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What changed in Freedom Holding Corp.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Freedom Holding Corp.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+868 added−953 removedSource: 10-K (2025-06-13) vs 10-K (2024-06-14)

Top changes in Freedom Holding Corp.'s 2025 10-K

868 paragraphs added · 953 removed · 542 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

148 edited+109 added−138 removed38 unchanged
Biggest changeDepartment of Treasury's Office of Foreign Assets Control ("OFAC") and other non-U.S. sanctions violations, to follow FATF recommendations; • tax reporting obligations under QI, FATCA and CRS regulations; • supervisory and organizational procedures intended to monitor and assure compliance with relevant laws and regulations and to prevent improper trading practices; • employee-related matters, including qualification and certification of personnel; • provision of investment and ancillary services, clearance, and settlement procedures; • maximum loan and bank guarantees concentration issued to shareholders; • credit risk requirements; • liquidity risk requirements; • acquisitions; • qualification of firm management; • cybersecurity and personal data protection; • risk detection, management, and correction; and • various shareholders' capacity requirements required for obtainment of a regulatory status (banking holding, major shareholder, insurance holding, etc.). 18 Table of Contents The regulatory authorities in each jurisdiction where we are regulated establish minimum net capital and capital adequacy requirements which currently range from approximately $2,000 to approximately $22 million and fluctuate depending on various factors.
Biggest changeDepartment of Treasury's Office of Foreign Assets Control ("OFAC") and other non-U.S. sanctions violations, to follow FATF recommendations; • tax reporting obligations under QI, FATCA and CRS regulations; • supervisory and organizational procedures intended to monitor and assure compliance with relevant laws and regulations and to prevent improper trading practices; • employee-related matters, including qualification and certification of personnel and senior management; • provision of investment and ancillary services, clearance, and settlement procedures; • maximum loan and bank guarantees concentration issued to shareholders and group of borrowers; • credit risk requirements; • liquidity risk requirements; • acquisitions; • investment limitations; • competition; • IT, information security and personal data protection; • risk detection, management, and correction; and • various shareholders' requirements required for obtaining regulatory status (banking holding, major shareholder, insurance holding, etc.).
Freedom KZ currently holds the following licenses: • No. 3.2.238/15 dated October 2, 2018 (initially issued on March 21, 2007) for performance of activity on the securities market, particularly (i) broker-dealer activity with the right to maintain customer accounts as a nominal holder, and (ii) portfolio management without the right to attract voluntary pension contributions; and • Banking license No. 4.3.12 dated February 4, 2020 (initially issued on April 4, 2019) for performance of exchange operations with foreign currency, except for exchange operations with foreign cash.
Freedom KZ currently holds the following licenses: • No. 3.2.238/15 dated October 2, 2018 (initially issued on March 21, 2007) for performance of activity on the securities market, particularly (i) broker-dealer activity with the right to maintain customer accounts as a nominal holder, and (ii) portfolio management without the right to attract voluntary pension contributions; and • Banking license No. 4.3.12 dated February 4, 2020 (initially issued on April 4, 2019) for performance of exchange operations with foreign currency, except for exchange operations with cash currency.
Cypriot Investment Firms and Regulatory Legislation Freedom EU is a Cypriot Investment Firm ("CIF") registered with the Registrar of Companies of Cyprus under number HE 324220 and regulated by CySEC under license number 275/15 and is under obligation to cooperate with the Cyprus Unit for Combating Money Laundering (MOKAS).
Cypriot Investment Firms and Regulatory Legislation Freedom EU is a Cyprus Investment Firm ("CIF") registered with the Registrar of Companies of Cyprus under number HE 324220, regulated by CySEC under license number 275/15 and is under obligation to cooperate with the Cyprus Unit for Combating Money Laundering ("MOKAS").
Regulation U.S. Securities Market Regulation Our U.S. subsidiary PrimeEx is registered as a securities broker dealer with the SEC, is a member of various self-regulatory organizations ("SROs") and securities exchanges, including being a "Blue Line" broker dealer on the floor of the NYSE.
Securities Market Regulation Our U.S. subsidiary PrimeEx is registered as a securities broker dealer with the SEC, is a member of various self-regulatory organizations ("SROs") and securities exchanges, including being a "Blue Line" broker dealer on the floor of the NYSE.
