Kazakhstan stock exchanges merger on hold amid sanctions on Moscow Exchange - Kazakh regulator

ASTANA. July 12 (Interfax) - The planned merger between the Kazakhstan Stock Exchange (KASE) and Astana International Financial Centre Exchange (AIX) has been put on hold, said Timur Suleimenov, Governor of the National Bank of Kazakhstan.

"As for the merger of KASE and AIX, for certain reasons, as you know, one of KASE's shareholders, Moscow Exchange , has been sanctioned. Now, given that one of the shareholders is under sanctions, this merger is practically unachievable. Therefore, as long as this situation persists, the process has been put on hold," Suleimenov told a briefing on Friday.

"Currently, we cannot complete the merger or even consider it further due to the presence of a sanctioned shareholder in KASE," he said.

President Kassym-Jomart Tokayev, in his state of the nation address, proposed merging the two exchanges to streamline operations and bolster the domestic financial market's capacity and appeal.

"At the moment, there are two stock exchanges in Kazakhstan, which results in duplication of their functions and sometimes competition between them. Such situation in our financial system is rather redundant. I suggest mulling over a merger of these stock exchanges so that they should be under centralized management," Tokayev said.

The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) on June 12 imposed sanctions on Moscow Exchange, the National Clearing Center (NCC), and the National Depository. Moscow Exchange held 13.1% of KASE's issued shares as of June 1, 2024.

Both KASE and its Clearing Center continue to operate as usual, conducting trading, clearing and settlements according to standard regulations. However, KASE is exploring options such as negotiating the repurchase of shares from Moscow Exchange or selling them to third parties to address the current situation.

The Kazakhstan Stock Exchange (KASE), headquartered in Almaty, ranks second among CIS exchanges in terms of stock market capitalization. It was founded in 1993.

Astana International Exchange (AIX) was organized in 2017 as part of Astana International Financial Centre (AIFC), a territory with a special tax, currency, and visa regime in the capital of Kazakhstan, created to attract investment in the economy. Trading in securities on the AIX was launched on November 14, 2018. The shareholders of AIX are the AIFC, the Shanghai Stock Exchange, the Silk Road Fund and NASDAQ, which provides the AIX trading platform. The AIX offers special segments for mining companies and infrastructure projects under the Belt and Road initiative.