in 2009, is to provide trading technology and surveillance systems. So this looks quite involved.

In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto, the mining giant that is building a vast new copper mine in the country, as well as the many smaller miners who see Mongolia as the “next great frontier” of the industry.

And for the LSE, the obvious long-term goal is to attract Mongolian energy and mining companies to list in London.

Can it be long before we see yurts erected in Paternoster Square?