Anti-Money Laundering, Anti-Terrorism Funding and Economic Sanctions Laws Anti-money laundering laws, financial record-keeping and reporting laws, and similar legislation and regulations in the jurisdictions where our subsidiaries operate, as well as certain stock exchanges and self-regulatory organizations, impose a variety of rules that require registered broker-dealers to meet "know your customer" requirements and monitor their customers' transactions for potentially suspicious activities.
Anti-Money Laundering, Anti-Terrorism Funding and Economic Sanctions Laws Anti-money laundering laws, financial record-keeping and reporting laws, and similar legislation and regulations in the jurisdictions where our subsidiaries operate, as well as certain stock exchanges and self-regulatory organizations, impose a variety of rules that require financial organizations, including registered broker-dealers, to meet "know your customer" requirements and monitor their customers' transactions for potentially suspicious activities.
After classifying the accounts, financial institutions must regularly present information, including name, taxpayer identification number, and account balance, to the local tax authorities for transfer to the IRS. The agreements also address when financial institutions in these countries are required to withhold taxes to be remitted to the IRS.
After classifying the accounts, financial institutions generally must regularly present information, including name, taxpayer identification number, and account balance, to the local tax authorities for transfer to the IRS. The agreements also generally address when financial institutions in these countries are required to withhold taxes to be remitted to the IRS.
We expect that the regulatory environment will continue to raise standards and impose new regulations with which we will be required to comply in a timely manner. We operate under various securities, banking and insurance licenses and must maintain our licenses in order to conduct our operations.
We expect that the regulatory environment will continue to raise standards and impose new regulations with which we will be required to comply in a timely manner. We operate under various securities trading, banking and insurance licenses and must maintain our licenses in order to conduct our operations.
It establishes a framework for MiFID II investment services such as broker dealer, investment advice, portfolio management activities, dealing on own account, CIF registration and licensing requirements, and the regulation of such activities by CySEC.
It establishes a framework for MiFID II investment services such as broker, dealer, investment advice, portfolio management, dealing on own account, ancillary services, CIF registration and licensing requirements, and the regulation of such activities by CySEC.
The agreements require financial institutions in these countries to identify their customers and analyze their products to identify the accounts of customers affected by FATCA and collect all necessary information to classify those accounts in compliance with the requirements of FATCA.
The agreements generally require financial institutions in these countries to identify their customers and analyze their products to identify the accounts of customers affected by FATCA and collect all necessary information to classify those accounts in compliance with the requirements of FATCA.
Item 1. Business OVERVIEW Freedom Holding Corp. ("FRHC") is organized under the laws of the State of Nevada and acts as a holding company for all of our operating subsidiaries.
ITEM 1. BUSINESS OVERVIEW Freedom Holding Corp. ("FRHC") is organized under the laws of the State of Nevada and acts as a holding company for all of our subsidiaries.
These programs facilitate employee movement both vertically and horizontally within our company, as well as enable employees to participate in cross-department projects, working groups, competitions, conferences, and other collective events that expose employees to other departmental functions. We teach practical job skills with a view to providing job satisfaction for our employees, and by extension, strong company performance.
These programs facilitate employee movement both vertically and horizontally within our company, as well as enable employees to participate in cross-department projects, working groups, competitions, conferences, and other collective events that expose employees to other departmental functions. We teach practical job skills with a view to improving job satisfaction for our employees, and by extension, strong company performance.
Customers can establish accounts and conduct securities trading with transaction-based pricing both through on-line tools and at retail locations. We market our brokerage services 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.
Customers can establish accounts and conduct securities trading with transaction-based pricing both through online tools and at retail locations. We market our brokerage services 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.
For more details please refer to Note 31 Statutory Capital Requirements in the notes to our consolidated financial statements in Part II Item 8 of this annual report. We spend considerable resources in our general efforts to comply with the various regulations to which we are subject, and we expect this burden to continue in the future.
