Kazakhstan opens international liquidity hub for trading in global securities

Photo by Askar Akhmetullin

Astana International Financial Center is going to host a new international trading platform called ITS. Once the registration process is completed, the platform will start working as a bridge between local investors and stocks of big global companies. ITS is going to provide investors with an opportunity to trade for 16 hours a day and guarantee that trades will be executed at the best international prices.

It is expected that ITS will operate along with KASE and AIX as an additional trading platform, not a new stock exchange. ITS is a multilateral trading facility (MTF) that doesn’t support initial public offerings, unlike classic stock exchanges. MTF digital platforms have been working in the European Union for years providing trades of thousands of financial instruments from all over the world.

«We are set to turn ITS into a global liquidity and tech hub in order to assist Kazakhstani and other investors’ trade in a wide range of global investment products. We hope that the platform will be a new center of attraction for international investors and will facilitate the development of IT and financial technologies both in Kazakhstan and the Central Asian region,» Chingiz Kanapyanov, ITS chairman highlighted.

At the initial stage, ITS will offer access to trading in more than 2,000 popular securities, including stocks of various companies from the U.S., Europe and Asia, depositary receipts and international ETF funds listed in the U.S. and Hong Kong. ITS plans to expand its offer to investors at the expense of securities from the U.K. and Germany, and the U.S. The platform also plans to launch its own market indexes, including an index with Kazakhstani and international stocks. According to ITS, these securities will provide investors with access to various business spheres and global industries.

It is expected that investors will be able to trade for 16 hours a day (from 11.00 am to 03.00 am, Astana time), five days a week which is enough to work with key stock exchanges from Asia, Europe and America. Investors are going to be happy with this work schedule, especially when primary markets are closed. For investors, this difference in opening hours means better risk management and the opportunity to adjust their portfolios if something happens in the corporate world or global economy.

Professional participants registered at AIFC such as brokerage companies and banks are going to be direct clients of ITS which will fully comply with Kazakhstan’s legislation and international restrictions imposed by countries and jurisdictions.

It is expected that about 15 brokerage companies will be plugged in with ITS within the first six months. They are set to facilitate retail investors and companies to execute their investment strategies at ITS.

The key difference between ITS and the current stock exchanges in Kazakhstan is the way ITS is going to secure trade and liquidity. The platform is going to use the Smart Order Routing technology that processes investors’ orders according to the principle of Best Execution. ITS will provide investors with access to the liquidity of international markets and by doing this will secure the execution of trades at the best global prices. The system will automatically find the best price on either ITS or an international platform. In addition, ITS technologies will guarantee the best execution of investors’ orders whether they small or big. With the help of Smart Order Routing and Best Execution technologies, ITS investors will have access to all liquidity of the global stock market regardless of how many brokers work with the platform. ITS also expects that banks and brokers from Armenia, Georgia, Azerbaijan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkey will take part in trades on the platform.

Given that the new platform is going to offer a wide range of securities, investors will be able to diversify their portfolios, improve their risk management systems and execute trading ideas regardless of market conjuncture.

«At the end of the day, the launch of trades on ITS will stimulate demand for Kazakhstan’s securities and raise interest in investments more generally. As a result, it will promote the development of the entire brokerage industry in Kazakhstan,» Sentran Securities Board Chairman Talgat Kamarov said.

What is going to be on sale on ITS: Stocks and depositary receipts listed in the U.S.

Stocks by Tesla, NVIDIA, Apple, Coinbase, Advanced Micro Devices, Amazon, Microsoft, Netflix, Carnival, Moderna, Qualcomm, NVIDIA, MicroStrategy, Virgin Galactic, Block, etc.

American depositary receipts by companies from the U.K. (AstraZeneca, Endava, Rio Tinto and Shell), Switzerland (Novartis), Finland (Nokia), Germany (BioNTech and SAP), Brazil (Nubank, Vale and Natura & Co Holding), Belgium (Anheuser-Busch InBev), India (Dr. Reddy’s Laboratories), Japan (Sony, Toyota Motor and Takeda Pharmaceutical), South Korea (LG Display, SK Telecom and Korea Electric Power Corp), etc.

Chinese stocks

Chinese companies’ stocks traded on ITS are listed on the Hong Kong Stock Exchange (HKEX), for example, Alibaba, JD.com, Xiaomi, Li Auto Inc., XPeng Inc., Baidu, Inc., Tencent, Country Garden Holdings, Meituan, WH Group and Sino Biopharmaceutical.

International ETFs

International ETFs are represented by the different funds with their unique investment strategies:

–         Global equity funds (Vanguard Total International Stock ETF and Vanguard FTSE All-World ex-US ETF);

–         U.S. equity funds (SPDR S&P 500 ETF Trust and iShares Core S&P 500 ETF);

–         Developed markets equity funds (Vanguard FTSE Developed Markets ETF and iShares Core MSCI EAFE ETF);

–         Emerging markets equity funds (Vanguard FTSE Emerging Markets ETF and iShares Core MSCI Emerging Markets ETF);

–         U.S. bond market funds (iShares Core U.S. Aggregate Bond ETF and Vanguard Short-Term Corporate Bond ETF);

–         Emerging markets bond funds (iShares JP Morgan USD Emerging Markets Bond ETF), and

–         Commodity funds (SPDR Gold Trust and iShares Silver Trust).

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