AFSA introduces enhancements to the AIFC Derivatives Framework
The Astana Financial Services Authority (AFSA) has introduced enhancements to the Derivatives[1] framework in the Astana International Financial Centre (AIFC). The enhancements, grounded in benchmarking on the best practices and the analysis of feedback received from the market, offers some refinements to the framework and introduces enhancements to conduct requirements for Derivatives transactions.
The amendments aim to establish a clear regulatory framework for Derivatives traded on Authorised Market Institutions[2] and Multilateral/Organised Trading Facilities (MTF/OTF)[3], ensuring effective pricing, settlement and operations, applying market conduct requirements from the AIFC Market Rules, and prohibiting Market Manipulation and Market Sounding.
Given the elevated risks associated with Derivatives operations, the framework establishes the following conduct requirements to protect Clients in Derivatives transactions:
- Requiring risk warning on marketing and other communications to ensure Clients are aware of the high risks associated with Derivatives transactions;
- Mandating additional disclosures in the key features document to ensure Clients understand the nature, risks, and essential characteristics of Derivative instruments and operations. This information, along with a risk warning, must be included in the key features document provided to Clients, enabling them to make an informed decision about proceeding with the service;
- Setting limits on Derivatives operations to mitigate risk exposure.
In response to the possibility of regulatory arbitrage involving Digital Assets Derivatives, the framework implements amendments aimed to ensure that the regulation of Digital Assets Derivatives aligns proportionally with the Derivatives framework.
The introduced enhancements to the Derivatives framework are applicable to both new applicants and existing Authorised Persons falling under the scope of this regime.
The commencement date is 1 January 2025.
The relevant amendments to the AIFC Market Rules, AIFC Glossary, AIFC Authorised Market Institution Rules, AIFC Multilateral and Organised Trading Facilities Rules, AIFC Conduct of Business Rules, AIFC Rules on Digital Asset Activities, AIFC General Rules are published on the AIFC website.
Reference:
The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.
Over 3,500 firms from over 80 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz
The Astana International Financial Centre (AIFC) is an independent jurisdiction with a favourable legal and regulatory environment and a developed infrastructure for starting and doing business, attracting investment, creating jobs and developing Kazakhstan’s economy. https://aifc.kz/
Contact information:
Public Relations and Communications Division of AFSA: +7 (717) 264 73 43; +7 7172 61-37-45 email: [email protected]
[1] Derivatives are financial instruments that derive their value from an underlying asset, index, rate, or financial instrument. This definition is provided for general understanding, while the official definition can be found in the AIFC Glossary.
[2] Authorised Market Institution is a Centre Participant which has been licensed by AFSA to carry on one or more Market Activities.
[3] Multilateral or Organised Trading Facility is an alternative trading venue that facilitates the exchange of financial instruments between multiple parties. This definition is provided for general understanding, while the official definition can be found in the AIFC Glossary.
