A number of significant amendments in the regulation of the
banking and finance sector of the Republic of Azerbaijan were made
in the first half of March 2016.
Start of Operations of the Chamber for Control of Financial
On 10 March 2016 the President of the Republic of Azerbaijan
signed a decree approving the charter (the "Charter") of
the newly-established Chamber for Control of Financial Markets (the
"Chamber"). The Chamber assumed the functions of the
following now-defunct state bodies: the State Committee for
Securities, the State Insurance Supervision Service of the Ministry
of Finance and the Financial Monitoring Service under the Central
Under the Charter, the Chamber is a public legal entity that
licenses, regulates and supervises participants of the securities
market, investment funds, insurance and credit organizations
(banks, non-banking credit organizations and postal operators) and
payment systems and ensures transparency and flexibility in its
The Chamber can adopt legal acts regulating the financial
markets, issue and revoke licenses of the participants of the
financial markets, and carry out inspections of said
The Chamber is exempt from taxes but cannot engage in business
activities and its revenues are used to fund its operation.
The activities of the Chamber are supervised by the Board of
Directors, which consists of five members and is chaired by the
chairman - Mr. Rufat Aslanli, chairman of the now-defunct State
Committee for Securities of the Republic of Azerbaijan.
The day-to-day activities of the Chamber are supervised by the
Management Board consisting of six members.
New Role of the Central Bank
The Central Bank of the Republic of Azerbaijan (the
"Central Bank") has lost the vast majority of its
functions. This happened pursuant to the amendments to the law On
the Central Bank approved by the President of the Republic of
Azerbaijan on 10 March 2016.
The Central Bank has been transformed from a state body to a
public legal entity and its charter capital has been transformed
into the charter fund.
The Central Bank's goals have been reduced to the
organization and maintenance of the centralized interbank and other
payment systems, as well as maintenance of the banking system's
stability. The Central Bank, however, continues to participate in
state monetary and currency policy.
In addition, the Central Bank has remained the so-called lender
of last resort, which means that the Chamber may apply to the
Central Bank for a loan for up to six months to maintain the
financial solvency of a bank, and the Central Bank must consider
this application within two days.
Amendments to Currency Regulation Rules
Pursuant to the amendments to the law On Currency Regulation
approved by the President of the Republic of Azerbaijan on 9 March
2016, currency regulation functions were passed from the Central
Bank to the Chamber.
The amendments also established that the Chamber will adopt
rules on opening foreign currency bank accounts outside Azerbaijan
for financial markets participants (licensed participants of the
securities market, investment funds, insurance and credit
organizations), while the Central Bank may adopt such rules for
Amendments to Deposit Insurance
Pursuant to the law On Full Insurance of Deposits approved by
the President of the Republic of Azerbaijan on 1 March 2016, any
amounts of deposits in national or foreign currency are subject to
full insurance. The maximum insured interest rate is currently 12%
for national currency deposits and 3% for foreign currency
Most of the powers for supervision of deposit insurance matters
have passed from the Central Bank to the Chamber.
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The implementation of the mandatory exchange of initial and
variation margin for non-cleared OTC derivative trades in the EU
commenced on 4 February for financial counterparties with the
largest derivatives portfolios.
Nevertheless, a RAIF's investment policy is subject to certain risk diversification requirements laid down by the CSSF.
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