New Initiatives for the Development of Kazakhstan's Securities Market: Regulatory Changes and Modernization of the Central Depository, DKnews.kz reports.
Kazakhstan’s Financial Market on the Path to Transformation
On January 30, 2025, the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan (ARDFM) approved a resolution titled "Amendments and Additions to Certain Regulatory Legal Acts of the Republic of Kazakhstan on the Development of the Securities Market." These changes aim to improve the efficiency, transparency, and convenience of financial transactions while fostering further growth of Kazakhstan’s stock market.
Key reforms focus on several aspects: optimizing securities transaction registration, simplifying settlements, enhancing the Central Depository’s infrastructure, introducing the account operator institution, and expanding opportunities for working with foreign securities.
Let’s take a closer look at how these innovations will impact market participants and increase Kazakhstan's investment attractiveness.
Registering Transactions via Bloomberg and Reuters
One of the most significant changes is the expansion of transaction registration methods. From now on, transactions can be registered not only through traditional means but also via international trading platforms such as Bloomberg and Reuters. This is particularly crucial for improving the liquidity of Kazakhstan’s stock market and attracting foreign investors.
Why is this important?
- Faster transaction settlements – reducing administrative burdens for market participants.
- Lower operational risks and default probabilities – a more reliable trading environment.
- Greater liquidity for Kazakhstani securities on global markets – making them more attractive to international investors.
Previously, transactions conducted via Bloomberg required additional confirmation at the Central Depository, complicating settlement processes. Now, market participants can send instructions directly to the Central Depository through Bloomberg and Reuters, streamlining the entire process.
This initiative significantly enhances Kazakhstan’s competitiveness in the global capital market and simplifies access for foreign investors to local financial instruments.
The Central Depository as a Regional Settlement Hub
Another major initiative is the transformation of Kazakhstan’s Central Depository into a regional settlement hub. The resolution now allows the Central Depository to process settlements not only for the Kazakhstan Stock Exchange (KASE) but also for other stock exchanges and clearing organizations, including participants of the Astana International Financial Centre (AIFC) and foreign counterparties.
Key advantages of this transformation:
- Kazakhstan becomes a financial hub for securities transactions in Central Asia.
- The Central Depository can handle international transactions, offering seamless settlement services for financial institutions.
- Kazakhstan's integration into the global financial system is simplified, attracting new market participants and investments.
Developing this ecosystem will increase confidence in Kazakhstan’s financial market and facilitate cross-border transactions with both local and foreign financial instruments.
Introducing the Account Operator Institution
Inspired by global best practices, Kazakhstan is also introducing the account operator model, which is widely used in the EU, Turkey, Israel, and other advanced financial markets.
What is an account operator?
An account operator is a professional financial entity responsible for managing client accounts and sub-accounts in the Central Depository based on client instructions. This role is usually fulfilled by local custodian banks or specialized brokerage firms.
Benefits of the account operator model:
- Easier access for foreign investors – international brokers and banks can work with Kazakhstani assets through local operators.
- Adaptation to time zones and regulatory requirements – foreign participants won’t need to navigate the complexities of Kazakhstan’s legal system.
- Enhanced transparency and security – minimizing risks and simplifying transaction settlements.
The introduction of account operators will make Kazakhstan’s market more accessible to global investors and increase foreign capital inflows.
Expanding Services for U.S. Securities
Another major step forward is enhancing Kazakhstan’s Central Depository’s capabilities in servicing U.S. securities. In 2023, the depository opened an account with The Bank of New York Mellon (BNY) – one of the world's largest global custodians.
Key benefits of this initiative:
- Kazakhstani investors now have direct access to U.S. stocks and bonds without intermediaries.
- Transaction costs are reduced due to a simplified custody structure.
- Greater transparency and security for financial instruments.
Qualified Intermediary (QI) Status
To further improve services for U.S. securities, the Central Depository obtained Qualified Intermediary (QI) status from the U.S. Internal Revenue Service (IRS).
Why is QI status important?
- Lower tax rates on dividends and coupons from U.S. securities.
- Elimination of double taxation for investors.
- Simplified tax documentation process, reducing administrative burdens.
This initiative not only strengthens the Central Depository’s position as a regional financial center but also makes investing in U.S. assets more accessible and cost-effective for Kazakhstani investors.
Kazakhstan’s securities market is undergoing significant transformations in 2025. The regulatory changes introduced by ARDFM aim to:
✅ Simplify transaction registration via Bloomberg and Reuters.
✅ Expand the Central Depository’s international role as a regional settlement hub.
✅ Introduce the account operator model to facilitate foreign investments.
✅ Improve accessibility to U.S. securities with QI status and lower tax burdens.
These reforms create a more transparent, efficient, and secure capital market, making Kazakhstan a more attractive destination for both domestic and international investors.
With these advancements, Kazakhstan is well on its way to becoming a key financial hub in Central Asia, attracting global capital and driving economic growth.
