Azerbaijan’s Central Bank Negotiates With Euroclear And Clearstream To Expand Market Access

| News, Economy, Azerbaijan

On December 11, Taleh Kazimov, the Chairman of the Central Bank of Azerbaijan (CBA), stated that the CBA was holding negotiations with Euroclear and Clearstream, the international depository and clearing centers. Kazimov noted that the discussions focused on establishing cooperation that would grant Azerbaijani investors broader access to global capital markets while enabling international market participants to operate more actively in Azerbaijan. He emphasized that "when a country connects to such centers and joins their system, it effectively appears on the global investor map".

He reported that Azerbaijani residents had invested around $1.6 billion in foreign capital markets, explaining that these investments mainly originated from legal entities operating in the oil sector, while individual investors were less active. He stated that the CBA was interested in encouraging citizens to direct their funds into the domestic financial system. According to Kazimov, storing assets in foreign depositories posed risks, including potential asset loss in cases of custodian bank bankruptcy. "That’s why the CBA is negotiating with Euroclear and Clearstream to ensure the safekeeping of Azerbaijani investors’ foreign securities at the National Depository Center (NDC)," he emphasized. Kazimov stated that approximately 17 billion manat (about $10 billion) of citizens’ cash remained outside the financial system. He highlighted that the CBA aimed to develop the local capital market and create alternatives to bank deposits and real estate, stressing that attracting foreign investors required modern infrastructure and a secure legal framework.

Azerbaijan had already joined the Abu Dhabi Securities Exchange (ADX) to link the Baku Stock Exchange (BSE) with the Tabadul trading platform, which would simplify and speed up transactions for investors and investment companies. The NDC planned to open nominee and depository accounts for ADX members, enabling settlements and the safekeeping of securities. Commenting on this cooperation, Kazimov stated that Tabadul was only "one tool," and that broader global connections were still required.

Ruslan Khalilov, the Chairman of the Board of the Baku Stock Exchange, stated that around 80 exchanges were connected to the Tabadul platform and that Azerbaijan would begin a test connection in January, initially through the ADX. He clarified that brokerage firms in Abu Dhabi could become remote members of the BSE to trade on behalf of their clients, while Azerbaijani brokers would similarly be able to become remote members of the ADX and conduct transactions on its platform. Khalilov emphasized that current legislation already allowed Azerbaijani investors to trade through the ADX, while the mechanism enabling foreign participants to operate through the BSE was still under preparation. He added that the technical integration could take one to two years, after which work on the commercial phase of the project would begin.

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