Centras Securities JSC: in response to claim court decides to force repo deal and collect fine from BCC Invest JSC - Subsidiary of Bank CenterCredit JSC

/KASE, July 30, 08/ - Centras Securities JSC (Almaty) a listing company of Kazakhstan Stock Exchange (KASE) in categories "А", "К", "Р" and "Н" disseminated the press release: Quotation start Centras Securities JSC informs that on May 16, 2008 the Specialized Financial Court of Almaty in regard of the claim of Centras Securities JSC to BCC Invest JSC - Subsidiary of Bank CenterCredit JSC decided to enforce repo deal execution and collect a money fine. In the claim Centras Securities JSC requested to force the defendant to execute the nego repo deal by way of collection from the defendant of the entire sum due upon repo deal closing. In its decision the court refused Centras Securities JSC to satisfy the claim reasoning the repo closing deal in accordance with the Rules of the Exchange is acknowledged as cancelled. On July 9, 2008 by Resolution of the Supreme Court of the Republic of Kazakhstan this decision was left unchanged, and an appeal of Centras Securities JSC unsatisfied. In its decision the Specialized Court of Almaty acknowledged the concluded repo deals as "annulled on the indicated date due to repo transaction failure". Annulment of the agreement entails the consequences, specified by article 403 of the Civil Code of the Republic of Kazakhstan. According to paragraph 1 of this article "upon annulment of the agreement the obligations of the parties end. According to paragraph 4 "The parties may not demand the executed according to the obligation before cancellation or changes of the agreement to be returned, unless otherwise is set by legislation acts or the agreement of the parties". At the same time, according to paragraph 5 of article 403 of the Civil Code of the Republic of Kazakhstan "in case the ground for annulment or alteration of the agreement is a substantial violation of the agreement by one of the parties, the affected party may require for the losses incurred due to annulment or alteration of the agreement to be paid". At that, the Specialized Financial Court decision specifies: - "the claimant indicates that the defendant, being the only counter agent of the deal, and correspondingly, an obliged person, failed to comply with obligations on repo deal closing... In its response to the claim the defendant indicates that they acted on behalf of their client at conclusion of repo opening and closing deals... In this part the court deems grounds of the claimant reasonable, and grounds of the defendant as subject to denial..."; - "...the court comes to conclusion that the person that is not a member of the Exchange may not be deemed as the party of the repo deal"; - "...the court comes to conclusion that the defendant, having concluded repo opening and closing deals, acted on his own behalf". These issues were most essential for Centras Securities JSC and being proved in the course of the proceeding. Thus, Centras Securities JSC considers the decision of the court positive, as this provides an answer to the question regarding the obliged person in relations between brokers and their clients, which was not clear on the Kazakhstan Stock market before now. The conclusions of the court were not disproved by the Resolution of the Supreme Court of the Republic of Kazakhstan, which gives grounds to think the Supreme Court also acknowledges responsibility of a broker at his conclusion of deals in the interest of clients. Centras Securities JSC think BCC Invest JSC must comply with its duties on close of repo deals before its counter agents, for the sake of confirming its status of a fair broker. Otherwise Centras Securities JSC will proceed with actions in order to protect the rights violated. The copy of the Almaty Specialized Financial Court decision dated May 16, 2008 is available at the corporate site of Centras Securities JSC - www.centras.kz. Press Service of Centras Securities JSC Quotation end [2008-07-30]