With rapid economic growth and highly attractive IPOs/ SPOs for investors in Central Asia and the EAEU, there is an increasing need for a liquid and efficient regional stock market. Therefore, the development of the capital market is one of the major and most significant priorities of the AIFC. The primary objective is to create a significant alternative to the banking system and to develop a liquid and well-balanced capital market with a broad range of financial instruments.
The Astana International Exchange is a regional platform for participants that attracts great financial inflows and connects the world’s leading market players in the East and West via its main partners – the Shanghai Stock Exchange, Nasdaq, Goldman Sachs, and Silk Road Fund. The AIX is a high-tech, innovative and efficient platform that provides services based on international standards, increases trading volume and revenue, as well as long- term expansion into new asset classes and revenue diversification.
The AIX’s main priority is to create a “familiar environment” for investors: a regulatory environment that is similar to other international jurisdictions, a technology platform with industry standard protocols that connects the AIX with the global investors and a group of brokers, which makes a link between domestic and foreign investors.
Nowadays, AIX has all the necessary components to function in full and conduct its first listings and IPOs, which AIX successfully demonstrated during the launch of trading for the national company Kazatomprom.
The development of the asset management market is integral to any successful financial centre, and the AIFC leverages its geographical position to provide international investors with access to markets in Central Asia. The AIFC opens opportunities for global and local private equity, as well as hedge funds and real estate funds to add diversity to their portfolios. Thus, localizing leading international asset management companies through the efficient use of Sovereign Funds along with strengthening internal expertise in the area, can
establish Nur-Sultan as the main regional centre for asset management and help boost the competitiveness of the Kazakh economy on the global market.
The AIFC has key advantages in acting as a regional centre for asset management. These include legislation based on common law principles, a favorable tax climate, independent currency regulation, access to Islamic and green finance, as well as economic and political stability.
The AIFC supports the development of the private banking sector along with the development of the asset management market. The Centre creates favourable opportunities for investments by wealthy individuals, and invites private equity and wealth management companies to open their offices in the AIFC. As private wealth management is globally experiencing a shift towards Asia, and as countries with developing economies are drawing more investments and fueling further wealth development, the AIFC aims at positioning Nur-Sultan as a main regional wealth management hub in Central Asia for the CIS, EAEU and other parts of Asia. The AIFC provides a favourable and reliable regulatory framework that is based on the positive experience of the world’s leading private equity management centres, that is leveraged on the positive global experience of the world’s leading wealth management centres such as Switzerland, Singapore, Luxembourg and the UAE. The extensive range of products and services (investment & portfolio consulting, tax & investment planning, asset allocation) are offered in accordance with the best modern practices in private capital management, via such structures as representatives, branches, affiliated companies, services for opening and maintaining accounts for local players.
With its modern infrastructure, flexible regulations, easy communication environment and legal transparency, the AIFC is well positioned to attract tech companies and become a regional FinTech hub with flexible regulation. The introduction and development of the relatively new FinTech aspect allows to reduce the cost of traditional financial services, facilitate an expanded integration with global markets and accelerate the development of the local financial system. Considering the transformations of the global financial system that uses innovative technologies, the AIFC has launched a number of initiatives that will help the region to seize the opportunities offered by FinTech. A legal regime has been launched by the AIFC to test new FinTech products in a light Regulatory Sandbox regime, along with a specialised regulatory environment (the FinTech Lab), which allows companies to offer their innovative financial services in a safe environment, without the full burden of regulatory requirements. The main objectives of the Regulatory Sandbox are to promote competition by removing unnecessary regulatory barriers to bring financial innovations to the market, ensure appropriate consumer protection safeguards, reduce potential risks in financial innovations by adapting existing risks, and to build a more efficient and stronger regulatory framework. Currently, the Astana Financial Services Authority has adopted the regulatory framework of the AIFC in the sphere of private electronic currencies (cryptocurrencies) and private placement of securities. However, in the near future it plans to introduce amendments into the AIFC Acts on the regulation of crowdfunding activities, which is aimed at providing access to alternative forms of financing for small and medium-sized businesses.
At the same time, the goals of the FinTech Lab are to simplify access to investments, create a legislative basis for new products/business models, eliminate ineffective legal norms, and ensure appropriate measures to protect consumers and investors. The FinTech Lab allows companies with licenses from foreign jurisdictions to test regional markets with a minimum amount of resources through step-by-step compliance with the AIFC regulatory requirements, and to test new unregulated financial services
Kazakhstan is an attractive platform for the development of Islamic finance in the region. The AIFC plans to become a regional Islamic finance hub for the countries of Central Asia and the CIS by providing a special infrastructure, legal and tax regime, as well as opportunities for professional development.
Working closely with the Asian Development Bank (ADB), the AIFC has created a favourable legal and regulatory environment for Islamic finance and banking, takaful and the Islamic capital market. For the further development of Islamic finance legislation, representatives of the AIFC joined the Technical Committee of the Islamic Financial Services Board (IFSB), as well as working groups on the development of IFSB standards. With the technical assistance of the Islamic Development Bank (IsDB), the AIFC is working on a Master Plan (Roadmap) of the development of Islamic finance in Kazakhstan.
To promote the AIFC as a regional hub of Islamic finance, the Advisory Council on Islamic Finance (ACIF) and the Central Shari’ah Advisory Board under the AIFC have been established. Their members are the best international experts in the field of Islamic finance. The AIFC is forming a fully-fledged market for Islamic finance. It has created the conditions for Islamic securities to be issued on the AIX: the issuance of corporate and sovereign Islamic securities (sukuk) are planned. The AIFC registered the first companies operating in the field of Islamic finance, including Islamic Bank, the Waqf Fund Investment Fund, Islamic FinTech organisations, as well as legal and consulting companies.
The AIFC facilitates the development of green finance by providing the necessary conditions and infrastructure, stimulating the transition to a green economy and sustainable development. The AIFC has developed a legislative base for green finance, including the Concept of the Green Financial System for Kazakhstan and the AIFC Strategy on leadership in green finance until 2025, which reflects the main institutional development stages of green finance at the AIFC. An important step was the development of the Rules for issuing green bonds on the AIX, which are based on the ICMA Green Bonds Principles and the Climate Bonds Initiative systematics, defining the criteria for green projects that can be financed through the issuance of green bonds, as well as the issue procedure itself. At the same time, the sectors of the economy in which the green projects described in these rules can be implemented are correlated with the provisions of the Concept on the transition of the Republic of Kazakhstan to a green economy. An example of the successful implementation of a green economy in countries with energy reserves similar to Kazakhstan is Norway, which is actively developing a green economy and is switching to clean technologies. In the long-term, the development of a sustainable economy is an economically viable action.