The Central Bank of Azerbaijan (CBA) is in talks with the international depository and clearing centers Euroclear and Clearstream, CBA Chairman Taleh Kazimov told Report.
According to him, the discussions are focused on cooperation that will allow Azerbaijani investors to access the global capital market and allow international participants to more actively operate in Azerbaijan.
"When a country connects to such centers and joins their system, it effectively appears on the global investor map," the country's top banker noted.
Kazimov reported that Azerbaijani residents have invested approximately $1.6 billion in foreign capital markets to date.
"These are primarily legal entities operating in the oil sector. Individuals are not very active, but we are interested in their funds working within the country," he said.
The CBA chairman noted that storing assets in foreign depositories carries certain risks, including the risk of loss in the event of the bankruptcy of custodian banks.
"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)," emphasized Kazimov.
According to him, approximately 17 billion manat ($10 billion) of citizens' cash currently remains outside the financial system.
"Our goal is to develop the local capital market and offer alternatives to bank deposits and the real estate market. Attracting foreign investors also requires modern infrastructure and a legal framework that ensures investment security," he emphasized.
Azerbaijan has already joined the Abu Dhabi Securities Exchange (ADX) to connect the Baku Stock Exchange (BSE) to the Tabadul trading platform. This should simplify and speed up transactions for investors and investment companies, ensuring more efficient and secure trading on comparable markets. The NDC will open nominee and depository accounts for ADX members, allowing them to conduct settlements and store the securities of their clients and their own portfolios.
Commenting on this collaboration, Kazimov noted that Tabadul is only one tool, but to enter global markets, "we need to develop broader connections."
Ruslan Khalilov, chairman of the Board of the Baku Stock Exchange, noted that approximately 80 exchanges are connected to the Tabadul platform, and Azerbaijan will begin a test connection in January. Initially, interaction will take place through the ADX.
He clarified that there are two connection options: "Brokerage firms in Abu Dhabi can become remote members of the BSE and trade on behalf of their clients on the BSE. Additionally, Azerbaijani brokers will be able to become remote members of the ADX and conduct transactions on the Abu Dhabi exchange platform."
Khalilov emphasized that legislation allows Azerbaijani investors to trade through the ADX, while the possibility of conducting transactions through the BSE for foreign participants is still being prepared: "The work is being carried out jointly with the Central Bank of the Republic of Azerbaijan and Deloitte."
The technical connection process, he said, could take one to two years, after which work on the commercial portion of the project will begin.