Kazakhstan is preparing to rewrite the rules governing its securities market for the first time in more than two decades. The draft Capital Market Law aims to make it easier for businesses to raise money on the stock market while strengthening protections for investors.
The new law is intended to replace the Securities Market Law adopted in 2003. The draft was published for public discussion in September 2026.
Kazakhstan’s stock market has expanded significantly in recent years. As of July 31, equity market capitalization on the Kazakhstan Stock Exchange (KASE) stood at KZT 47.7 trillion, or about $100.5 billion, while corporate debt in circulation had reached KZT 16.8 trillion, or about $35 billion.
Despite that growth, state-owned and quasi-state companies and banks remain the main borrowers in the bond market. Private businesses rarely raise money through the exchange, while turnover in already-issued shares remains low.
A Law That Grew Along With the Market
Over more than two decades, the Securities Market Law has been amended by more than 60 legislative acts.
The regulatory framework was built around individual financial products and procedures, and the regulatory policy consultation paper underpinning the reform proposes changing more than half of the existing provisions.
Rather than introduce another large package of amendments, the authorities have decided to replace the law. More technical rules would instead be set out in secondary legislation, allowing them to be adjusted without going through the full legislative process.
SMEs, the Exchange, and the Liquidity Shortage
One of the main aims of the reform is to make the market more accessible to smaller businesses. Around 90% of financing for small and medium-sized businesses in Kazakhstan is linked to the banking sector, according to reform documents citing the Damu Entrepreneurship Development Fund.
KASE sought to make the market more accessible to smaller companies as early as 2017 by introducing less stringent listing conditions. But while the exchange could change its own requirements, it could not simplify the state procedures governing securities issuance.
A company seeking to sell shares or bonds must prepare legal and financial documentation, register the issue, and comply with disclosure requirements. For a small business, the cost of lawyers, auditors, and other advisers can be disproportionate to the amount it hopes to raise.
The draft would therefore allow a separate category for SMEs with simplified listing, delisting, and disclosure rules. Smaller issuers would also be able to use an abbreviated securities prospectus, the document setting out financial information about the company, the terms of the offering, and the risks.
Companies making repeat issues would no longer have to prepare the entire set of documents from scratch. Registration is also expected to be digitized and transferred from the Agency for Regulation and Development of the Financial Market (ARDFM) to the Central Securities Depository, which maintains records of securities ownership.
The limited role of private companies is also visible in the bond market. At the end of 2025, outstanding corporate debt totaled KZT 16.2 trillion, or about $34 billion. According to ARDFM estimates cited in the reform materials, 75-80% was attributable to the quasi-state sector – companies wholly or partly controlled by the state. Banks accounted for another 12-13%, leaving less than 5% for other private companies.
Trading activity in shares also remains low. Reform materials put the turnover ratio at 2-4%, making it more difficult to sell large positions without significantly affecting the price.
Pension savings could provide an additional source of demand. As of April 1, 2026, Kazakhstan’s pension assets totaled KZT 26.81 trillion, or about $56.5 billion. Most remained under the management of the National Bank. In contrast, private portfolio managers controlled just KZT 101.81 billion, or about $214 million, less than 0.4% of total pension assets.
Retail Investors and New Instruments
The reform also responds to the rapid growth in the number of retail investors. By September 2026, the number of brokerage and securities accounts in Kazakhstan had exceeded 5.2 million, although only around 276,000 were active.
The large gap is partly linked to the spread of mobile investment applications and omnibus accounts, where a broker maintains a single account within which the assets of numerous clients are recorded.
Under the draft, investors would be divided into qualified and non-qualified categories, with sales of the riskiest products to non-qualified investors restricted.
ARDFM would also gain broader powers to oversee advertising and sales practices for financial products. If a broker sells a complex instrument to a non-qualified client in violation of the requirements, the investor would be able to demand that the transaction be unwound. The broker would have to repurchase the securities and compensate the investor for losses.
Disputes between investors and market participants could also be considered by a financial ombudsman before going to court.
Alongside these protections, the new law would expand the rules covering less developed parts of Kazakhstan’s capital market. These include derivatives – financial instruments whose value depends on another asset, such as a currency, stock, interest rate, commodity, or index. In the first quarter of 2026, derivatives trading on KASE amounted to KZT 1.6 billion, or about $3.4 million.
Separate provisions are envisaged for Islamic securities, including sukuk, while the law would also cover green and social bonds used to finance specified environmental or social projects.
Digital financial assets would be regulated according to their economic substance. If a digital asset effectively represents a security or a derivative, the relevant capital-market rules would apply.
Foreign Capital and Two Financial Jurisdictions
The draft also seeks to make the market easier for foreign financial institutions to access. They are expected to receive simplified procedures for tax registration and obtaining a Kazakh business identification number, or BIN.
Clearing – the system for settling transactions after a trade is concluded – would also change, with Kazakhstan planning to bring requirements for its central counterparty closer to European Securities and Markets Authority (ESMA) standards.
The reforms also have to account for Kazakhstan’s two financial jurisdictions. KASE operates under national jurisdiction and ARDFM supervision, while Astana is also home to the Astana International Financial Centre (AIFC), which has its own regulator – the Astana Financial Services Authority – the Astana International Exchange, and its own legal framework based on English common law.
Differences between the two regimes allow market participants to choose the jurisdiction that best suits them, but can also create regulatory arbitrage, with similar transactions subject to different rules.
The draft therefore envisages a Coordination Council under the National Bank involving ARDFM and the AIFC regulator to coordinate regulation between the two systems.
Kazakhstan also aims to create conditions for moving from Frontier Market to Emerging Market status in the classifications used by international index providers MSCI and FTSE Russell.
The new law itself, however, would not change Kazakhstan’s classification. Index providers separately assess liquidity, foreign investor access, foreign-exchange arrangements, settlement systems, market infrastructure, and the size of publicly traded companies.
ARDFM expects the economic effects of the new model to become visible no earlier than 2027-2028. Its impact will ultimately depend on whether more private companies use the market to raise capital and whether trading in their securities increases.
