THE LETTER OF THE AGENCY OF THE REPUBLIC OF KAZAKHSTAN ON REGULATION AND SUPERVISION OF THE FINANCIAL MARKET AND THE FINANCIAL ORGANIZATIONS

of February 19, 2010 No. 05-03-23/293-3177

 Concerning single system of personal accounts

The agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations (further - the Agency) following the results of the meeting held in the Agency on January 21, 2010 with participation of representatives of the Agency, OYuL "Association of Financiers of Kazakhstan", JSC Central Securities Depository (further - the Central depositary) and the organizations, performing activities for maintaining system of registers of security holders (further - registrars), reports the following.

Concerning refusal of the Central depositary in reflection in single system of personal accounts (daleeesls) the transactions registered in systems of maintaining registers of security holders which maintaining is performed by registrars.

According to Items 32 and 33 of the Rules of implementation of activities of the Central depositary approved by the resolution of Board of the Agency of December 29, 2008 No. 238 (further - Rules of depository activity), reflection of security transaction in single system of personal accounts is performed by the Central depositary in day of receipt of the electronic order of the registrar by carrying out the corresponding transactions on personal accounts. The form of the electronic order of the registrar and procedure for its provision are established by the Set of rules of the Central depositary.

All changes entered by the registrar into the system of registers of security holders are subject to entering into single system of personal accounts in day of receipt of the electronic order of the registrar and are provided to the Central depositary according to the procedure, adopted by the Set of rules of the Central depositary.

According to Item 8 of Chapter 5 of the Set of rules of the Central depositary time of the beginning and the end of acceptance of orders of the registrar constitutes at least seven working hours during the day and is established "by Regulations of JSC Central Securities Depository which are provided to registrars for acquaintance in case of the conclusion of the Agreement.

Therefore, time of functioning of the software and hardware of the Central depositary supporting ESLS shall match time of functioning of programs of the registrars supporting systems of maintaining registers of security holders.

Item 35 of Rules of depository activity provides cases in case of which the Central depositary refuses reflection of security transaction and modification of single system of personal accounts. At the same time, the refusal in reflection because of receipt of the electronic order out of time of the acceptance of orders established by regulations of the Central depositary is not the reason for which the Central depositary has the right to refuse to the registrar reflection of the transactions transferred to them in ESLS.

Thus, the Central depositary needs to provide possibility of acceptance and processing of electronic orders of registrars in day of their obtaining taking into account completion dates of the orders provided by the current legislation of the Republic of Kazakhstan.

Concerning registration of transactions with the securities delivered in trust management.

According to Item 40 of Rules of maintaining system of registers of security holders, approved by the resolution of Board of the Agency of February 25, 2006 No. 62 (further - Rules), transfer of securities in trust management is performed by introduction on personal account of founders of trust management of record about the trustee which is performed based on the relevant counter orders on removal of record about the trustee given by the founder of trust management and the trustee and means agreement cancelation of trust management and the termination of powers of the trustee.

Thus, on personal account of the security holder the number of the securities delivered in trust management with indication of the name of the trustee is specified and, respectively, to the trustee the separate personal account on the securities delivered in trust management is not opened.

Subject to the foregoing we consider necessary to specify the provisions of the Set of rules of the Central depositary determining the procedure of reflection in ESLS of transactions by the securities delivered in trust management.

Concerning registration of security transactions in case of which acquisition according to the legislation of the Republic of Kazakhstan receipt of consent of authorized body on acquisition of the status of the large participant is required.

By the legislation of the Republic of Kazakhstan it is determined that any person independently or together with another (others) person (persons) cannot be the large member of the open-end accumulation pension fund, bank and insurance company without written consent of authorized body.

According to the subitem 5) of Item 54 of Rules the registrar within three calendar days from the moment of receipt of the order draws up written refusal with indication of the reasons of its non-execution if as a result of the conclusion of the transaction proceeding from the registers of security holders this systems of maintaining, requirements of the legislation of the Republic of Kazakhstan are violated.

Therefore, registrars have no right to perform registration of security transactions in system of registers as a result of which person, will own ten and more

(in the provided original the fragment of the text is absent)

insurance company without the corresponding consent of authorized body.

At the same time by the subitem 2) of Item 35 of Rules of depository activity it is determined that the Central depositary in day of receipt of the electronic order of the registrar refuses reflection of security transaction and modification of single system of personal accounts in the presence of data on discrepancy of the transaction to requirements of the legislation of the Republic of Kazakhstan.

Thus, the central depositary needs to provide in electronic orders on reflection of security transactions in ESLS as a result of which person will own ten and more percent of voting shares of bank, insurance company or the open-end accumulation pension fund obligatory specifying of details of the document confirming receipt of consent of authorized body to acquisition of the status of the large member of this financial organization. At the same time for the purpose of observance of requirements of the legislation of the Republic of Kazakhstan, regarding need of receipt of consent of authorized body to acquisition of the status of the large participant the central depositary needs to perform the corresponding reconciliation proceeding from the personal accounts and the received order of the registrar this single system and, respectively, in case of identification of this violation to refuse reflection of the transaction and to report about it in the Agency.

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