AIFC executive comments on the merging of two exchanges in Kazakhstan

Renat Bekturov, the executive partner of the Astana International Financial Center (AIFC), the key jurisdiction for the Astana International Exchange (AIX), has revealed details of the process of merging the Kazakhstan Stock Exchange (KASE) and AIX initiated by President Kassym-Jomart Tokayev.

He also spoke about the presence of the Moscow Exchange on the list of shareholders of AIX.

«The final decision is yet to be made. Currently, we are discussing issues related to merging our liquidity: what will it look like; whether the legal form will change and if so, how will it change? Once we have answers to these questions, we will negotiate with the current shareholders because we don’t know whether they will decide to stay as shareholders and what a new structure will look like. We are going to discuss these questions,» Bekturov noted.

President Tokayev announced the idea of merging KASE and AIX during his address to the nation on September 1. He argued that Kazakhstan’s market is too small for the two exchanges. Moreover, KASE and AIX often duplicate each other’s functions, Tokayev said.

Later, Madina Abylkassymova, head of the Agency for Regulation and Development of the Financial Market (ARDFM), revealed several scenarios of the possible merging and ruled out the scenario of AIX taking over KASE.

«KASE is a big platform. In terms of the amount of transactions, liquidity and traded stocks, it is much bigger than AIX. However, AIX has an advantage as its operation is based on English law. Now, we are going to find the best option for the move… But KASE is the local stock exchange and this won’t change,» she said.

While talking about the merger, Abylkassymova cited the Qatar Financial Center (QFC) which combines 50 public and private companies. The QFC is working on establishing an ecosystem friendly to businesses and may be a good example for the merging of KASE and AIX.

Elena Bakhmutova from the Association of Financiers of Kazakhstan also believes that KASE should be the core platform for any merger because it accounts for the vast majority of liquidity in the market.

Apart from KASE and AIX, established in 1993 and 2007, respectively, there is a third exchange called ITS. This platform has been working since this summer and is registered with AIFC. ITS specializes in trading with shares and depository receipts of large foreign companies, including those going public. In September, the exchange offered access to shares of Arm Holdings, the British chip producer, Instacart, the U.S. food delivery service and Klaviyo, an internet marketing company. All these stocks were available for investors in Kazakhstan through Freedom Broker.