Kazakhstan to strengthen state control over commodity exchanges

The draft law on exchange trading, developed in fulfillment of the instructions of the Head of State, provides for the formation of transparent market pricing in Kazakhstan. This was announced by Minister of Trade and Integration Arman Shakkaliyev at the Government session. 

The draft law was developed by the Ministry of Trade and Integration together with the parliamentary corps, its presentation was recently held on the platform of AMANAT party. The document is aimed at solving three key tasks:

  • toughening regulatory requirements for exchanges and strengthening state control;
  • elimination of circumvention of procurement procedures of subsoil users;
  • ensuring access of domestic producers to transparent trading instruments. 

Thus, commodity exchanges are proposed to be excluded from the category of small and micro-business entities. The Minister explained that in the Kazakh market now there are 10 of them, 9 are subjects of micro-business and one is a small business. At the same time, the annual turnover of exchange transactions exceeds one trillion tenge. According to the results of 2022, this volume exceeded 2.5 trillion tenge, and for 10 months of this year - 1.6 trillion tenge.

The bill also provides for increasing the financial stability of commodity exchanges. The size of the authorized capital will be 600 thousand MRP, which is about two billion tenge. Guarantee fund - 100 thousand MRP.

"Today businesses have problems in entering commodity exchanges. Barriers are also created on participation of entrepreneurs in specific transactions. Entry and participation fees range from 250 thousand to 95 million tenge. Naturally, these are unaffordable expenses for the majority. Therefore, we are considering the establishment of a single maximum amount of contributions and payments for participation in tenders. We will approach this issue differentiated. The main participants of trades - brokers and clearing centers - we propose to include in the category of subjects of financial monitoring," Shakkaliyev noted.

The Ministry of Trade and Integration is currently forming a list of exchange commodities, from which it intends to single out socially important ones. These are coal, wheat, oil products and a number of food products. Given their important role in ensuring energy and food security, trade in these categories will be carried out only on those commodity exchanges, which will be included in the special list. 

"The list of commodity exchanges itself will be determined by a decision of the Government on a competitive basis. This will allow to ensure transparent pricing, as well as to track commodity flows both within the country and in foreign economic activity," the Minister said.

At the Government session A. Shakkaliev also told about the developed measures that will stimulate business to bring their products to commodity exchanges. For domestic producers of goods it is the application of the offset method of VAT payment, for national exporters - the introduction of a simplified procedure for VAT refund (up to 5 days). Also, together with the KTZ, it is envisaged to revise railroad tariffs for logistics in case of an exchange transaction.

The bill provides for the exclusion of the possibility of circumvention of public procurement through commodity exchanges (it is more than 40 billion tenge annually). By analogy with public procurement, Kazakhstan will introduce a register of unscrupulous participants of exchange trades. There are also amendments aimed at banning the use of automated accelerated application technology. For dominating market subjects it is proposed to limit the entry to the auction through intermediaries and to fix the status of dealer for them. Procurement of subsoil users intends to transfer to specialized electronic trading platforms synchronized with the register of goods, works and services NADLOC. 

"This is the current method of procurement. There is a legislative base, but subsoil users have not used it for many years. At the same time, for free access to electronic platforms, we propose to exclude fees and contributions for domestic producers," the head of the department noted. 

Among the announced innovations there is also a revision of requirements for compliance with commercial secrecy on the exchange. That is, all information on participants and transactions will be published in the public domain. Arman Shakkaliev emphasized that the draft law reflects all the tasks set by the Head of State.

"Exchange trading should act as an important driver of growth of trade, economy and domestic production. The key result will be the formation of transparent market pricing and enhanced control over cash flows of its participants," the Minister summarized.

#Government session #Legislations #Ministry of Trade and Integration

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