Kazakhstan Tightens Entry Rules for the Financial Market
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Kazakhstan is introducing new admission rules for the financial market. Minimum rating requirements are being imposed on banks, insurance companies and their shareholders, and only ratings from S&P, Moody’s and Fitch will be taken into account, Orda.kz reports.
The Agency for Regulation and Development of the Financial Market has set minimum thresholds for key players, including banks, insurance companies and their shareholders. They must now have a rating of at least BBB on the international scale. For some players, including investment portfolio managers that do not manage pension assets and certain securities market participants, a lower threshold of B- will be allowed.
A BBB rating is the lower boundary of investment grade, meaning companies are considered to have acceptable reliability. A B- rating is lower and applies to riskier players whose stability depends more heavily on market conditions.
The new requirements apply to companies seeking to become major shareholders, open branches or establish subsidiaries in Kazakhstan.
At the same time, the regulator has fixed the list of agencies whose ratings will be recognized. It includes only three international companies: Standard & Poor’s, Moody’s and Fitch.
The document also provides for exceptions. The requirements may be softened for companies from countries with stable sovereign ratings, as well as for large public companies, provided their shares are traded on international exchanges, their capital exceeds $200 million, they are profitable, have sufficient liquidity and undergo audits in line with international standards. It is also allowed to use a previous rating for one more year if the agency itself has stopped assigning it.
Original author: Alexander Zhdanov
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