FINANCIAL MARKET

16.1. Concept about the financial market Financial market represents economic relations connected with movement of money capital in different forms and securities. It is a component of system of market relations and is integrally connected with commodity and other markets: grounds, natural resources, labour, habitation, real estate, gold and insurance. In the economic literature and economic practice the concept of financial market is accepted for treating extended, with inclusion of money, credit, currency markets, market of capitals.(see diagram in drawing 2). It is caused by the usual practice basically world, to consider finance as a category identical category of money and cost as a whole, as any kind of economic resources can mediate itself by money or appropriate securities, other documents being titles of property. A number of distinguished authors of textbooks in the fina-ncial market as a deposit, pension, insurance markets, viewing them as relatively isolated segments of the financial market. Money market represents the market of payment means including not only cash money, but also noncash payment means. Credit market is connected with credit operations of banks under the loans: here concern as well the commercial credit. In the market of capitals the movement of intermediate term and long-term accumulation of the participants of public manufacture is carried out. In the financial market the object of sale and purchase are the specific goods money and valuable (money papers). The important place in the financial market occupies the market of securities, (scheme 10, the extraction of drawing 2)representing the economic relation, mediating by movement of securities. It includes the share market connected with circulation of share values: corporate securities shares , bonds and market of state securities. The term "the fund market" is connected with the name of establishment on which bargains with securities share stock exchange were made out. From the functional point of view the financial market is a system of the market relations ensuring accumulation and redistribution temporarily of free money resources of enterprises, banks, state. The functioning of this market enables to order and to raise efficiency of many economic processes, especially investment. It is reached by variety of share tools of the given market, mainly securities. The meaning of the financial market is defined not only by its influence on reproductive process and also by mobilization of free money resources (on a voluntary basis) and their redistribution. Its functioning enables to redistribute reso-urces on "horizontal" instead of a "vertical" way inherent to administrative command economy. At horizontal movement direct connections between the enterprises and organizations as requital of redistribution of financial resources

work. It stabilizes financial position of enterprises and organizations, branches and whole econo-

M O NEY

CAPITAL MARKET

SECURI TY M A R- MAR KET RKET

C U RR E N C Y MARKET -KET CARENCY MARKET The scheme 10. Interrelation of financial market with securities market - translation of means on those spheres and objects, my at the expense of operative where the greatest need in them proceeding from a principle of the most efficiency of their use is felt. Thus, the financial market carries out redistributive sub-function as subcategory of finance and as thus occurs maintenance financial resources of the economic agents with the purposes of their developmentand expansion of reproduction, performance of the financial market of reproductive function follows from here. The financial market allows to estimate real cost of business by quotations of securities: their higher quotation will be at effectively working enterprises and organizations. The presence of financial market constrains inflation as the government for a covering of deficiency of the budget uses not a currency issue but issue of securities having free circulation in the market and their price is defined by demand and provision. \ 16.2. Direction of the financial market Kazakhstan

One of priority directions of development of the domestic share market is formation of extensive list of attractive financial tools. The basic task of the given direction is creation of conditions for occurrence and presence of new financial tools which promote occurrence in the investors of an opportunity of redistribution credit risk by diversification of investments and at the enterprises of the emitters new source of borrowings representing cheap enough alternative to bank credit. The development of financial market restrains because of a low standard of living of the most part of population that reduces quantity of the individual investors. Therefore the task of development of financial market is a perfection of mechanisms of attraction of savings of population (not professional investors) through the collective forms of investment. The important factor of functioning of financial market is also political stability in economic space circulation of securities can cover economic spaces of a number of countries. The political realities of CIS countries practically exclude an opportunity of the long-term forecast concerning profitability of this or that enterprise and hence limit desire to get securities. The revival of the financial market is possible at activization of issue and circulation of corporate securities shares and bonds of enterprises of real sector of economy. In Kazakhstan this segment of financial market was in insufficient advanced condition that restrain economic potential as a whole. The formation of national share system including components as investment institutes, share stock exchanges, outside of exchange trade, deposit establishments should be held simultaneously with reference to other market structures, first of all, of joint-stock communities of a different type, in conditions of reliable legislative maintenance of activity of this system at positive structure forming of a role of the state in economy. Further development of Kazakhstan's financial market will be taken into accountthe main findings of the global crisis. The state's efforts to mobilize financial resources should primarily be targeted at domestic investors. Internal resources of the economy retain their full potential and to accelerate the introduction of tools for rapid and large-scale involvement of domestic savings, including circulating in the informal sector. In this connection it seems appropriate to conclude the stock market securities more attractive and sustainable national, state, and with the participation of state companies ("blue chip") and placing them among retail investors. However, limited resources in a relatively small economy of Kazakhstan determines the high value in the financing of the program industry-realizations of funds and resources of foreign investors. One of the key priorities of the post-crisis development will be to promote competition in the financial sector. It provides as direct measures need to gradually increase the minimum capital requirements of financial institutions, primarily banks. Regulation and supervision of the financial market should be on the principle of countercyclical, including through the formation of wire-manifolds, an increase of equity capital, reserves and liquidity in the period of active growth and use of the accumulated potential in the downturn. Regulation of complex financial instruments, with the release of its acquisition and that, value and risks is difficult to assess, it is necessary to implement the principles of compulsory full or partial risk-taking tools, and the creators of the perturbation zhnosti tracking risk. Will develop further and increase the efficiency of supervision and regulation of financial markets and financial institutions in order to limit systemic risk, to prevent crises in the future and the credibility of the financial system of Kazakhstan. Regulation and supervision of banking conglomerates may be enhanced by improving prudential regulation and supervision groups to practice the identification of potential risks to which the parties may be subject to the banking conglomerate. Requires the strengthening mechanisms of protection of investors and consumers of finan-

