The new rule in Azerbaijan defines requirements to securities dealers.
The State Committee for Securities (the “SCS”) has issued Rules On Acting as Dealers in Securities Market on June 30, 2014. The rules became effective on January 1, 2015.
Dealer are professional participants of Azerbaijan’s securities market. A dealer must obtain license from the SCS to be able to operate in Azerbaijan. A dealer may act as market maker – stand ready to buy and sell the securities at their bid and ask prices. More important for Azerbaijani market, dealers act as underwriters in security issues.
The new rules set out new requirements with respect to organizational structure of a dealer. A dealer must have, among others, internal control, internal audit and risk management department.
The rules also set forth capital requirements. In all cases, a dealer’s risk weighed capital must not be below AZN 100,000, which is around USD 125,881. A dealer must also maintain certain amount of so called “total capital”.