Launch Partners

Launch Partners

Kazakhstan to grow Shariah investments

The International Trading System (ITS) platform in Kazakhstan aims to offer several Shariah compliant investment opportunities over the next year to better tap a huge potential within the Caucasus region, ITS Managing Director Alexander Diakovsky told IFN Investor.

“There is a very big deficit of this kind of instrument in the region right now. Active practicing Muslims are very interested in specific financial instruments like Islamic deposits and Sukuk. They often save just at home because they don’t have proper instruments [for investing in].”

Among the new offerings planned are exchange-traded fund (ETF) units and money market instruments, said Alexander, as the ITS platform – which allows trading in global stocks via its broker members – already offers over 2,800 equities options from mainly US exchanges – acting as an intermediate market between Hong Kong and London trading hours.

ITS will be directly responsible for derivative-type offerings “because we have all the facilities for those and licenses”. But ETFs and instruments that need to be listed on exchanges will be handled in collaboration with licensed partners.

Since its launch on the 7th June 2023, ITS had been focusing on equities in overseas markets – acting as support to brokers and other trading outfits that deal directly with the investing public. It was only on the 6th November 2024 that a locally-listed instrument was offered, using the ITS World Index.

“That ETF was issued by IPS Capital, which operates within the jurisdiction the Astana International Financial Centre (AIFC) and the primary listing occurred on the Astana International Exchange.”

Next came the ITS Shariah ETF, also by IPS Capital, which is based on the ITS Shariah index that includes 30 large-cap stocks from around major exchanges. The top holdings are tech giants Apple, Microsoft and Nvidia for this mainly US-centric benchmark index.

Alexander said IPS Capital and other asset managers had indicated readiness to issue more Shariah compliant ETFs over 2025, including those which will be issuing based on new ITS indices to be announced in due course.

Owned by a number of market-participation shareholders, like AIFC and NASDAQ-listed Freedom Holding Group, Alexander said ITS currently has five brokers with stakes in the platform and expects this figure to rise to 15 brokers soon.

“The main and the key advantage of AIFC is that you if you are a licensed broker, for example from Tokyo, you don’t have to get a new license in Kazakhstan. Your license can work. We have some international brokers from Armenia. We have interest from Turkiye, Azerbaijan and South Africa.”

Another attraction is the ITS platform allows trading from 10am to 3.35am local time in Astana. “It’s a very long trading session that covers all pre-market and set trading sessions, including the US, part of Asia and Europe.”

While current trading volume is about US$35 million daily, Alexander said the goal for the ITS platform is to achieve US$100 million daily trades by the end of 2025 – anticipating that the investors base will be growing, especially among those seeking Shariah compliant opportunities.

The International Trading System (ITS) platform in Kazakhstan aims to offer several Shariah compliant investment opportunities over the next year to better tap a huge potential within the Caucasus region, ITS Managing Director Alexander Diakovsky told IFN Investor. “There is a very big deficit of this kind of instrument in the region right now. Active practicing...

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