For more details please refer to Note 30 "Statutory Capital Requirements" in the notes to our consolidated financial statements in Part II Item 8 of this annual report. We spend considerable resources in our general efforts to comply with the various regulations to which we are subject, and we expect this burden to continue in the future.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) Today, ESG principles are fundamental in determining the direction of development of companies that are committed to a responsible approach to the impact of their activities on the environment, society, and economy. Freedom Holding Corp. is among them, and we have been working extensively in this direction.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) Today, ESG principles are essential in determining the direction of development of companies that are committed to a responsible approach to the impact of their activities on the environment, society, and economy. Freedom Holding Corp. is among them, and we have been working extensively in this direction.
Brokerage commissions are charged on investment products in accordance with a schedule that aligns with local practices. We provide our brokerage customers with access to the U.S. stock markets, and a significant amount of our brokerage business relates to trading in U.S.-exchange listed and OTC securities by our brokerage customers.
Brokerage commissions are charged on investment products in accordance with a schedule that aligns with local practices in the markets where we operate. We provide our brokerage customers with access to the U.S. stock markets, and a significant amount of our brokerage business relates to trading in U.S.-exchange listed and OTC securities by our brokerage customers.
We believe our employees are our most important investment, and we are committed to providing them: • a safe and positive work environment; • opportunities to learn, grow, and advance in their careers; • clear instructions of our expectations and the right tools so they achieve success; and • fair compensation, benefits and recognition for their work.
We believe our employees are our most important investment, and we are committed to providing them: • a safe and positive work environment; • opportunities to learn, grow, and advance in their careers; • clear instructions of our expectations and the right tools to achieve success; and • fair compensation, benefits and recognition for their work.
The recordkeeping provisions require that we and our subsidiaries make and maintain books that, in reasonable detail, reflect our transactions and dispositions of assets and devise and maintain a system of internal accounting controls that enables us to provide reasonable assurance that transactions are properly recorded in accordance with management's authorizations, that transactions are recorded as necessary to permit the preparation of financial statements, that access to our funds and other assets is permitted only in accordance with management's authorizations, and that the recorded accounts for assets are compared periodically with the existing assets to assure conformity.
The recordkeeping provisions require that we and our subsidiaries make and maintain books that, in reasonable detail, reflect our transactions and dispositions of assets and 25 Table of Contents devise and maintain a system of internal accounting controls that enables us to provide reasonable assurance that transactions are properly recorded in accordance with management's authorizations, that transactions are recorded as necessary to permit the preparation of financial statements, that access to our funds and other assets is permitted only in accordance with management's authorizations, and that the recorded accounts for assets are compared periodically with the existing assets to assure conformity.
The back-end infrastructure of Tradernet is designed to handle high volumes of transactions securely and efficiently, ensuring the platform's reliability and performance even during peak trading times. Tradernet back office solutions automate many administrative processes, reducing the need for manual intervention and minimizing errors.
The back-end infrastructure of Tradernet is designed to handle high volumes of transactions securely and efficiently, promoting the platform's reliability and performance even during peak trading times. Tradernet back office solutions automate many administrative processes, reducing the need for manual intervention and minimizing errors.
As of the date of this annual report, the Russia-related economic sanctions that have been imposed generally do not target our Russian client base, most of whom are members of the emerging Russian middle class population and many of whom live outside of Russia.
As of the date of this annual report, the Russia-related economic sanctions that have been imposed generally do not target our Russian customer base, most of whom are members of the emerging Russian middle class population and many of whom live outside of Russia.
The services covered by the suite include: • KYC and AML: ID verification, AML screening, and facematch checks for any jurisdiction. • Liveness technology: In-house facial biometrics for fast onboarding and continuous checks. • Video verification: Agent-assisted video verification built to comply with AMLD requirements. • Chargeback prevention: Verification of payment methods before transactions are made.
The services covered by the suite include: • KYC and AML: ID verification, AML screening, and facematch checks for any jurisdiction. • Liveness technology: In-house facial biometrics for fast onboarding and continuous checks. • Video verification: Agent-assisted video verification built to comply with AMLD requirements. 20 Table of Contents • Chargeback prevention: Verification of payment methods before transactions are made.
We may use the assets within the omnibus accounts to finance, lend, provide credit or provide debt financing or otherwise use and direct the order or manner of assets for financing of other clients of ours. See " Margin Lending " below. • Margin lending.
