FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2012
KAZAKHSTAN STOCK EXCHANGE
During 2011 we have introduced several
projects in order to improve regulatory,
technical and technological frameworks.
Kadyrzhan Damitov
President
2011 was a productive year, full of
accomplishments in strategic development
and international cooperation. It was a
great honor for KASE to host 17th General
Assembly of FEAS in Almaty, and we believe
that it has considerably contributed to further
development and international recognition
of Kazakhstani financial market. We plan to
remain an active member of FEAS and continue
our cooperation with its member exchanges on
joint projects in the future.
During 2011 we have introduced several
projects in order to improve regulatory,
technical and technological frameworks, as set
out in KASE Development Strategy 2011-2013.
Among these are continuing modernization
of IT infrastructure, reaching international
HISTORY AND DEVELOPMENT
The major highlight of 2011 was the 17th
General Assembly of Federation of Euro-
Asian Stock Exchanges (FEAS) hosted by
KASE in Almaty. Within the framework of this
event, KASE also held First Meeting of Eurasia
Group on Corporate Governance for Capital
Market Development of the Organization for
Economic Co-operation and Development and
the marketing exhibition which were attended
by over 120 participants from 23 countries,
including 16 stock exchanges.
KASE has become a member of FEAS in 1997
and considering its active participation within
the organization was elected a member of its
Executive Committee in 2010. The decision to
conduct General Assembly in Almaty was made
in December 2010, during the 16th General
Assembly held in Istanbul.
Moreover, in regard to international cooperation,
KASE obtained an affiliate membership in the
South-Asian Federation of Exchanges, signed
Memorandums of Understanding (MOU) with
Korea Exchange, Istanbul Stock Exchange and
Tehran Exchange, aimed at further development
of capital markets in the respective countries
as well as Kazakhstan. Within the framework
of MOU signed with Korea Exchange, parties
commenced a joint consulting project aimed
at improvement of current regulatory and
infrastructural environment of KASE.
standards on stock exchange operations,
improving services, such as Direct Market
Access and remote membership, further
development of derivatives market, and many
others.
Being a part of a global financial market
KASE performance was affected by negative
tendencies in economy in 2011. KASE Index
has dropped by 37.5%, but at the same time
trading volumes remained approximately same,
with only 3% drop, totaling US$ 199.1 bn. The
reason behind this tendency is low industry
diversification and number of companies
included in KASE Index as well as moderate
level of market liquidity. In the same time,
although trading in shares slowed compared
KASE introduced T+0 gross settlement with
full prepayment scheme on stock market that
decreased a number of defaults to almost
zero. Also introduction of FIX-gateway allowed
external information systems to connect to
KASE trading system and this improved the
attractiveness of KASE to foreign investors.
KASE also worked on further development
of the derivatives market that was launched
in December 2010, by conducting various
regulatory and marketing activities, from
discussing issues with the regulators to
marketing presentations.
KASE became a part of Dow Jones FEAS Index
universe, by joining Dow Jones FEAS Titans 50
Equal Weighted Index, the first blue-chip index
derived from Euro-Asian stock exchanges, and
Dow Jones FEAS Composite Index.
With support of KASE a new professional
union was formed in Kazakhstan in 2011– the
Exchange Association of Kazakhstan (EAK)
that is aimed at uniting local exchanges’ efforts
towards development of organized trading in
Kazakhstan.
FUTURE OUTLOOK
In 2012 KASE is planning to work further on its
strategic development projects following the
successful implementation of some of the major
projects in 2011.
to 2010, trading volumes in corporate bonds
market have increased by 8.7%.
We are working with the Government of
Kazakhstan and regulator on the highly
anticipated People’s IPO program that should
commence in the middle of 2012 and we
believe that it will bring the necessary attractive
instruments on supply side that would boost
Kazakhstani financial market. We hope that
this government program will give momentum
to blue-chip companies towards IPO within
the next 2-3 years. It is likely that they will give
a good example of “going public” to other
companies in Kazakhstan in the future. We are
now working on the improvement of market
infrastructure to support this initiative.
The global scale of the 17th FEAS General
Assembly in Almaty helped KASE raise
awareness of some of the issues that global
markets face at the moment, propose changes,
and continue to extend its international
relationships with foreign fellow exchanges.
2011 was a starting point for a highly anticipated
People’s IPO program. This is an initiative of
the Government of Kazakhstan to conduct IPO
of companies that are a part of state-owned
“Sovereign Wealth Fund “Samruk-Kazyna”
JSC. It is planned that the first group of
companies will go public in the second half
of 2012. Through IPOs the Sovereign Wealth
Fund is planning to privatize approx. 5-15%
of these companies. KASE being one of its
major participants prioritized its medium- and
long-term projects to successfully support the
conduct of IPOs on Kazakhstani stock market.
In order to improve the information disclosure
of its listed companies KASE plans to introduce
electronic document management system
named “IS2IN” (“issuer to investor”). In the
short-term perspective KASE plans to create
an automated surveillance system in order to
prevent price manipulations and insider trading.
KASE continues its work on introduction of
Remote Membership to create favorable
conditions for non-residents of the Republic of
Kazakhstan to become members of KASE. In
the same time, Direct Market Access capability
is set to be introduced in 2012 to allow clients
of the members of KASE to access the KASE
trading system directly.
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