JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013EURASIAN TRADE SYSTEM COMMODITY EXCHANGEMr. Kurmet OrazayevChairman of the BoardIn 2011 ETS steadily focused on buildingour core business and continued toreinforce the leading positions on themarket of exchange trade.A year of 2011 proved to be an encouragingperiod for Kazakhstani market. It has beennoted that commodity trade has potential togrow and further advance in Kazakhstan. In2011 ETS steadily focused on building our corebusiness and continued to reinforce the leadingpositions on the market of exchange trade.The combined trade turnover exceeded morethan US$ 2 bill as of 2011 whereas company’sfinancial indicators increased by 10 times sinceits foundation.Our customers continue to benefit fromour substantial investments in informationtechnology. Throughout 2011, we advancedour technology on several fronts. An importantdevelopment for ETS was the establishmentof the indispensable exchange infrastructure.It enables major operators of internet tradingto enter Kazakhstani market which became aninherent part for further dynamic growth of themarket.Additionally, ETS continued to execute onproduct launches and global expansion thatwill smooth the way for the advanced market.We have initiated the successful cooperationwith International Association of Exchangesof the Commonwealth of Independent Statescountries (IAEx CIS), Federation of EurasianStock Exchanges (FEAS), The London GoldMarket Fixing Limited (TLGMFL), Hong KongExchanges and Clearing Ltd (HKEx).Moreover we expanded our strategic initiativesthat include the chairmanship of ETS in thecommittee on development of commoditymarkets with IAEx CIS since November 2011.As we look ahead in 2012 and beyond, webelieve that international collaboration createslong-term value for our shareholders andcustomers.Looking ahead, our core strengths of providinghigh level of service, technology platformsand secure central clearing counterparty willcontinue to benefit market participants. Weappreciate our shareholders, customers andpartners for their confidence and support in thedevelopment of our project.HISTORY AND DEVELOPMENTBuilding on contemporary trade infrastructureon the commodity exchange, ETS serves theinvestment needs of our customers.Eurasian Trade System was founded in 2008on behalf of President of the Republic ofKazakhstan. With its strategic partners RegionalFinancial Center of Almaty city JSC and stockexchange “Russian Trading System” the projectis mainly aimed to form price indices on thecountry strategic goods. It ensures the datatransparency, the decrease of intermediarycosts when buying and realizing goods as wellas setting fair prices for the ultimate consumersand sellers.ETS focuses on driving efficiency through lowercosts, consumer alignment and technologyimprovement. As a result a full-fledged technicalcenter has been created on the basis of ETSin Almaty city. The center is entirely suppliedwith the recent equipment and security system.Both spot and derivative market have beenprovided with contemporary trading system aswell as auction trading system to any underlyingasset which enables reliability and high pace ofconducting transactions.Moreover ETS delivers clearing solutionsand services through an independent centralcounterparty. Our clearing house brings thesecurity and fulfills the contract obligationsand business transactions. Clearing houseguarantee funds are well-capitalized withcollateral from its clearing firms. However ETShas been taking part in the build-up of legal andregulatory documents for the development oforganized commodity markets in Kazakhstanthat should satisfy international standards.FUTURE OUTLOOKThe past year demonstrated the cautious returnof certainty to the commodity market. Diversityacross our business is a key asset which impliesenhancing the product line. Hence it enables usto maintain effectiveness and profitability duringunpredictable macroeconomic cycles.ETS carries on the work of the formation ofregulatory standards of exchange trade inKazakhstan in accordance with internationalpractices. On behalf of the President’sadministration of RK, ETS jointly with NationalBank of the RK and Ministry of environmentprotection of the RK is involved in developmentof projects on the launch of gold as well asemission trading via our exchange.ETS’ chairmanship in the Committee onthe development of commodity marketspromotes the formation of the unified exchangeinfrastructure, and also integrity of commoditymarkets within the bounds of EurasianEconomic Community (EurAsEC). MoreoverETS aims to put efforts and build the leadingelectronic venue for the procurement agency,particularly the government procurement.Hence the launch of regional indices on thestrategically significant goods is a necessaryprocess to be implemented in the nearestfuture.Using our best practices we are able to createthe favourable competitive environment for bothconsumers and sellers in pursuit of bringing theequal access for participants.PAGE 42