We may use the assets within the omnibus accounts to finance, lend, provide credit or provide debt financing or otherwise use and direct the order or manner of assets for financing of other customers of ours. See " Margin lending " below. • Margin lending.
As of March 31, 2024, we, through our subsidiaries, held: brokerage licenses in Kazakhstan issued by the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market (the "ARDFM") and the Astana Financial Services Authority (the "AFSA"), in Cyprus issued by the Cyprus Securities and Exchange Commission ("CySEC"), in the United States issued by FINRA, in Armenia issued by the Central Bank of Armenia, and in Uzbekistan issued by the Ministry of Finance of the Republic of Uzbekistan; a foreign currency operations license in Kazakhstan issued by the ARDFM; a banking license in Kazakhstan issued by the ARDFM; insurance licenses (general and life) in Kazakhstan issued by the ARDFM; and payment services licenses in Kazakhstan, Uzbekistan and Kyrgyzstan.
As of March 31, 2025, we, through our subsidiaries, held: brokerage licenses in Kazakhstan issued by the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market (the "ARDFM") and the Astana Financial Services Authority (the "AFSA"), in Cyprus issued by the Cyprus Securities and Exchange Commission ("CySEC"), in the United States issued by FINRA, in Armenia issued by the Central Bank of Armenia, and in Uzbekistan issued by the Ministry of Finance of the Republic of Uzbekistan; a foreign currency operations license in Kazakhstan issued by the ARDFM; banking licenses in Kazakhstan issued by the ARDFM and in Tajikistan issued by the National Bank of Tajikistan; insurance licenses (general and life) in Kazakhstan issued by the ARDFM; and payment services licenses in Kazakhstan, Uzbekistan and Kyrgyzstan.
Data Privacy and Cybersecurity As part of our business, we routinely receive sensitive and confidential information from our clients. We also collect personal information from our prospective and current employees, as permitted by employment laws and regulations.
Data Privacy and Cybersecurity As part of our business, we routinely receive sensitive and confidential information from our customers. We also collect personal information from our prospective and current employees, as permitted by employment laws and regulations.
In addition, we have recently established subsidiaries in Kazakhstan with a view to launching a telecommunications business and a media business, respectively, each of which is in the developmental stage. In our Other segment we also conduct proprietary securities trading activities, which are mainly conducted by FRHC.
In addition, we have established subsidiaries in Kazakhstan with a view to developing a telecommunications business and a media business, respectively, each of which is in the developmental stage. In our Other segment we also conduct proprietary securities trading activities, which are mainly conducted by FRHC.
These regulations cover a broad range of practices and procedures, including but not limited to: • minimum net capital and capital adequacy requirements; • the use and safekeeping of customers' funds and securities; • recordkeeping and reporting requirements; • customer identification, clearance and monitoring to identify and prevent money laundering and funding of terrorism, U.S.
These regulations cover a broad range of practices and procedures, including: • minimum net capital and capital adequacy requirements; • the use and safekeeping of customers' funds and securities; • recordkeeping and reporting requirements; • customer identification, clearance and monitoring to identify and prevent money laundering and funding of terrorism, U.S.
Our Brokerage segment primarily focuses on retail brokerage and investment banking. Our Banking segment encompasses lending, deposit services, payment card services, money transfers, and correspondent accounts, supporting both individual and corporate clients with innovative digital financial solutions. Our Insurance segment offers life and general insurance services.
Our Brokerage segment primarily focuses on retail brokerage and broader investment banking services. Our Banking segment encompasses lending, deposit services, payment card services, money transfers, and correspondent accounts, supporting both individual and corporate customers with innovative digital financial solutions. Our Insurance segment offers life and general insurance services.
We maintain omnibus brokerage accounts for certain institutional brokerage clients, in which transactions of the underlying clients of such institutional clients are combined in a single account with us.
We maintain omnibus brokerage accounts for certain institutional brokerage customers, in which transactions of the underlying customers of such institutional customers are combined in a single account with us.
We grant margin loans to our brokerage customers, collateralized by securities and cash in the customer's account, for application to a portion of the purchase price of securities, and we receive income from interest charged on such margin loans. 8 Table of Contents • Investment banking.
