About Freedom Holding

Freedom Holding Corp. operates as a holding company that owns and operates several diversified financial services businesses. The company’s subsidiaries engage in a broad range of activities in the securities industry, including retail securities brokerage, investment research, investment counseling, securities trading, market making, investment banking and underwriting services in Eurasia, and consumer banks servicing clients in Russia and Kazakhstan and an agency only institutional brokerage at the New York Stock Exchange. The company owns directly, or through subsidiaries, various companies, including LLC Freedom Finance Azerbaijan (Freedom AZ); Freedom Finance Europe Limited (Freedom EU); Freedom Finance Technologies Ltd (Freedom Technologies); Freedom Finance Germany GmbH (Freedom GE); JSC Freedom Finance (Freedom KZ); Freedom Finance Global PLC (Freedom Global); Bank Freedom Finance Kazakhstan JSC (Freedom Bank KZ); LLC Investment Company Freedom Finance (Freedom RU); LLC FFIN Bank (Freedom Bank RU); LLC Freedom Finance Ukraine (Freedom UA); FFIN Securities, Inc. (FFIN); Prime Executions, Inc. (PrimeEx); and LLC Freedom Finance Uzbekistan (Freedom UZ). The company owns a 32.88% interest in Freedom UA. In July 2020, the company completed the acquisition of Zerich Capital Management (Zerich). In December 2020, Zerich was merged into Freedom RU and its separate legal existence terminated. In connection with the merger, the assets and liabilities of Zerich were transferred to Freedom RU. The company also owns minority equity interests in both the UX (24.3%) and the SPBX (12.8%). The company’s Cyprus brokerage office serves to provide its clients with operations support and access to the investment opportunities, relative stability, and integrity of the U.S. and European securities markets, in cases where the regulatory regimes of the jurisdictions of the company’s other subsidiaries provide only limited or no direct investor access to international securities markets. The company operates under various securities licenses in the jurisdictions where it conducts business, plus it has banking licenses in Russia and Kazakhstan that allows it to expand the types of financial services it provides to its Russian and Kazakhstani clientele. The company’s Cyprus operations are conducted in Limassol, Cyprus where it is licensed to receive, transmit and execute customer orders, establish custodial accounts, engage in foreign currency exchange services and margin lending, and trade its own investment portfolio. Through the company’s Cyprus office, it provides transaction handling and intermediary services to its offices requiring access to securities markets in the U.S. and Europe. The company is a member of the Russian National Association of Securities Market Participants (NAUFOR), a statutory self-regulatory organization with wide responsibility in regulation, supervision and enforcement of its broker-dealer, investment banking, commercial banking and other member firms in Russia. Freedom Bank RU is a member of the National Financial Association in Russia. In Kazakhstan, Freedom KZ and Freedom Bank KZ are members of the Association of Financiers of Kazakhstan. Freedom UA is a member of the Professional Association of Capital Market participants and Derivatives (PARD) in Ukraine. Freedom EU is a member of the Association for Financial Markets in Europe (AFME). PrimeEx is registered as an agency only execution broker-dealer that operates on the floor of the New York Stock Exchange (NYSE) and is a member of Nasdaq Stock Exchange (NASDAQ), the Financial Industry Regulatory Authority (FINRA), and the Securities Investor Protection Corp (SIPC). Retail Brokerage Services The company provides a comprehensive array of financial services to its target retail audience, which is individuals, businesses and financial institutions seeking to diversify their investment portfolios to manage economic risk associated with political, regulatory, currency, banking, and national uncertainties. Its clients also include other broker-dealers. Clients are provided online tools and retail locations to establish accounts and conduct securities trading on transaction-based pricing. The company markets to its customer demographic through a number of channels, including telemarketing, training seminars and investment conferences, print and online advertising using social media, mobile app and search engine optimization activities. The company serviced more than 290,000 client accounts in fiscal 2021, of which more than 63% carried positive cash or asset account balances as of March 31, 2021. During March 31, 2021, the company had approximately 97,000 active accounts. The company has accelerated its growth through nonorganic growth strategies, including several strategic acquisitions, which has enabled it to expand its market reach, increase its client base and provide its clientele the convenience of both a state-of-the-art proprietary electronic trading platform, Tradernet, and 98 retail brokerage and financial services offices located across Kazakhstan (26), Kyrgyzstan (1), Russia (44), Uzbekistan (8), Ukraine (13), Cyprus (2), Germany (2), Azerbaijan (1) and the U.S. (1) that provide its full array of financial services, investment consulting and education. In Russia 28 brokerage and financial services offices also provide banking services to firm customers. In Kazakhstan eight brokerage and financial services offices also provide banking services to firm customers. Tradernet Software Platform: The company’s Tradernet software platform provides clients a browser-based desktop application and in some countries, a supporting mobile app to facilitate trading activity. Tradernet provides clients with trading capabilities and access to monitor multiple markets around the world simultaneously, including Kazakhstan Stock Exchange (KASE), Astana International Exchange (AIX), Ukrainian Exchange (UX), Moscow Exchange (MOEX), Saint-Petersburg Exchange (SPBX), New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange, Chicago Mercantile Exchange, Hong Kong Stock Exchange and Deutsche Börse and to execute trades electronically in these markets in multiple products from a single trading account. Additionally, Tradernet allows clients to monitor and manage all aspects of their personal accounts, including non-trading orders and participate in the company’s client social network. The company offers its customers seamless access to all classes of tradable, primarily exchange-listed products traded on numerous exchanges and market centers around the world. Full-Service Brokerage: The company offers full-service brokerage covering a broad array of investment alternatives, including exchange-traded and over-the-counter corporate equity and debt securities, money market instruments, exchange traded options and futures contracts, government bonds, and mutual funds. A substantial