AIFC chief sets fintechs in his sights

Q: The Astana International Financial Centre [AIFC] was launched in July 2018. What have been its achievements so far? 

A: The establishment of the Astana International Exchange [AIX], but also the initial public offering [IPO] of Kazatomprom on the same AIX were major achievements. Russian firm Polymetal also carried out a small IPO to test the appetite of local and Asian investors and the AIX held a few bond transactions too. Besides [that], we introduced an independent court system and arbitration system. With our sandbox regime, we registered a few dozen fintechs trying to innovate in the fintech space, from payment solutions to peer-to-peer lending and so on. 

Q: Where do you see the biggest potential for the AIFC to thrive? 

A: I’m a big fan of fintech. I believe we have to give a lot of opportunities to fintech companies. The technological revolution has changed the market of financial services dramatically. Traditional banks are less and less competitive, and we believe the AIFC can play an important role in the development of fintechs. We provide a flexible environment; we haven’t got the mantra of financial stability on our shoulders.

With our regulatory sandbox we can be more helpful to fintechs, on a regional level at least. Besides, we are part of the Global Financial Innovation Network and we established the Bureau for Continuous Professional Development, which is important in the AIFC ecosystem because it helps the younger generation refocus their skills. 

Q: What are the key performance indicators you are working with? 

A: We look at the Global Financial Centre Index, and we have made very strong progress recently. Besides, there are metrics approved by the government in terms of IPOs, liquidity and so on. Yet the success of the AIFC is not only related to our internal measures, but very much depends on the country’s overall business ecosystem.

We have to develop an open sky policy: we cannot grow the AIFC without more flights in and out of capital city Nur-Sultan. We have about 35 flights a day at the moment – as a reference, Dubai has 600. Other things can be improved, such as the legislation on immigration. We waived entry visas for OECD countries, but we also need more people from the developing world, now that more liquidity, [skills] and sources of FDI come from that part of the world.

We need elementary things such as more international schools. We need to improve those things, not only for the future of the AIFC, but from a national investment attraction strategy perspective. 

Q: What will be the relationship between the AIX and the existing stock exchange in Almaty, the Kazakhstan Stock Exchange [Kase]? 

A: Kazakhstan is a small market. We need to make sure we are helping each other by not dividing the market in pieces. Tech-wise it is clear we have a much better platform  – Kase is like an old-style Zhiguli Soviet car that has survived so far, but it’s difficult to think it has any future. Also, in terms of the privatisation programme, the government was clear that the IPOs of state companies would happen on the AIX. The Kazatomprom IPO proved we are reliable, and we can bring in liquidity and provide efficient services at reasonable tariffs. Now we have a good pipeline of potential AIX future issuers, all with an international angle.

Q: What’s the ceiling for the AIFC? 

A: It is a tough business, but I believe we have enough ingredients to become at least a regional hub. One of the key success factors is our jurisprudence based on English common law. None of our neighbours have done such a brave reform. Fintechs can possibly help us do things in a different way at the AIFC. We can become more advanced as a jurisdiction and as a country, in terms of challenging traditional financial services.