Exchange-Traded Notes (ETN) listing on AIX
Having transparency, high standards of reporting, and using the jurisdiction of English law, the Astana International Financial Center (AIFC) is a great platform for attracting investments in Central Asia. In this article, we would like to discuss the Astana International Exchange (AIX) and Exchange Traded Notes (ETN) financial instrument placement on it. The AIX exchange was established in 2017 and was designed to provide clear and favorable conditions for attracting local and foreign investors, as well as creating a platform for the growth of private business financing and the whole economy. Listing of various securities is allowed on the AIX platform, including shares (Equity), bonds (Debt) and fund units (Units).
Exchange-Traded Notes (ETN) listing on AIX
Exchange-Traded Notes listing on AIX
Meanwhile, ETN is an unsecured and unsubordinated debt instrument issued by a bank or other financial institution. At the same time, ETN income is tied to one of the stock indices or another benchmark (or to a set of benchmarks), for example, to the prices of oil and precious metals to the indices of developing countries [1].
According to the AIX definition, debt security is an instrument that creates or recognizes debt, whether or not it is backed. Thus, ETN in the understanding of AIX is clearly a debt instrument.
The AIX sets out the following basic requirements for ETN issuers:
- Conducting an audit of annual financial statements covering the previous 2 years.
If the period of the audited annual financial statements is:
- not later than 9 months on the proposed listing date- in such a case, additional financial statements are not required;
- later than 9 months but not later than 15 months on the expected listing date- audited interim financial statements must cover at least the first 6-month period;
- later than 15 months but not later than 18 months on the expected listing date – audited interim financial statements must cover at least the first 6-month period.
- At the time of listing, the relevant minimum market capitalization level must be at least US $500,000.
In AIX the creation of a Special Purpose Company practice is applied, then this company issues ETN.
| № | ETN | Currency | Issuer | Founder |
|---|---|---|---|---|
| 1 | QFIN | Tenge | Kaz Financials SPC Limited | AIX FM Limited |
| 2 | QZA | Tenge | Qazaqstan Equity Active SPC Limited | AIX FM Limited |
| 3 | QZP | Tenge | Qazaqstan Equity Active SPC Limited | AIX FM Limited |
| 4 | FFIX | U.S. dollar | FF IUIF Fixed Income USD SPC Limited | AIX FM Limited |
| 5 | FIPO | U.S. dollar | Fund of Initial Public Offerings SPC Limited | AIX FM Limited |
| 6 | BCCGF | U.S. dollar | Global Fund A SPC Limited | AIX FM Limited |
| 7 | IXU | U.S. dollar | iX US 500 Equities SPC Limited | AIX FM Limited |
| 8 | IXT | U.S. dollar | iX US Short-Term Treasury SPC Limited | AIX FM Limited |
| 9 | IXN | U.S. dollar | iX NASDAQ 100 Equities SPC Limited | AIX FM Limited |
| 10 | IXO | U.S. dollar | iX Brent Oil SPC Limited | AIX FM Limited |
| 11 | IXE | U.S. dollar | iX Global Emerging Markets Equities SPC Limited | AIX FM Limited |
| 12 | BTC | U.S. dollar | iX Bitcoin SPC Limited | AIX FM Limited |
| 13 | IXG | U.S. dollar | iX Gold SPC Limited | AIX FM Limited |
| 14 | IXD | U.S. dollar | iX US High Dividend SPC Limited | AIX FM Limited |
| 15 | IXY | U.S. dollar | iX High Yield Corporate Bond SPC Limited | AIX FM Limited |
| 16 | IXA | U.S. dollar | iX US Aggregated Bonds SPC Limited | AIX FM Limited |
| 17 | IXB | U.S. dollar | iX Global Emerging Markets Bonds SPC Limited | AIX FM Limited |
As can be seen from the above table, as of May 14, 2022, no other private company has issued ETN except FM Limited, an affiliate of the AIX exchange. However, these examples show that if the above requirements are met and the relevant documents are provided, it is possible to register SPC, issue and list ETN on the AIX exchange.