cial services. The availability of adequate mechanisms for such protection is an integral condition for the successful operation and development of financial markets in any country. In the post-crisis development to improve the quality of corporate governance and transparency of financial institutions, improve-shenstvovat policies and procedures the supervisor to assess the quality and effectiveness of risk management and corporate governance, ensure transparency, pechit activities of financial institutions and disclosure of information about their financial situation . Of great importance is improving the valuation of financial instruments. To determine the mechanisms of an adequate assessment of such a tool is required methodology that allows all participants to determine the fair value of financial instruments, using equivalent criteria and principles, as well as unify impairment of certain financial instruments in the portfolios of institutional investors. Current trend is to develop an optimal mechanism to prevent the accumulation of imbalances, the appearance of "bubbles" in the markets of real and financial assets, and minimization of systemic risk.

16.2. Securities market Securities market part of the financial market where different kinds of securities issued by enterprises and organizations of the state bought and sold. The functioning of this market enables to order and increase efficiency of many economic processes, especially investment. It is reached by variety of share tools of the given market securities. Securities represent the money documents certifying the property right or the relation of the loan of their owner to organization, issuing such documents. Securities can exist in the form of the detached documents or records on the bills. The kinds of securities are various: shares, bonds, state liabilities, deposit and savings certificates of banks, short-term notes of National bank concern to them. The documents which are proving to be confirming reception of the bank credit, debt receipts, wills, lottery tickets, insurance policies do not concern to securities. In Kazakhstan, according to the law "About securities market " apply emission securities securities having within the limits of one issue homogeneous features and essential elements, placed and circulating on the basis of uniform for the given issue conditions. They are subdivided into: state and non state. State certify the rights of its holder concerning the loan, in which borrower is the Government of Republic of Kazakhstan, local executive body or National bank of Republic of Kazakhstan . Non state emission of securities shares, bonds and other securities which are issued by non state organizations. In the conventional treatment it is corporate securities. On securities payment of incomes to their owners as dividends or percents and also opportunity of transfer of money or other rights following from these documents, other persons is provided. The share which is issued by enterprises and organizations, joint-stock companies, enterprises, organizations, commercial banks, cooperative societies without a target date of circulation certifying entry of means on the purpose of

their development and giving the right to its owner on reception of a part of profit of the enterprise, organization as the dividend. The joint-stock company can issue the privileged shares which give the shareholders the right of priority to reception of dividends and also on priority participation in distribution of property of a community in case of its liquidation. The share can be issued as nominal, and to bearer. In economic practice other kinds of shares are used: the open and closed joint-stock companies the convertible shares limited etc. Concept "the gold share" defines the securities giving it to the owner the right of the veto at solution of major questions of functioning of joint-stock company. The bonds, as against the shares, represent the securities certifying entering by their owners of money resources and confirming the obligation to compensate them nominal cost of bonds in term, stipulated in them, with payment of fixed percent (if other is not stipulated by conditions of issue). The bonds, thus, certify the relation of the loan between their owner (creditors) and establishment, organization which has issued the given documents (debtors). There are bonds of the following kinds: the bonds of internal state and local loans; the bonds of enterprises and organizations. The bonds can be issued as nominal and on the bearer, percentage and interest-free (target),freely addressing or with the limited circulation . Enterprises and organizations get the bonds of all kinds by own means, and citizens at the expense of personal means. The means received from realization of internal state and local bonded loans are directed to appropriate budgets or off-budgets funds. The bonds of these loans are distributed by establishments of banks. The income on the bonds of the percentage internal state and local loans is paid at repayment of loans by charge of percents to face value of the bonds or by payment of coupons. The bonds of enterprises are issued and are distributed according to their charters and current legislation. The bill represents the document certifying the unconditional liability of drawer of a bill to pay after approach of term the certain sum of money to the owner of the bill to billholder. The financial bill is given out with the purpose of attraction of money and also on the basis of the bargains about rendering financial services. In structure of securities the state securities showing the fact of the loan on the part of the state at the population and the legal persons are assigned. They are issued in different forms: exchequer obligations, exchequer bonds, exchequer bills, bonds. The distinction between them consists in validities, conditions of payment of incomes and repayment, character of circulation and personification, holders. In Republic of Kazakhstan the exchequer bills are transformed into the form of the state exchequer obligations (SEO), which essence is considered in the chapter "The State Credit and State Debt" (section 17.2). The short-term notes of National bank are state securities with term of circulation to 1 year. They are used for realization of the purposes of money-credit policy and operative regulation of money supply in circulation since June 1995.

