FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2013
KAZAKHSTAN STOCK EXCHANGE
KASE has completed several main projects
in 2012 on its way to improvement and
development of infrastructure, as well as
the expansion of local market.
Kadyrzhan Damitov
President
2012 has been a successful year for
Kazakhstan Stock Exchange in terms of
fulfillment of scheduled projects. Within
the implementation and enacting main
projects in 2012 KASE collaborated with its
members, issuers, investors through different
activities and continues working actively on
establishment of bilateral and multilateral
relations with foreign exchanges, international
associations and financial institutions.
Regarding the local projects of 2012, KASE
worked on the alignment with the requirements
of the new Law on Risk Minimization, which
defined amendments to the existing legislation
aimed at the major objectives such as the
increase transparency of the stock exchange
issuers and members activity, protection the
rights and interests of investors, improvement
of securities market infrastructure. During
the working process KASE had to change its
organizational structure and internal normative
base. The reform process turned out to be quite
labor-intensive and affected all the divisions of
KASE. One of the main projects in alignment
with the requirements of the new law on risk
minimization is a new monitoring system of
KASE members - their financial strength and
solvency are under continuous control. There
is a big volume of open data necessary for
investors seeking a partner on Kazakhstan’s
financial market on KASE website.
Following the announcement by the
Kazakhstani President in September 2011
the Government of Kazakhstan approved the
Program aimed at partial privatization of the
Sovereign Welfare Fund’s “Samruk-Kazyna”
subsidiary blue-chip companies on KASE to
enable Kazakhstani citizens to buy shares.
The first IPO within the program was launched
in November 2012 with KazTransOil (an oil
transportation and pipelines company) as the
first company to go public.
With the announcement of the program the
amount of retail investors’ accounts increased
five times and it keeps growing very rapidly.
Over 34 thousand retail investors and 10
accumulative pension funds of Kazakhstan took
part in the subscription to shares organized by
financial advisors and KASE. The combined
demand for those shares exceeded the supply
more than twice.
Upon completion of the subscription to
KazTransOil KASE successfully accomplished
its role as trade organizer in the first stage
of the nationwide program “People’s IPO”.
The secondary market trading of KazTransOil
shares on KASE remains active. Since the
secondary market trading was launched on
December 25, 2012 to the end of 2012 the
trading volume has exceeded US$19 m,
which is a very significant trading volume for
Kazakhstani equities. As of the end of 2012 the
price of KazTransOil shares increased by more
than 14% followed by an insignificant decrease
of 2% in January and February of 2013.
KASE’s primary role aside from participation
in working groups on the IPO process is
book-running. For this reason, the exchange
developed a special module in the Trading
System to collect applications from the market
participants, consolidate, process, generate
reports and execute other functions related
to performing the subscription. KASE also
acknowledged that sudden significant increase
in number of investors on the market and
trading activity may require additional capacity
for the existing trading system and introduced
changes to increase its capacity by 20-30%.
Last year KASE worked on introduction of
new derivative products launching futures on
most liquid shares. In addition, KASE received
a license for clearing operations allowing
it to clear deals on the exchange market.
Elaboration of the Remote Access and DMA
concepts, as well as development of the T+3
settlement cycle project realization scheme also
took place in 2012.
All the above-mentioned local projects
required development of the IT systems
including upgrade of the trading system and
introduction of new modules and programs.
IS2IN - an electronic system for exchange
of electronic documents and provision of
information about issuer to the investor was
established, along with the new trading method
“Subscription” introduced especially for the
People’s IPO program. There were additional
IT-developments related to DMA and Remote
access introduction.
Concerning the overall stock market indicators,
following a drop of KASE index in 2012 by
about 12.3% due to adverse conjuncture in the
face of continuing instability on global markets,
as well as by some issues in Kazakhstani bank
sector and the harsh drop of one of the leading
companies share price, in the beginning of
2013 KASE index has increased by 12-15%
mainly due to increase in price of newly listed
securities (KazTransOil and KCell) that became
a part of the index due to their high liquidity.
KASE is one of the key players in the capital
market development process. Aside from the
fact that the stock exchange plays an important
policy role in defining listing and compliance
standards for companies that wish to go
public, the performance of a national stock
exchange often taken as a proxy for the health
of a nation’s economy. Thus, improvement of
KASE performance and enhancement of its
self-regulatory functions is an important policy
goal focused at strengthening key partners
and uniting efforts in favor of the capital market
development.
We continue to collaborate with international
and internal financial institutions to improve
KASE infrastructure and participate in global
economic events to gradually gain worldwide
recognition. In 2012 KASE signed an agreement
with Wiener Boerse AG on joint calculation and
promotion of Kazakhstani securities market
indicators. One of the important projects
planned for 2013 is full membership at the
World Federation of Exchanges. KASE has
already submitted the letter of intent, which was
reviewed by WFE Board of Directors, and is
preparing for successful implementation of the
WFE accession procedure.
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