portion of the company’s revenue is derived from commissions from clients through accounts with transaction-based pricing. Brokerage commissions are charged on investment products in accordance with a schedule it has formulated that aligns with local practices. Margin Lending: The company extends credit to clients, collateralized by securities and cash in the customer’s account, for a portion of the purchase price of securities. Investor Education: The company provides a variety of investment education and training courses to clients. Its clients are provided online access to tools that enable them to manage and monitor their accounts and portfolio performance via the Tradernet platform. Investment Research: The company employs 27 research and securities analysts that conduct equity and debt research covering a number of individual securities worldwide. It provides regular research reports, notes and earnings updates to its clients. The research department supports the company’s clients and sales department with equity and fixed-income research focused on the Kazakhstani, Ukrainian, Russian, European and U.S. markets. The company’s research reports focus primarily on large, liquid public companies along with other linked commodities and currency markets. Its research reports are based on fundamental valuation and are typically issued on a quarterly-basis or when significant events occur. Consumer Banking: In Russia and Kazakhstan the company has augmented its brokerage operations with consumer banking services. The company generates banking service fees and commissions by providing services that include lending operations, payment card services, deposit services, money transfers, opening and maintaining correspondent accounts, renting safe deposit boxes, e-commerce money transfer services for legal entities, and tender guarantees. The company is an authorized Visa/MasterCard issuer. In Russia, the company is a participant in the Mir payment system. The Mir payment system is a national electronic payment system established by the National Bank of Russia. The company also issues multi-currency cards, which allow purchases to be made in multiple different currencies with the use of a single card. The company provides internet banking and mobile applications for Android/iOS for companies and individuals. In addition, the company offers clients several investment and structured banking products (insured deposits with option features and currency risk hedging products as permitted by local laws). In Russia, the Deposit Insurance Agency of Russia insures 100% of deposits of individuals up to 1.4 million Russian rubles (approximately $18,400 as of March 31, 2021). In Kazakhstan, the Kazakhstan Deposit Insurance Fund (KDIC) administers the deposit insurance system. The KDIC insures deposits in the case of liquidation of the bank-member of the Fund. Deposits are insured up to 15 million Kazakhstani tenge (approximately $35,300 as of March 31, 2021), per client. Additionally, the company has developed a payment card it calls the invest card. The invest card allows the company’s clients the ability to manage their investment accounts both online or in person. It offers features unique to the Kazakhstani market including integration with the client’s brokerage accounts to allow for convenient instant money transfers to and from the client’s brokerage account; free payments, transfers and exchange operations, and reduced service fees for certain transactions; o fee interbank and p2p transfers and replenishment of the card in any currency; and improved convenience including the ability to remotely open bank accounts by means of biometric identification and remote execution of account opening documents. Freedom Bank KZ is also focused on developing and digitizing other classic banking products, such as mortgages. Investment Banking The company has established teams of investment banking professionals in Almaty and Moscow. Its investment banking division provides strategic advisory services and capital markets products. The company’s investment banking team focuses on certain sectors, including consumer and business services, energy, financial institutions, real estate, technology, media and communications. The company’s investment banking activities are concentrated in Kazakhstan, Russia and Uzbekistan where the governments continue to privatize industries, but commercial banks concentrate their services on large enterprises or state-owned enterprises. In these countries, the commercial lending sources also impose loan structures and debt covenants that exclude many companies. Equities Capital Markets: The company provides capital raising solutions for corporate clients through initial public offerings and follow-on offerings, including listing companies on appropriate exchanges. The company focuses on companies in growth industries and participate as market makers in its underwritten securities offerings after the initial placements of shares. Debt Capital Markets: The company offers a range of debt capital markets solutions for emerging growth and small market companies. It focuses on structuring and distributing private and public debt, for various purposes, including buyouts, acquisitions, growth capital financings, and recapitalizations. In addition, the company participates in bond financings for both sovereign and corporate emerging market issuers. Proprietary Trading and Investment Activities In the regular course of the company’s business, it takes securities positions as a market maker and/or principal to facilitate customer transactions and for investment purposes. In market making activities and when trading for the company’s own account, it exposes its own capital to the risk of fluctuations in market value. Repurchase and Reverse Repurchase Agreements Additionally, through the use of securities sold under agreements to repurchase and securities purchased under agreements to resell, the company acts as an intermediary between borrowers and lenders of short-term funds and provide funding for various inventory positions. The company also employs repurchase and reverse repurchase agreements in its proprietary trading activities. Competition The brokerage and financial service firms with which the company principally competes for customers include Tinkoff, BCS, BrokerCreditService and JSC IC Finam in Russia; Halyk Finance, BCC Invest and First Heartland Securities in Kazakhstan; BrokerCreditService and Otkrytie in Cyprus. While there are many large banks in Russia and Kazakhstan, Freedom Bank RU has identified its principal banking competitors as Tinkoff, BCS and Alfa-Bank; and Bank Freedom KZ has identified its principal banking competitors as Kaspi Bank, Altyn Bank and Alfa-Bank. History The company was founded in 1981. The company was incorporated in 1981. It was formerly known as BMB Munai, Inc. and changed its name to Freedom Holding Corp. in 2017.