Deposit and bank certificates securities issued exclusively by banks. The commercial papers represent the short-term liabilities having fixed income. They promote to decrease rates of crediting and redistribution tenge supply within the framework of financial market, distracting a part of tenge resources from the currency market. The agency bonds allow financial agencies to carry out effective policy of borrowings at realization of state investment policy. Under the infrastructural bonds the execution of obligations of the emitter is provided with the guarantee of the state in frameworks of concessional agreement on realization of the infrastructural project made between the state and the emitter, in the sum appropriate cost of object, transmitted to the state. Quota (Pai in Russian) nominal emission securities without documentary form of issue confirming a share of its proprietor in share investment fund, right on reception of money received from realization of assets of quota investment fund at termination of its existence and also other rights connected with features of activity of quota investment funds determined by the law.
Besides securities in the financial market of the advanced economic systems the so called derivative financial tools (derivatives), certifying the right of their owner on purchase and sale of real securities, currency, other values are used: futures and the options contracts, currency and percentage swops, subscription rights, of the deposit certificate, options and futures on exchange indexes and some other. Futures operations the urgent bargains on stock exchanges on purchase selling of financial and credit tools, goods, currency for the price fixed at the moment of the bargain with execution of operation through certain interval of time . At swops the purchase (sale) of share values, currency, other subjects, goods simalteneously concluded opposite transactions for certain term combined. In options the option of execution or failure of execution of the obligation given by one of the parties by conditions of the contract depending on circumstances, developing on the market is given. The subscription rights derivative securities giving the right already to the existing shareholders to get new issues of share of the company for lower prices those which are placed in the primary market. The deposit certificate is a derivative securities being the certificate about possession a share in a bullet of shares) of various companies. Warrants derivative securities, which express the preferential right on purchase of shares of the emitter at certain period on a determined price. Usual term of warrants5-20 years.

In Kazakhstan derivative - Kazakhstan of the deposit receipt (DR) is used emission of securities are proving to confirm the property right of certain quantity emission of securities of the emitter non-resident of Republic of Kazakhstan, issued according to the legislation of other state. Use of derivative securities is stipulated by certain needs: insurance (hedging) financial and price risks, increase of liquidity, decrease of cost of borrowings, reception of access to the necessary market. 16.3. Emission and circulation of securities. Issue of securities in circulation emission is a sale of securities to their primary owners investors, legal persons and citizens.

The emission of securities is carried out: 1) at establishment of joint-stock company and allocation of the shares among it the founders; 2) at increase of sizes of initial authorized capital (fund) of joint-stock companies by issue of shares; 3) at attraction of extra means by the state, legal persons, by local bodies of authority by issue of the bonds and other debt obligations. The market of securities functions in two basic forms: the primary market, on which there is a mobilization of capitals by means of sale of securities their primary accommodation and secondary market, on which earlier issued securities circulate. I initial public offering "primary open allocation" of shares of various companies. I the operation, at which company-emitter for the first time involves the external investors. The realization of I assumes transparency of activity of the company emitter, availability of its financial, accounting and other documents to the investor, representatives of state bodies and also as a whole for general public. The secondary market consists of two parts: the organized market represented by a share stock exchange and unorganized(outside of-exchange) market. As against the organized market outside exchange market there is no uniform centre for realization of operations, the bargains are made by the dealers and brokers at their offices. The operations in the organized market are strictly regulated and on unorganized are held by less rigid rules, basically, on securities of new companies and corporations, whose parameters do not correspond to criteria showed for registration on a stock exchange. However it does not remove the responsibility from the participants outside of exchange market for unconscientiousness of held operations. Besides the financial markets can be classified by other criteria: on kinds of securities: the market of shares, bonds etc.; on the emitters: the market of securities of enterprises, state securities; by territorial criterion: national, international, regional; on terms: the market of short-term, intermediate term and long-term securities; on kinds of the bargains: cash, forward etc.; by branch criterion. Circulation of securities, that is their sale and purchase between investors, including at intermediary of investment institutes, is carried out for the market prices. The rate of securities is defined on a stock exchange, it is directly proportional to profitability norm of profitability of securities (dividend for the shares, percent for the bonds) and back is proportional to an existing level of loan percent. The market rate is formed under influence of a parity of a supply and demand of securities, which depends on many factors and first of all economic. During economic rise, when the dividends are increased and accordingly demand for securities grows, their rate raises, during an economic crisis it falls, as the dividends decrease, the norm of loan percent grows.

