The amendments bring the Rules in line with the Banking Law, extending provisions of the Rules to cover derivative financial instruments, defined as contracts in the Kazakhstan Civil Code (such as forwards, swaps, etc.), in addition to derivative securities.

The amendments introduced certain requirements in respect of swap contracts entered into by banks. Specifically, the amendments stipulate that Kazakhstan banks can enter into derivative securities transactions and derivative financial instruments, such as credit default swaps and total return swaps, only if the following conditions are met:

  • an underlying asset of the swap is not a liability of the bank;
  • the swap is for hedging purpose only; and
  • the swap is purchased in an organized securities market.