At the same time, we note the need to provide the following documents to start the procedure for listing bonds on the AIX site:
| № | Document name | Description | Form | Link |
|---|---|---|---|---|
| APPLICATION: agreements between AIX and issuer | ||||
| 1 | Preliminary listing Agreement | The Pre-listing Agreement must be signed before the Applicant submits documents. If the Pre-Listing Agreement is not signed and the applicable fee is not paid, AIX will not consider the submitted listing package. | Form | |
| 2 | Listing Agreement | The Listing Agreement must be submitted to AIX after approval of the Listing Package and must be signed by the Applicant prior to the date of Listing on the Official List. | Will be provided by AIX | |
| 3 | AIX listing admission application | Signed and stamped by the Applicant | Form | MLR 17 |
| 4 | Application for admission of securities to trading (statistical data must be submitted in the attachment to the form) | Signed and stamped by the Applicant | Form | ADS 3.2.1 |
| Other documents | ||||
| 5 | Card with sample signatures of Authorized persons | Apostilled/notarized copy | Form | ADS 3.4.3 (2) |
| 6 | Power of attorney to sign | Apostilled/notarized copy | ADS 3.4.3 (2) | |
| 7 | Confirmation of the appointment / consent of the Processing Agent | Signed and stamped by the Applicant | Form | MLR 1.2 (2) |
| INFORMATION ABOUT THE ISSUER: Documents required by AIFC rules | ||||
| 8 | Ownership structure identifying the beneficiaries of the issuer (including an Extract from the register of shareholders or the register of participants, or a similar document) | Certified by the Applicant’s seal | AML 5.1.3 (a) | |
| 9 | Decision on the appointment of the Board of Directors and the Management Board members (or relevant bodies responsible for making decisions in accordance with the Charter) | Scanned copy | ||
| 10 | Passports/identity cards of Senior Management, ultimate Beneficial Owners | Scanned copy | AML 6.3.1 (a) | |
| 11 | CVs of the Management Board and the Board of Directors members (or relevant bodies responsible for making decisions in accordance with the Association article) | Scanned copy | MLR 6 | |
| Company Information | ||||
| 12 | Code of Corporate Governance (only for public offering, if available) | Certified by the Applicant’s seal | MLR 2.1 | |
| 13 | Conflict of Interest Policy (for public offering only) | Certified by the Applicant’s seal | MLR 8.1 | |
| 14 | Organizational structure | Signed and stamped by the Applicant | ||
| 15 | Registration certificate | Apostilled / notarized copy | MLR 3.1 | |
| 16 | Charter | Scanned copy | MLR 3.1, ADS 3.3.1 (4) | |
| 17 | Audited Financial Statements (previous biennium) and Audited/Unaudited Interim Financial Statements (if applicable) | Scanned copy | MLR 4.1 | |
| DOCUMENTS WITH INFORMATION ON SECURITIES | ||||
| 18 | Prospectus (for public offering)
Offer Document (for Wholesale Bonds) form Terms and conditions (for tax-exempt bonds) |
Signed and stamped by the Applicant | Prospectus Rules | |
| 19 | Decision on the issue of securities (in accordance with local legislation and/or constituent documents of the issuer) | Scanned copy | MLR 17.4.1 (8) | |
| For Green Bonds in addition to the above requirements | ||||
| 20 | External review of Green Bonds | Signed and stamped by the External Assessor | Form | GRN 4.1 (d) |
| For Sukuk bonds in addition to the above requirements | ||||
| 21 | Details (including qualifications and experience) of the members of the Shariah Supervisory Board who have reviewed the relevant Securities. | Signed and stamped by the Applicant | MLR 22.3 (1) (a) | |
| 22 | Opinion of the Shariah Supervisory Board regarding the compliance of the Securities with the Shariah requirements | Certified by the seal of the Applicant | MLR 22.3 (1) (c) (i) |
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