In structure of a trade turnover of the Kazakhstan stock exchange (2008) a significant part of bargains (more than 61,9 %) fall to "repo" operations. Operation repo (from the English word "repo" the standard reduction of a word collocation "repurchase agreement" "the agreement to sell with the subsequent repayment") is set of two simultaneously concluded, differing on dates of performance and opposite on a direction to each other bargains with homogeneous securities (a subject of repo operation ) which parties(sides) are two same persons (participants of repo operation ): the bargain of opening repo; the bargain of closing repo. In relation to separate persons repo operation is subdivided into: 1)directly repo operation (direct repo), that is sale by the given person of a subject of repo operation subject to conditions obligations of its buy-back; 2)operation of the opposite repo, that is purchase by the given person of a subject of repo operation subject to conditions obligations of its return sale. Repo operations can be carried out in trading system by two ways: 1) a "direct" way on the tenders spent by a method of the conclusion of direct bargains 2) an "automatic" way - on the tenders spent by a method of continuous counter auction in the market of automatic repo. From other positions of structure of a trade turnover of Kazakhstan stock exchange of 33,7 % falls to operations with foreign currency; 2,2 % on operation with the state securities; and only on operation with corporate securities it is necessary 2,2 %, including with shares 1,1 % and 1,1 % with corporate bonds.

16.5. The participants of securities market The participants of securities market are the emitters of securities, investors and investment intermediaries. They form structure of the given market. As the emitters are the legal person, state body or body of local administrations issue securities and bearing obligations on them before the owners of securities . Investors legal persons or citizens, including foreign, getting securities on its own behalf and at own expense. The institutional investors investment funds, investment banks, state pension funds, insurance companies and other funds of special purpose, at which on character of their activity significant money resources are accumulated. Investment intermediaries of securities market specialized organizations ensuring progress of securities from emitters to the investors as at primary issue of securities and at their resale investment funds, commercial share stock exchanges, broker and dealer offices, consulting firms, specialized organizations on a storage of securities, conducting the register of holders of securities, mutual accounts on operations with securities (depositaries, castodiums, clearing organizations independent registered holders). There are three models of securities market depending on character of the financial intermediaries: non bank, bank and mixed. Mixed model is issued when intermediaries in the securities market act as both non bank companies and banks.

