Azerbaijani investors to be allowed safekeeping of financial assets in European depositories

The National Depository Center (NDC) of Azerbaijan has begun negotiations with Euroclear and Clearstream, the main financial securities depositories in Europe.

The NDC has responded to a request by the Azerbaijani Report news agency, confirming that an official application process will be launched to open a pooled account in these depositories.

The institution did note, however, that membership in these depositories and account activation is a long-term process.

NDC’s accession to international depositories would accelerate the integration of Azerbaijan’s capital market into the global financial system. This cooperation will ensure both the more secure storage of local investors' assets in foreign markets and their more efficient management from an economic perspective, the institution states.

One of the key factors in joining international depositories is the volume of operations and the economic feasibility of such membership. According to NDC, the interests of local market participants and the volume of securities planned for placement in these depositories are taken into account in the consideration of whether to join Euroclear and Clearstream.

Additionally, membership in international depositories requires a strong risk management policy and full compliance with international regulations on anti-money laundering (AML) and counter-terrorism financing (CTF).

The lack of interest from domestic market participants in securities issued on European markets had previously prevented the NDC from reaching the necessary volumes for membership and creating the required infrastructure. However, recently, increasing demand has prompted renewed activity in this direction.

In this context, in 2024, the NDC aligned its risk management procedures with international standards and improved its policies on anti-money laundering and internal regulations.

As Caliber.Az recalls, institutions like Euroclear and Clearstream are central securities depositories (CSDs), which are financial market infrastructures that hold and transfer fungible securities such as corporate shares and government bonds. 

By Nazrin Sadigova