The Agency for Regulation and Development of the Financial Market (ARDFM) is proposing a ban on unqualified investors buying risky financial products like structured notes, according to a draft resolution published on the Legalacts.egov.kz portal. The draft will be open for public comments until Dec. 6.
An investor is considered qualified if he has a higher education in finance, economics, mathematics or information technologies, or possesses at least one international certification, such as Chartered Financial Analyst (CFA), Certified International Investment Analyst (CIIA), Financial Risk Manager (FRM) or other certificates confirming expertise in the financial markets.
To apply for recognition as a qualified investor, an individual must have at least three years of work experience in fields related to financial instrument transactions. Qualified investors must also have funds totaling more than 8,500 monthly calculation indices (1 MCI = KZT 3,692 or $7.9, USD1 = KZT498.34 as of Nov. 25).
A person can be recognized as a qualified investor only after completing 50 transactions with securities or other financial instruments on the securities market or stock exchanges, continuously for one year after applying for recognition.
Only brokers or dealers who have obtained a license from the ARDFM can recognize an investor as qualified. The agency introduced the concepts of qualified and non-qualified investors on Oct. 26, 2022.
Additionally, the agency has decided to:
- Prohibit the replenishment of bank accounts and/or the withdrawal of funds from the bank accounts of clients (legal entities) at the expense of and/or to the accounts of third parties.
- Require the executive bodies of dealers and brokers to approve advertising and marketing materials.
- Mandate that brokers pay money to non-qualified investors within 14 days if they have made transactions with instruments intended for qualified investors.
- Require brokers, dealers and managers to notify the regulator within five days if they, their shareholders or executives and employees are being criminally prosecuted.