The original rule situation in securities market is occupied by investment funds. They issue share with the purpose of mobilization of money resources of investors and their investment on behalf of fund in securities and also on bank accounts and savings; thus all risks connected with such investments, all incomes and losses are charged to the owners (shareholders) of this fund and are realized by them at the expense of change of the current price of the shares of fund. Depending on mutual relation with shareholders the investment funds are divided: - mutual funds open investment funds, which obliged to redeem emitted by them the share at the shareholders of fund for the price and on conditions established by the legislation; - the investment companies closed investment funds which are obliged to buy out issued by them share at shareholders of the fund. In Republic of Kazakhstan the following kinds of investment funds work: 1) joint-stock investment fund; 2) quotal investment fund, which can be created in the following forms open, interval or closed. The transfer-agency activity in securities market is carried out with the purposes of reception both transfer of the documents and information between the clients. The transfer-agents register and keep account the documents received by them for transfers and transmitted to the clients. Concept "the infrastructure of securities market" includes legal provision of this market legislation, normative certificates of state bodies etc.), information, depositary and accountclearing network recording bodies. Development of highly-organized financial market is promoted by organizations of the professional participants of the market of securities associations. The functioning of financial ma-rket requires state regulation. In Kazakhstan, a body which is carrying out such functions, is Committee for the Control and Supervision of Financial Market and Financial Organizations of the National Bank of Kazakhstan (FSC). The Committee establishes the requirements and standards of activity of the emitters, registers the prospectuses of issues and decision on issue of securities, carries out control of observance by the emitters of all conditions and obligations on issues, licenses activity of the professional participants of the market of securities, provides the rights of investors in this market, spends anti exclusive regulation of behaviour of participants etc. the regulating actions are carried out also by Ministry of Finance and National Bank of Republic of Kazakhstan. Self-adjustable organizations professional participants of the market of securities establish for themselves rules of game, carry out the control of their execution (regulation of bargains, regulation in the field of activity of participants of the market of securities, resolution of disputes, disciplinary and executive functions). These spheres of self-regulation mention certain situations of securities in the secondary market. 16.6. Islamic Finance Kazakhstan's financial services market is expanding the implementation of principles of the Islamic Finance Brokers. Law of the Republic of Kazakhstan on the organization and activities of Islamic banks and Islamic finance organizations, adopted in February 2009, creates the opportunity to open the country's Islamic banks, Islamic investment funds, as well as for issuance of Islamic securities. The main principles of Islamic finance are: a ban on pay-calculus as a percentage, equal participation in the risks and profits, providing cash flow real assets, ban funding of certain activities (such as gambling, trafficking in arms, alcohol, tobacco products). According to the law of the Islamic Bank is the second-tier bank and implementation is ongoing work on the basis of a special license. The following products of Islamic banks: welcome investment deposits and interest-free demand deposits, loans in cash form in terms of maturity, repayment and without paying compensation, investment activities on a lease (lease) financing business with the provision of commercial loans or by participation in the authorized capital of

legal entities and (or), in partnership, agency activity. Due to the fact that the principles of Sharia law prohibits guaranteeing income and do not participate in the risks, Islamic banks are not parties to the fund-tirovaniya guarantee deposits. Under the contract of a commercial loan Islamic bank purchases the goods in your property and sells it to customers at a premium deferred or installment payment. In this contract shall contain the terms of the name and quantity of goods, prices and margins on the goods. Thus, compliance with the principles of Shariah-Xia: the lack of uncertainty in the transaction and ban the use of money as a commodity. Income of an Islamic bank in this case is the markup on the goods. On the basis of partnership agreement between the Islamic bank can financing manufacturing and trading activities to generate income. According to the agreement the bank and the client make the project funds or property. Gains and losses on the draft Islamic bank and the client are in accordance with a prior agreement or in proportion to the common property. Thus, the principle of shared risk. Income of an Islamic bank in this case is part of the profits from the project. Islamic investment funds according to law is a shareholder-ny investment fund or closed-end investment fund that invests in compliance with the principles of Sharia. General rules of Islamic approaches apply to the Islamic of instruments in the securities market. In Islamic securities has two main distinguishing features nye: the release of their issuer may not charge fees as a percentage of the value of securities and to guarantee income securities, funds raised through the issuance and distribution of Islamic securities, should not be used to finance illegal activities according to the Koran (the same as that of a bank financing). Islamic certificates of participation issued for the use of raising funds for the organization of a new investment project, the development of an existing investment or entrepreneurial finance. Profit is distributed to investors. Also emerged the concept of "Islamic Investment Fund" - joint stock investment fund or closed-end investment fund that invests fund assets in compliance with the principles of Islamic finance. The law establishes the following types of Islamic securities: stocks and shares of Islamic investment funds, Islamic lease certificates, Islamic certificates of participation. Islamic lease certificates are issued to finance the purchase of attracting large objects, such as real estate. To do this, create an Islamic special finance company that acquires property for funds received from the placement of certificates. This property is rented, and rents are distributed between the certificate holders as dividends. In world practice, Islamic securities are issued as the Legal entities and governments for the construction of infrastructure facilities, mixed-use centers, production has been established. Often, when projects use a combination of Islamic and Islamic lease certificates of participation certificates. Currently under the Act, the originator of the Islamic special finance company may be an Islamic bank, JSC "NC" KazAgro ", JSC" Fund "SK" and its 100% subsidiaries. The development of the legal framework of Islamic finance is accompanied by the emergence of new entrants. His consulting activities are carried out, the brokerage company, an Islamic bank. The introduction of Islamic finance in Kazakhstan extends the range of financial services. In addition, it is a tool to attract investment capital in Kazakhstan and the world's major participants in the Islamic financial industry.

16.7. Stock exchange The organizers of tenders in the market of securities are stock exchange and quoted organization of over the counter securities market. Stock exchange is an organization an exclusive subject of which activity is the maintenance of necessary conditions of normal circulation of securities, definitions of their market prices and distribution information about them.

