Kazakhstans financial sector regulation: achievements and challenges Deputy Chairperson

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Kazakhstans financial sector regulation
achievements and challenges

Deputy Chairperson

Bakhmutova YelenaLondon, January
2007
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Overview

• Development of Kazakhstans financial sector
• Regulation of Kazakhstans financial sector
• Transparency of Kazakhstans financial
  institutions and impact on impending IPOs
• Taxation issues

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• Development of Kazakhstans financial sector

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Main indicators of the banking sector
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Main indicators of the insurance sector (USD mln.)
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Institutional infrastructure of the securities
market
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Issuers and issues of securities
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KASE Official List
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Accumulative Pension System of the Republic of
Kazakhstan
Calculated on a 12-month basis Calculated
on a 36-month basis
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Regulation of Kazakhstans financial sector
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• January 1, 2004 establishment of the
  Agency of the Republic of Kazakhstan on
  Regulation and Supervision of the Financial
  Market and Financial Organisations
• Banking Sector
• Legislative base of the banking system regulation
  was formed
• The transition program of commercial banks to IAS
  finished
• Consolidated supervision was introduced
• Development of risk-management system
• Transition to Basel II.

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• Insurance sector
• Insurance legislation taking into account the
  modern trends of international insurance market
  was formed
• Implementation of distance supervision system and
  analysis of professional participants of
  insurance market activity
• Improvement of insurance organisations
  prudential regulation
• Risk-management system development.

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• Securities market
• Legislative base of securities market regulation
  was formed
• Law on Investment funds
• Law on Securitization
• Law on Concessions
• A draft law on the issues of protection of
  minority investors rights was developed
• Implementation and development of Corporate
  Governance Principles
• Establishment of Regional Financial Centre of
  Almaty.

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• Pension Sector
• Expansion of financial instruments list for
  pension assets investment
• Increase of responsibility of pension assets
  managers on provision of APF pension assets
  yield
• Improvement of risk-management system.

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Transparency of Kazakhstans financial
institutions and impact on impending IPOs
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• Amendments to legislation on issues of licensing
  and consolidated supervision were approved, which
  allow effective supervision on the consolidated
  basis
• 17 commercial banks have signed the Cooperation
  and Interaction Memorandum on issues of
  transparency increase of banks activities
  overseeing the disclosure of the following
  information by banks
• - about real owners of banks
• - about list of organisations,
  controlled by banks
• - about affiliates of the banks and
  deals conducted with them
• - about business development strategy
  of banks.
• Corporate Governance Code based on OECD corporate
  governance principles was implemented by issuers
• Forming of legislative base for the development
  of IPO.

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• Taxation issues

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• Tax exemptions
• Turnovers of financial services sales.
• Interest from deposits in banks and organisations
  executing certain types of banking operations
  and interest from debt securities, paid out to
  individuals.
• Operations with government securities and
  interest from them.
• Banks and organisations executing certain types
  of banking operations can deduct the expenses of
  provisions (reserves) against doubtful and bad
  assets and also conditional liabilities.

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Concept of Kazakhstans financial sector
development untill 2012

• Main priorities
• Increase of stability in the financial sector and
  its institutes
• Increase of quality of financial sector services
  and their availability
• Forming of liquid stock market and its
  components
• Improvement of financial sector regulation
  standards
• Liberalisation of financial sector in order to
  increase market competition.

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Thank you for your attention!