The Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market has developed and piloted a new Supervisory Assessment Model for professional securities market participants.

The new model is designed to further advance risk-based supervision and enhance the effectiveness of supervisory assessments by placing greater emphasis on investor protection and the quality of corporate governance.

The need to refine supervisory approaches reflects the ongoing development of Kazakhstan’s securities market, the expansion of the client base of licensed securities market participants, and the growing importance of conduct-related risks and factors. The Agency’s supervisory expectations are aimed at identifying emerging vulnerabilities at an earlier stage, enabling targeted supervisory intervention, and strengthening market stability through a more robust and comprehensive risk assessment framework.

The methodological foundation of the model is based on internationally recognized standards, including the Principles of IOSCO, as well as supervisory approaches adopted by international regulators (ESMA, FCA, etc.), adapted to the specific characteristics of Kazakhstan’s securities market. The assessment is conducted across four core supervisory areas: Investor Protection; Corporate Governance; Business Model Analysis; Data and Asset Protection. Based on the assessment results, each licensed securities market participant is assigned a supervisory rating, which serves as the basis for supervisory planning, supervisory measures, and proposals aimed at further enhancing the regulatory framework.

The pilot implementation of the model identified a number of areas requiring further development within market participants’ practices. In particular, investor profiling frameworks need to be established, to ensure that financial products offered to clients are appropriate to their investment objectives, experience and risk profile. Transaction monitoring mechanisms to identify potential indicators of market manipulation and other forms of market abuse are necessary to be developed, which are essential for maintaining market integrity and resilience. The Boards of Directors are not consistently engaged in strategic decision-making, risk oversight and internal control processes, which may increase the risk of conflicts of interest.

The development of the model forms part of the Agency’s broader program aimed at strengthening conduct supervision across the financial sector. Following completion of the pilot project, the Agency has developed an internal supervisory framework and guidance for conducting supervisory assessments under the new model.

This year, the Agency intends to extend the supervisory assessment framework across the securities market, including major brokers, dealers and investment portfolio managers. The methodology will be further calibrated, where necessary, based on additional supervisory observations.

The key elements of the new supervisory model will also be aligned with, and reflected in, the Securities Market Development Program through 2030 and the forthcoming Capital Markets Law. This will contribute to greater transparency, resilience and effectiveness of regulation, while further strengthening the protection of investors’ rights and legitimate interests.

 External Communications Office

press@finreg.kz

Source : https://www.gov.kz/memleket/entities/ardfm/press/news/details/1246786?lang=ru