Stock exchange is the organizer of the secondary market of securities. On a stock exchange are quoted (the rate) old releases of securities, basically, share of joint-stock societies is established. The share stock exchange is created in the form of joint-stock company and should have according to the legislation of Kazakhstan not less than ten members. It is noncommercial organization, does not pursue the purpose of reception of profit, is based on self-recoupment (ability to pay itself) and does not pay incomes to the members from activity. The legislation establishes the minimal authorized capital of share stock exchanges. Stock exchange is not engaged in activity as investment institutes but can issue and sell own shares giving rights to enter in its members. Stock exchange is registered according to the legislation and receives the license in the authorized body on conducting exchange activity. Operations with securities can be also carried out by share departments of commodity and currency stock exchanges as independent structural divisions at presence of the license on such activity. The members of stock exchange are the professional participants of the market of securities and legal persons having the right on realization of bargains with others, except for securities, financial tools. The operations on stock exchange are carried out only by its members. Under their assignment direct purchase sale of securities by the brokers and dealers are carred out. The brokers intermediaries at the conclusion of the bargains work under the assignment and at the expense of the clients, receiving for it the certain payment. In modern conditions of exchange activity the intermediary operations are done by broker firms with a network of branches having close connections with banks. The dealers are engaged in sale and purchase of securities on its own behalf and at own expense: it is separate firms, banks, private persons members of a share stock exchange.
The Kazakhstan stock exchange S represents universal financial market which can be divided into four basic sectors: the market of foreign currencies, the market of the state securities, including the international securities of Republic of Kazakhstan, the share market and corporate bonds, the market of derivatives. Financial activity of stock exchange can be carried out at the expense of means received from the basic activity. Money payments and taxes are from introductory member payments; exchange taxes from each bargain which has been carried out on a stock exchange; inclusions in listing securities and their presence in the list of stock exchange; usages of property of stock exchange; means for rendering information, consulting and other services, other incomes of activity of stock exchange. Incomes of stock exchange are directed on covering of expenditures connected with realization the functions, expansion and perfection of its activity. Stock exchange as agreed with Committee for the Control and Supervision of Financial Market and Financial Organizations establishes rules of the admission of securities to trade listing, and also rules of exception them from trade delisting,. Basic principle of activity of a stock exchange is the maintenance of liquidity of the market of securities.

16.7.1. Regional Financial Center of Almaty (RFCA) RFCA of the National Bank of Kazakhstan is a special legal regime governing the relationship of the financial center participants and stakeholders aimed at developing the financial market of Kazakhstan. The objectives of a financial center is to develop the securities market, ensuring its integration with international capital markets, attracting investment into the economy of the Republic of Kazakhstan, Kazakhstan output-human capital in foreign securities markets. Financial center operates on the following principles: 1) equality of Kazakhstan and foreign participants; 2) the movement of capital in accordance with currency laws of the Republic of Kazakhstan. Authorized agency for regulation of the financial center (the Committee for Regional Financial Center of Almaty of Kazakhstan National Bank) - a government body implementing the state regulation of the functioning of the financial center derivations. A standing advisory body is the International Council, which is created under the authorized. Participants in the financial center are the professional securities market participants engaged in brokerage and (or) dealer activities and have: 1) the certificate of state registration (re-) entity, issued by the competent authority; 2) a license to operate in the securities market, issued by the commissioner-soaked state body on regulation and supervision of financial markets and financial institutions (FSC National Bank of Kazakhstan); 3) participants in the financial center may enter into transactions with financial instruments only to the special trading floor of the fi cial center. Obligatory condition of state registration of legal persons - professional participants of securities market is the presence of the authorized body of a permanent body of the legal linden in the city of Almaty. Special trading platform of the financial center is a trading platform stock exchange functioning on the territory of Almaty theory and is determined by the Committee of the RFCA, in which participants carry out the financial center of bargaining and financial instruments. The rules of the auction to be taken with regard to spe Alno trading floor financial center, to be agreed with the Development including ETS and with the authorized state body on regula-tion and supervision of financial markets and financial cial institutions (FSC). Tax control participants in the financial center is carried out in co-responsible with the tax legislation of the Republic of Kazakhstan. 16.7.2. Indicators of stock market The important factor which is taken into account by the investors at an estimation of investment opportunities and their results are an index of the share market it is a basis of forecasting and exact parameter of tendencies in the market. In the market of securities of Kazakhstan there are some indicators describing condition of the exchange market of non state securities. Indicators of the share market are: 1) capitalization of the share market; 2) capitalization of the market of corporate bonds; 3) an index of the share market (index KASE). 4) indexes of the market of corporate bonds: - profitablenesses of corporate bonds (index KASE_BY); - the prices of the corporate bonds, considered under their prices without taking into account saved up (charged, but not paid) compensations on them (under the "pure("clean") prices) (index KASE_BC); - the prices of the corporate bonds, considered with allowance for all compensation charged on them, including not paid compensation (index KASE_BP). In the market of sovereign eurobonds index KASE_EC, considered on net prices of bonds

