CHAPTER A. GENERAL

1.1. This Notice sets out the AFSA’s expected approach to the testing within the AIFC FinTech Lab of the FinTech Lab Activities involving Event-Based Contracts, including the permitted and prohibited scope of underlying events, the Regulated/Market Activities required to provide such contracts, and the categories of Clients to whom such contracts may be offered.

1.2. This Notice applies to all Authorised Persons and prospective applicants under FINTECH Part 2 that intend to offer Event-Based Contracts (each a “Testing Firm”, as defined in paragraph 2.4). An Authorised Person already under the supervision of the AFSA that wishes to offer Event-Based Contracts may refer the matter directly to the FinTech Lab. The treatment of its Licence depends on the activities it already carries out:

(a) where the Authorised Person already holds a Licence to carry on the Regulated/Market Activities required to operate an Event-Based Contract platform (Operating a Multilateral Trading Facility, Operating an Investment Exchange, or Operating a Digital Asset Trading Facility, as applicable), it need not vary the scope of its Licence. The AFSA may instead vary such Authorised Person's Licence by imposing such conditions, restrictions, requirements as it considers appropriate to facilitate the provision of Event-Based Contract activities within the FinTech Lab, having regard to the nature of the licensed activities and the proposed testing arrangements. The AFSA may determine that certain provisions of this Notice do not apply, or apply with such modifications as the AFSA considers appropriate, to such Authorised Person;

(b) where the Authorised Person does not carry out the activities necessary to launch such contracts, it must apply to vary its Licence to add the necessary Regulated/Market Activities to launch the contract, and be subject to conditions, restrictions and requirements under the varied Licence. In either case, any internal arrangements necessary for the supervision of such testing will be determined by the AFSA.

1.3. Supervision of Event-Based Contract activities is carried out by the AFSA. This Notice does not address Derivatives or other instruments offered outside the scope of this Notice, nor personal-capacity activity by Persons not connected with the activities of an Authorised Person.

1.4. Testing within the FinTech Lab enables the AFSA to approve, and to keep under review, the entire testing arrangement, including the contract specifications, the profiles of the Clients onboarded, and the number and detail of transactions. The AFSA may at any time impose or vary conditions, restrictions and requirements, suspend or limit the offering of particular Event-Based Contracts, or require a Testing Firm to cease Testing, where the AFSA considers that developments in the testing give rise to risks to Clients, to market integrity or to the Regulatory Objectives. This reflects the supervisory control available to the AFSA under the FinTech Lab framework and the conditions of each Testing Firm’s Licence.

1.5. A Testing Firm tests its Event-Based Contract activities against a business plan and a testing or development plan submitted to the AFSA. The AFSA monitors the Testing Firm’s progress against that plan and, under FINTECH 2.7.2, requires interim reports covering, among other matters, the number of Clients onboarded, the number and value of transactions, Client complaints, and any fraud or operational incidents and the steps taken to address them.

1.6. The AFSA will also impose appropriate safeguards on a Testing Firm, under FINTECH 2.1.3, through a Risk Mitigation Programme (RMP) and Testing Plan.

CHAPTER B. DEFINITIONS

2. For the purposes of this Notice, unless the context requires otherwise:

2.1. Event-Based Contract - means a specified Investment that is a Derivative, the payoff of which is determined solely by reference to the occurrence or non-occurrence of a specified future observable event (the “Reference Event”), which is binary in structure (paying a fixed predetermined amount per contract upon the occurrence of the Reference Event and zero upon its non-occurrence, or vice versa), settles wholly by cash payment without any party taking delivery of any Investment, Commodity or other underlying asset by reference to which the Reference Event is determined, confers no right to acquire or dispose of any Investment, Commodity or other property, and is not a Contract of Insurance. An Event-Based Contract must be fully collateralised in accordance with paragraph 4.4.

2.2. Classification of an Event-Based Contract:

(a) where offered by a Testing Firm Operating an Investment Exchange or Operating a Multilateral Trading Facility, an Event-Based Contract is a Derivative, settled in a Fiat Currency.

(b) where offered by a Testing Firm Operating a Digital Asset Trading Facility, an Event-Based Contract is a Digital Asset Derivative offered in accordance with paragraph 4.1 and the DAA;

(c) the Notice does not itself assign an Event-Based Contract to a particular category of Derivative or Digital Asset Derivative. A Testing Firm must, before commencing Testing, agree with the AFSA and obtain the AFSA's approval of the category applicable to its Event-Based Contracts. The AFSA decides having regard to the terms on which the contracts are to be concluded, their payout structure, their settlement and exercise mechanics and their economic substance. A Testing Firm must agree with the AFSA any change to those terms or mechanics and must not give effect to such a change until the AFSA's approval has been obtained.

