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In a move to restrict the influx of funds into Kazakhstan, and into the domestic property market in particular, the Kazakh Parliament has recently approved a number of changes to the legislation governing the securities market.

In late 2004 the Kazakhstan government adopted a number of regulations setting forth basic investment rules and limits for investment funds to supplement the new Law on Investment Funds. Among other things, it identifies the investment instruments in which funds that are not created as 'risk funds' may invest.

The Central Depository, which registers transactions and holds securities traded on the Kazakhstan Stock Exchange as a nominal holder, has opened an account with Clearstream Banking Luxembourg to facilitate the accounting of securities and funds of the depository's clients. This long-awaited link with global markets should simplify cross-border securities trading.

In an unexpected move, the National Bank of Kazakhstan has effectively prohibited the investment of pension assets in debt securities issued by special purpose vehicles (SPVs) owned by Kazakhstan companies, unless such SPVs meet minimum rating requirements identical to those applicable to the securities of other foreign issuers. New rules on depositary receipts have also been approved.

The new Securities Market Law regulates the issue, placement, circulation and redemption of securities and other financial instruments. The law aims to ensure the efficient operation of the securities markets, protect the interests of investors and safeguard competition. Meanwhile, new rules have been introduced on the management of securities portfolios.

New resolutions issued by the National Bank of Kazakhstan have established rules for evaluating the financial viability and stability of brokers, dealers and securities registrars. The bank has also established new reporting requirements to increase transparency and efficiency in securities market operations.

A new regulation sets out the rules for the issue, placement, circulation, repayment and servicing of mid-term foreign currency-denominated state securities issued by municipal executive authorities. The list of securities in which pension funds may invest has also been expanded.

Recent National Securities Commission regulations of interest to securities market players include new reporting requirements for pension funds and rules on the assignment of national identification numbers to state securities.

The National Securities Commission has issued regulations on the placement of international bonds on the Kazakh securities market, and has introduced a standard method for writing off securities in investment accounts. The National Bank of Kazakhstan's authority to deal with securities and derivatives has also been increased.

The National Securities Commission recently adopted several new acts aimed at protecting the rights and legally protected interests of investors in the securities market and of fund depositors. They include regulations on second-tier banking activities and pension funds.

The government and the National Securities Commission have adopted a number of new resolutions relating to additional share issuances made by joint stock companies, hard currency-denominated Treasury bills, pension funds and government borrowing. This update has the details.

Over the past 12 months the National Securities Commission of the Republic of Kazakhstan has continued to enact regulations for the further development and implementation of the legal framework that governs securities and the securities market. This update outlines the most important of these.