is applied; KASE_EP the index considered with allowance for saved up interest and paid coupons; KASE_EY an index of average profitableness of eurobonds. The separate group of indicators of the market reflects values of the average weighted rate repo various terms of the attraction, the stock exchange established by tenders in repo operations sector on the state securities (SS) and to non state securities, and also in automatic repo sector. Especial indicator is TONIA (Tenge Over Night Index Average), which pays off daily as the average weighted interest rate under bargains of opening repo for the period of one working day (repo "overnight"), the prisoner on a stock exchange in sector automatic repo with SS. The average weighed rate repo for the period of one day on attraction in tenge is, that last pays off a stock exchange on repo, including sector automatic repo, sector repo on SS and sector repo on NSS. The indicator of volume takes into account a volume of transactions open in all repo sectors for the term of about 14 days inclusive. Indicator KazPrime reflects average value under rates of accommodation of money in Kazakhstan market of inter-bank deposits. Calculation of the indicator is made by KASE daily under quotations which move trading system of a stock exchange participants of the Agreement on formation of the indicator. Trend reflects difference concerning value of the previous working day. Indicator KIBOR represents average value under the rates of accommodation of money declared by banks on various terms 7, 14 days, 1, 2 and 3 months. 16.8. The financial crisis of 2007-2009 In the causes of the financial crisis to highlight its two components: external from the world monetary system and internal from the national one. In addition, we must distinguish the ex-ternal manifestation of the crisis and domestic, the essential mechanisms of action of. Arising first as the liquidity crisis, he gripped the credit sector and gradually spread to the entire financial system. The crisis has manifested itself as a permanent shortage of funds needed to market the business entities, and lending institutions could not meet their needs; economic entities have the "money hungry" banks - the lack of liquidity. On the part of the deployment of external causes of the crisis must take into account a broad integration of monetary systems of Kazakhstan in the international monetary system, the dependence of national monetary systems of similar systems the world's leading economic centers - the U.S., Europe and China. Terms of international trade, the formation of the exchange rate, the output of Kazakh companies and banks in the global financial markets has led not only to the benefits of using cross-country exchange factors, but dormant, and the risk of loss due to market uncertainty, natural course of events, defaults in individual levels of the market mechanism. In fact such circumstances, and served as an impetus, a "spark" of the crisis imbalances in the U.S. mortgage system. The next driving force of the financial crisis effect on the part of the global financial market. The migration of financial capital exacerbates the situation-tion. The outflow of capital from the markets, unstable in terms of investors, limits the possibility of the domestic financial market to finance Con-bnosti economy, increasing the cost of financial capital. Money-capital investors to invest in more reliable and less risky instruments and facilities: government securities, treasury bills (and at the international level in the economies of countries with high ratings). Turbulence in financial markets resulting, in many cases, tocollapse of the stock even seemingly solid companies, such shares could be overvalued before the market upwards prematurely as a result of short-term, temporary operating factors. This leads to a decrease in the value of collateral on such shares in commercial banks and break into banks' assets and their security, reducing the quality of assets, as mentioned earlier. Among the external factors the enormity of financial instruments, particularly derivatives, debt and speculative transactions: money lost all contact with the mass of commodities, that is a vio-l-