2.3. Semi-professional Client - means an ordinary Retail Client who has passed the appropriateness assessment required by COB 5.3.4 and who meets the additional eligibility conditions set out in this Notice. The term is used in this Notice only; a Semi-professional Client is not a separate category of Client and remains a Retail Client for the purposes of the AIFC Acts. A Semi-professional Client is eligible to be offered Event-Based Contracts in accordance with paragraph 5.

2.4. Testing Firm - means a Person testing, or applying to test, Event-Based Contract products or services within the FinTech Lab, being a FinTech Lab Participant, a Person applying for a Licence to become a FinTech Lab Participant, or an Authorised Person that already holds a Licence and has been authorised by the AFSA to offer Event-Based Contracts within the FinTech Lab.

2.5. Event Contract Settlement Source - means the independent, publicly available data source pre-specified in the contract specification that is used to determine the outcome of the Reference Event for settlement purposes.

2.6. Capitalised terms not defined in this Notice have the meanings given in the GLO.

CHAPTER C. PERMITTED AND PROHIBITED SCOPE

3.1. An Event-Based Contract must reference only a financial or economic Reference Event.
A Reference Event that is not financial or economic in nature falls outside the permitted scope of this Notice and must not be referenced by an Event-Based Contract, whether or not it is listed among the prohibited categories in paragraph 3.2. The following categories of financial or economic underlying are permitted:

(a) prices of Securities and securities indices;

(b) prices of Digital Assets included in the Table of Digital Assets approved by the AFSA in the FinTech Lab;

(c) prices of Commodities and commodity indices (except for prices of Commodities included in the list of socially significant food products approved by the Ministry of Trade and Integration of the Republic of Kazakhstan);

(d) interest rates, including central bank policy rates and recognised benchmark or reference rates;

(e) exchange rates between currencies; and

(f) macroeconomic indicators released on a pre-announced schedule by official government agencies or central banks, including inflation data, GDP releases, employment statistics and central bank rate decisions.

(g) any other financial or economic event approved by AFSA, provided that:

·       the event is objectively observable and capable of independent verification;

·       the event has a demonstrable economic rationale.

3.2. The following Reference Events are generally prohibited, unless otherwise approved by the AFSA under paragraph 3.3:

(a) sporting events, including individual athlete performance and match or tournament outcomes;

(b) political elections, political ratings, referendums, or the formation of a government;

(c) weather, natural phenomena or environmental conditions;

(d) entertainment, social media, cultural or celebrity-related events;

(e) terrorism, armed conflict, assassination, or the death of any Person;

(f) individual injuries, criminal conduct, or the personal circumstances of identifiable natural persons; or

(g) any activity that is unlawful under the law of the Republic of Kazakhstan or otherwise contrary to the public policy of the AIFC.

3.3. A Testing Firm seeking to list an Event-Based Contract whose Reference Event does not fall clearly within paragraphs 3.1 or 3.2 must obtain the prior written approval of the AFSA before listing the contract. The AFSA will have regard to the hedging and price-discovery utility of the contract, its susceptibility to manipulation, the reliability of the Event Contract Settlement Source, the proximity of the Reference Event to any prohibited category, and any other public-interest consideration.

CHAPTER D. LICENSING, CLEARING AND MARKET INTEGRITY

4.1. The AIFC Acts do not at present provide a dedicated regulatory framework for Event-Based Contracts as a distinct class of product. An Event-Based Contract falls within the existing category of Derivatives or, where offered on a Digital Asset Trading Facility, of Digital Asset Derivatives, in accordance with paragraph 2.2. Event-Based Contract activities are accordingly eligible for Testing in the FinTech Lab under FINTECH 2.2.1(a)(i), being Financial Activities similar to those already regulated in the AIFC in which an established process is applied differently so as to create a new business model. Under GEN 1.4.1(b), a Person may apply for a Licence to carry on activities not specified in GEN Schedule 1, which provides the basis on which the AFSA may authorise a Person to carry on Event-Based Contract activities in the FinTech Lab. The AFSA determines the Licence category appropriate to each Testing Firm on a case-by-case basis. The Licence categories available for operating an Event-Based Contract platform are set out below:

4.2. As an Event-Based Contract is an Investment, a Testing Firm may also carry on, in relation to Event-Based Contracts, any other Regulated/Market Activities in relation to Investments for which it is authorised, including, without limitation, Dealing in Investments as Agent, Arranging Deals in Investments, and Advising on Investments, subject to this Notice and the conditions of its Licence. The Regulated Activity of Dealing in Investments as Principal is not available in respect of Event-Based Contracts under this Notice, consistent with the prohibition in paragraph 4.3 on a Testing Firm trading on Event-Based Contracts listed on its own platform. A Testing Firm must comply with the rules applicable to its Licence category (AMI, MOTF or DAA, as the case may be), as applied to Event-Based Contracts subject to any modifications specified in its Licence.

4.3. A Testing Firm must not trade, whether as principal or through Affiliates, on Event-Based Contracts listed on its own platform.

4.4. Each Event-Based Contract must be fully collateralised: the full potential payout amount must be collected from the contracting parties at the time of trade and held in segregation, such that no counterparty credit risk arises between the contracting parties and no margin, leverage or mark-to-market exposure is permitted. On an Investment Exchange or a Multilateral Trading Facility, collateral and settlement must be denominated in a Fiat Currency. Where a Digital Asset Trading Facility offers Event-Based Contracts in the form of Digital Asset Derivatives under paragraph 4.1, collateral and settlement are governed by the DAA. Provided that full collateralisation is maintained at all times, a separate Clearing House Licence is not required. Client Money/Investment must be held with a Third Party Account Provider in compliance with COB. Where this is done, a separate authorisation to carry on the Regulated Activity of Providing Custody is not required.

4.5. Each Event-Based Contract must have a written contract specification, which the AFSA approves before the contract is listed, setting out the precise definition of the Reference Event and its outcome space, the Event Contract Settlement Source, the settlement trigger and expiry mechanism, the binary payout structure, and a clear and binding dispute-resolution and ambiguity-resolution mechanism. The Event Contract Settlement Source must be independent of the Testing Firm, publicly available and verifiable, and the Testing Firm must not use a source in which it or its Affiliates have a financial interest or which it is able to influence.

4.6. The provisions of sections 86 and 87 of the FSFR and Chapter 5 of MAR relating to Market Abuse apply in full to the Testing Firm and to all Event-Based Contracts. For the purposes of Event-Based Contracts, Inside Information includes material non-public information concerning the Reference Event (including its occurrence, non-occurrence, timing or outcome), and any act of manipulating, influencing or interfering with the Reference Event for the purpose of profiting on a related Event-Based Contract constitutes Market Abuse. A Testing Firm must maintain systems and controls to detect and prevent Market Abuse and Financial Crime, must notify the AFSA immediately of any suspected Market Abuse, and must not permit any Person possessing material non-public information about a Reference Event to trade on related Event-Based Contracts. The AFSA will pay particular attention to a Testing Firm’s insider-dealing systems and controls in relation to Event-Based Contracts that reference official data releases, for example GDP releases and central bank rate decisions.

4.7. A Multilateral Trading Facility and an Investment Exchange operate through Members, being Authorised Firms (e.g. carrying on Regulated Activity of Dealing in Investments as Agent), and do not deal with Clients directly. Both the operator of the facility and the Members are Testing Firms: the operator tests the trading infrastructure and the Event-Based Contracts, while the brokers or Members carry on the Client-facing activities. A Digital Asset Trading Facility may instead onboard and deal with Clients directly. The allocation of Client-facing obligations between these Testing Firms is set out in paragraph 5.6.

CHAPTER E. CLIENT CLASSIFICATION AND ELIGIBILITY

5.1. Event-Based Contracts may be offered only to:

(a) Professional Clients; and

(b) Semi-professional Clients, as defined in paragraph 2.3.

No other Retail Client may be offered Event-Based Contracts, whether directly or through an intermediary. In particular, Event-Based Contracts must not be offered or made available to the general retail public.

Client classification must be carried out in accordance with COB, and a Retail Client may be treated as a Semi-professional Client only where the appropriateness assessment required by COB 5.3.4 has been carried out. The AFSA approves the Testing Firm’s classification methodology, including the questionnaires used to assess Semi-professional Clients, rather than the classification of each Client.

5.2. A natural person must be at least 21 years of age to be onboarded or to trade Event-Based Contracts. A Testing Firm must verify the age and identity of each Client through its Customer Due Diligence process before onboarding.

