RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of August 24, 2012 No. 278

About modification and amendments in the resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations of September 26, 2009 No. 209 "About approval of the Instruction about requirements for availability of risk management system for the organizations performing broker and dealer activities in the security market, activities for management of investment portfolio"

For the purpose of enhancement of regulatory legal acts of the Republic of Kazakhstan the Board of National Bank of the Republic of Kazakhstan DECIDES:

1. Bring in the resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations of September 26, 2009 No. 209 "About approval of the Instruction about requirements for availability of risk management system for the organizations performing broker and dealer activities in the security market, activities for management of investment portfolio" (registered in the Register of state registration of regulatory legal acts at No. 5844) the following changes and amendments:

state the name in the following edition:

"About approval of Rules of forming of risk management system and internal control for the organizations performing broker and dealer activities in the security market, activities for management of investment portfolio";

state Item 1 in the following edition:

"1. Approve the enclosed Rules of forming of risk management system and internal control for the organizations performing broker and dealer activities in the security market, activities for management of investment portfolio";

state item 4 in the following edition:

"4. To the organizations performing broker and dealer activities and activities for management of investment portfolio till March 29, 2010 to bring the internal documents and the used software and hardware into compliance with requirements of the Rules approved by this resolution.";

in the Instruction about requirements for availability of the risk management system for the organizations performing broker and dealer activities in the security market, activities for management of investment portfolio approved by the specified resolution:

state the name in the following edition:

"Rules of forming of risk management system and internal control for the organizations performing broker and dealer activities in the security market, activities for management of investment portfolio";

state preamble in the following edition:

"Rules of forming of risk management system for the organizations performing broker and dealer activities in the security market, activities for management of investment portfolio (further - Rules) are developed according to the laws of the Republic of Kazakhstan of July 2, 2003 "About the security market" (further - the Law on the security market) and of July 4, 2003 "About state regulation, control and supervision of the financial market and the financial organizations" and establish procedure for forming of risk management system and internal control for the organizations having the license of the state body performing regulation, control and supervision of the financial market and the financial organizations (further - authorized body), on implementation of broker and dealer activities (further - the Broker and (or) the dealer), activities for management of investment portfolio (further - the Managing director), requirements to availability of risk management systems.

The procedure for forming of risk management system for the organizations performing broker and dealer activities in the security market, activities for management of investment portfolio includes the following:

1) basic requirements to availability of risk management system;

2) requirements to internal documents of the Broker and (or) dealer and Managing director;

3) requirements to the organization of activities for asset management of clients, accepted in investment management, and own assets of the Broker and (or) dealer and Managing director;

4) requirements to the organization of activities of the Managing investment committee and the Broker and (or) the dealer who is the Managing director;

5) requirements to the organization of monitoring of risks, in the course of investing activities of the Managing director or the Broker and (or) the dealer who is the Managing director;

6) requirements to the organization of monitoring of risks in the course of activities of the Broker and (or) the dealer or the Managing director who is the Broker and (or) the dealer;

7) requirements to the organization of internal control and internal audit;

8) requirements to the organization of information exchange system;

9) requirements to the software and hardware used for maintenance of risk management system.";

state Item 1 in the following edition:

"1. The purpose of Rules is determination of requirements to forming in the organization performing broker and dealer activities (further - the Broker and (or) the dealer), the organization performing activities for management of investment portfolio (further - the Managing director), risk management systems, except for the organizations combining the above-stated types of activity with activities for implementation of investment management of pension assets and also banks of the second level.";

add with Item 1-2 of the following content:

"1-2. By terms of the contract on broker servicing, the prisoner Brokerom and (or) the dealer or to the Managing director who are Broker and (or) the dealer, it is provided not to the relevant requirements established by paragraphs the eighth, ninth and tenth the subitem 3) of Item 8, subitems 9) and 10) of Item 11, subitems 4), 5) and 6) of Item 23, Items 23-1 and 23-2, subitems 2), 8), 9) of Item 58, Items 62-1, 62-2, 62-3, 62-4, 62-5, 62-6, 62-7 and 62-8 of Rules that the client order is taken by it to execution only in the presence of money and (or) securities at the client on bank and (or) personal account this Broker and (or) the dealer or the Managing director who is Broker and (or) the dealer in the amount of at least an amount of the money and (or) securities specified in the client order.";

2, of 3, of 4, 5 and 6 to state Items in the following edition:

"2. Governing body (the supervisory board - for the Broker and (or) the dealer created in other in addition to joint-stock company) and executive body of the Broker and (or) dealer, Managing director provide to form of business (further - the supervisory board) compliance of risk management system to requirements of Rules and create conditions for execution by divisions and workers of the Broker and (or) dealer, Managing director of the obligations assigned to them in the field of risk management.

3. In Rules the following concepts are used:

1) open foreign exchange position - exceeding of requirements (obligations) in currency of separate foreign state (group of foreign states) over obligations (requirements) in the same foreign currency;

2) price risk - the risk of emergence of expenses (losses) owing to change in value of financial instruments arising in case of change of conditions of the financial markets influencing market value of financial instruments;

3) reputation risk - risk of emergence of expenses (losses) owing to negative public opinion or decrease in trust to the Broker and (or) the dealer, the Managing director;

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