tion of the basic economic law the law of monetary circulation. Debt securities in some countries many times greater than the gross national product and reserves. Consequently, the financial crisis has arisen to be regarded as a debt crisis. The purpose of financial derivatives reducing a variety of risks: credit, currency, political, market, etc. However, the security that they provide are not regarded by traders as an additional factor that provides a profit in operations with simple tools, as well as the main incentive for arbitrage trading with derivatives the tools. Financial derivatives in 1990 began to break away from prime money market instruments, which strengthened its instability. Derivatives proved to be more independent and popular than the tools that produced them. Moreover, the derivatives that were supposed to reduce the risks have become their main source of the global financial market. Slight fluctuations in simple financial instruments reflected in the sharp jumps of the market dynamics of derivative securities. The concentration of financial derivatives in the hands of a few large banks leads to the facts and rumors about the loss from operations of companies with derivatives cause a chain reaction in global financial markets, which affects the volume and prices of derivatives. Losses from derivatives trading began billions. In 2007, these processes led to the global financial crisis, which escalated in the global economic crisis. The essence of the crisis lay in the fact that the sphere of circulation was oppo-sed to the production, create a path where you can make money from money, which led to an increase in "money of the pyramid." The effect of external factors on the spread and the internal state of the monetary system of Kazakhstan. It is believed that the cause of the crisis in Kazakhstan was a need has arisen for the obligations of banks' payments to foreign creditors without the possibility of refinancing debt due to limited access to cheap credit and the former a sharp increase in funding costs. This limited the lending of domestic borrowers, and the money was lacking for normal operations. Payment of external debt level of banks, of course, reduces the possibility of lending their domestic economy, but should also consider other aspects of the problem. And so the first reason was the difficulty with the ability to refinance the debt of banks in connection with the sharply increased cost of capital in international markets, which triggered the mortgage crisis in the U.S.. The decrease was accompanied by a deterioration in banks' asset quality - the growth of substandard and bad loans, the devaluation of collateral supply (falling housing prices, real estate). This led to the need to increase provisions of participating in the bank. State assets contributed to equity of banks, including - income, which is gradually reduced. The effect of these factors led to doubts about the financial stability of banks and. as a consequence the fall of the value of their shares, depreciating equity and contributed to its decline. Doubts about the ability of banks to operate normally under such conditions did not lead to an increase in deposits, which affects the size of the third element of the above relation. Started to decrease banks' resource base. Commercial banking system (in aggregate) is able to "create" (generate) the money through the consistent movement of the initial deposit (deposit) in the system with the participation of CBOs involved in the process-luzhivaniya and lending businesses, which determines the effect of the money multiplier (multiplier) of the money supply. The slowdown is caused by multiplication of the general deterioration of state assets, despite the decline in reserve ratio for commercial banks by the National Bank. On the part of the exchange rate factors have also operated the deployment of the crisis. To revitalize the economy of the RK National Bank lowered the refinancing rate to increase the money supply and thus meet the demand for money businesses. However, this signal was not received by the banks for a corresponding reduction in rates of interest on loans because of the circumstances already set out above. At the same time, this event usually leads to a reduction of the national currency: it is manifested, for example, in the U.S. dollar's depreciation to the major world currencies, but here, at the same time, acted in the opposite direction tendency to strengthen the dollar against the currencies of those countries, financial intermediaries which the PV bought the securities of U.S. companies (which has increased the demand for dollars to buy these

securities, and strengthened the dollar). But in countries where these operations are not ope-rated (Kazakhstan and other CIS countries), central banks were forced to maintain the dollar (in order to stimulate exports and, consequently, the whole economy) to spend foreign exchange reserves. As a result, limited opportunities to use the central bank's reserves for domestic pur-poses: refinancing of commercial banks, keeping inflation at a manageable level, and in general, the reduction of gold reserves could become critical. As a result, banks' ability to make extra moneysignificantly limited, and money for all nor-mal lending clientele was lacking. Banks are reducing lending, money demand is growing for it - the interest rate. Credit money was less. Began business failures throughout the chain defaults in one link broke the normal operation in a few allied. Principle of the incident triggered a "domino". The global financial crisis has demonstratedsignificant shortcomings of existing models of financial relationships, as globally, and at the national level. Weaknesses revealed in the structure of state regulation and the activities of financial institutions themselves. Problems emerged in recent issues of the imperfections and inconsistencies of the risk management current trends and the level of exposure (both in degree and quality of risk management), relatively low levels of corporate governance, lack of transparency and, consequently, inefficient business models that prove to be extremely sensitive to negative trends. In the post-crisis period eliminated the shortcomings of the financial sector, the mistakes and send it into the mainstream of the development of a stable and progressive improvement. Work will continue on a modern, stable and competitive financial system of Kazakhstan. Since 2010, holds a five-year plan of forced industrial-innovative development. In this regard, the financial sector the task to fully mobilize the financial resources to implement projects that will be provided by the plan. The financial sector has become a bridge between national savings and the needs of innovation-based growth, which involves the restoration of confidence in it. The state's efforts to mobilize financial resources should primarily be targeted at domestic investors, as the need to ensure their participation in post-crisis economic growth. An important factor in the industrialization of the program is active involvement in its implementation of foreign investors, so you should pursue a policy of a stable investment climate, favorable regime for foreign investment. Should be increased effectiveness of state regulation and oversight that promotes the formation of a sustainable, competitive and most efficient operation of financial institutions in Kazakhstan, based on the priority of national economic interests, by increasing the stability of the financial sector, confidence in the financial system and stimulate investment activity.