5.3. A Testing Firm must not onboard, or permit to trade, any Client who is (a) a Politically Exposed Person ("PEP") or (b) a public official of the Republic of Kazakhstan. This prohibition applies to all such Persons and is not subject to the Enhanced Due Diligence exception otherwise available under the AML.

5.4. The following limits apply to a Testing Firm’s Event-Based Contract exposures, expressed in Fiat Currency, consistent with the testing limits in FINTECH Schedule 1 and with the AFSA’s power under COB 5.7(2) to modify the limits applying to Derivatives offered to Retail Clients. The limits are specified in the Testing Firm’s Licence and are not fixed: the AFSA may increase or reduce a limit for a particular Testing Firm on a risk-based approach, and a Testing Firm may apply to increase a limit on grounds including six months’ operation without incident, full compliance with applicable requirements, and the provision of an adequate arrangement to compensate Clients.

(a) The aggregate exposure of a Semi-professional Client to Event-Based Contracts must not exceed 1,000 USD (or equivalent) where the Client is a natural person, or 20,000 USD (or equivalent) where the Client is a Body Corporate; a Professional Client trades within the aggregated limits in sub-paragraph (b).

(b) Where no arrangement to compensate Clients is in place, the aggregate exposure that a Testing Firm may hold at any time must not exceed 200,000 USD (or equivalent) for Semi-professional Clients and 5,000,000 USD (or equivalent) for Professional Clients. Where Clients are onboarded through brokers or Members, this limit applies to each Testing Firm that onboards Clients.

(c) The aggregate exposure of a Semi-professional Client must in any event not exceed 20% of that Client’s net assets, calculated in accordance with COB 2.5.2 (excluding the Client’s primary residence) and excluding any borrowed funds and credit facilities. Where more than one limit applies, the lower applies. A Testing Firm must obtain sufficient information about each Semi-professional Client to calculate and monitor these limits.

5.5. Before a Client is first permitted to trade Event-Based Contracts, the Testing Firm must provide the Client with a written key information document, in plain language, describing the product, its risks, the Reference Event, the Event Contract Settlement Source, the payout structure and the applicable fees. Alongside the key information document, and before the Client is first permitted to trade, the Testing Firm must give the Client a separate, short and prominent written risk warning in plain language. The risk warning must state that an Event-Based Contract is a binary, all-or-nothing Derivative whose outcome depends solely on the occurrence or non-occurrence of the Reference Event, and that on each contract the Client will either win the fixed payout or lose the entire amount placed at risk. The Testing Firm must obtain from the Client a separate written acknowledgement, consistent with COB 2.5.1(c), that the Client has received, read and understood the risk warning before being permitted to trade. All Event-Based Contract activities are subject to compliance with AML, and a Testing Firm must demonstrate the required policies, procedures, systems and controls before commencing business with Clients. For platforms using blockchain-based settlement or accepting Digital Assets as collateral, integration of blockchain analytics tools is required and anonymous or pseudonymous participation is prohibited.

5.6. Where Event-Based Contracts are made available through a Multilateral Trading Facility or an Investment Exchange, the Testing Firm operating the facility does not onboard or deal with Clients directly. The obligations in this Chapter that relate to a Client apply to the Testing Firm that onboards the Client and not to a Testing Firm that only operates the infrastructure. Where a Digital Asset Trading Facility onboards Clients directly, those obligations apply to it.

CHAPTER F. APPLICATION OF AIFC ACTS AND EFFECTIVE DATE

6.1. A Testing Firm remains subject to all applicable obligations under the AIFC Acts, including reporting obligations under FINTECH 2.7.2 and the minimum technology requirements under FINTECH Schedule 1, regardless of the technological infrastructure used to effect a transaction. The frequency and content of reporting, and any boundary conditions, limits or other measures, are determined by the AFSA on a case-by-case basis and specified in the Testing Firm’s Licence. A breach of the Licence conditions, restrictions and requirements may constitute grounds for the AFSA to take enforcement action under the FSFR and the relevant Rules.

6.2. This Notice comes into effect on 28 August 2026. It is forward-looking and sets out the AFSA’s expected supervisory approach to Event-Based Contracts within the FinTech Lab. This Notice remains in force until withdrawn or varied by the AFSA. Defined terms have the meanings given in the GLO; in the event of any inconsistency between a definition in this Notice and the GLO, the definition in the GLO prevails, unless expressly stated otherwise in this Notice.