We grant margin loans to our brokerage customers, collateralized by securities and cash in the customer's account, for application to a portion of the purchase price of securities, and we receive income from interest charged on such margin loans. • Investment banking.
The securities, banking, payment services and insurance business activities of our subsidiaries are subject to extensive regulation and oversight by the stock exchanges, central/national banks, governmental and self-regulatory authorities in the foreign jurisdictions where we conduct business activities.
The securities trading, banking, insurance, payment services and telecom business activities of our subsidiaries are subject to extensive regulation and oversight by the stock exchanges, central/national banks, governmental and self-regulatory authorities in the jurisdictions where we conduct business activities.
In the jurisdictions where we conduct business, we are subject to often overlapping schemes of regulation that govern all aspects of our relationships with our customers.
In the jurisdictions where we conduct business, we are subject to often overlapping schemes of regulation that govern many aspects of our relationships with our customers.
Violations of securities, banking, sanctions, anti-money laundering and financing of terrorism laws, rules and regulations could subject us and our employees to a broad range of disciplinary actions including imposition of fines and sanctions, other remedial actions, such as cease and desist orders, removal from managerial positions, loss of licensing, and civil and criminal proceedings.
Violations of securities, trading, banking, payment services, sanctions, anti-money laundering and financing of terrorism laws, rules and regulations could subject us and our employees to a broad range of disciplinary actions including the imposition of fines and sanctions, other remedial actions, such as cease and desist orders, removal from managerial positions, loss of licensing, and civil and criminal proceedings.
Kazakhstan Banking Regulation Banks in Kazakhstan are subject to numerous laws and regulations governing banking activities as well as a number of laws and regulations that regulate, among other matters, payment services, anti-money laundering, data protection and information security.
Kazakhstan Banking Regulation Banks in Kazakhstan are subject to numerous laws and regulations governing banking activities as well as a number of laws and regulations that regulate, among other matters, payment services, anti-money laundering, data 22 Table of Contents protection and information security.
Accessible via both web and mobile platforms, Tradernet ensures that users can monitor and manage their investments in real-time from any location with internet connectivity. The platform's interface is designed to be intuitive and customizable, offering tools for technical analysis, portfolio management, and market monitoring.
Accessible via both web and mobile platforms, Tradernet allows users to monitor and manage their investments in real-time from any location with internet connectivity. The platform's interface is designed to be intuitive and customizable, offering tools for technical analysis, portfolio management, and market monitoring.
In addition, PrimeEx is licensed as a broker dealer in six U.S. states, requiring it to comply with applicable laws, rules and regulations of each of those states. A state regulator may revoke a license to conduct securities business in its state and fine or otherwise discipline broker dealers and their officers, directors and employees.
In addition, PrimeEx is licensed as a broker dealer in 32 U.S. states and the District of Columbia, requiring it to comply with applicable laws, rules and regulations of each of those states. A state regulator may revoke a license to conduct securities business in its state and fine or otherwise discipline broker dealers and their officers, directors and employees.
Pursuant to these 22 Table of Contents intergovernmental agreements, our subsidiaries in the relevant countries which are financial institutions are required to obtain customer documentation associated with the indicia of the relevant customer's U.S. tax residency status, as well as related account information, and to report it accordingly.
Pursuant to certain intergovernmental agreements, our subsidiaries in the relevant countries which are financial institutions are required to obtain customer documentation associated with the indicia of the relevant customer's U.S. tax residency status, as well as related account information, and to report it accordingly.
These laws, rules and regulations require us to maintain high standards for personal data collection, processing, and retention and impose strict standards for reporting data breaches. They also provide for potentially significant penalties for non-compliance.
These laws, rules and regulations require us to maintain high standards for personal data collection, processing, and retention and impose strict standards for information security risk management and reporting data breaches. They also provide for potentially significant penalties for non-compliance.
The back-office system handles transaction processing, compliance checks, and real-time account monitoring, ensuring smooth and efficient operations. The integration of Tradernet's back-office system with the trading platform allows for the efficient management of trading accounts and commissions, ensuring accurate reporting and payment processing. Compliance and risk management are integral parts of Tradernet's back-office solutions.
The back-office system handles transaction processing, compliance checks, and real-time account monitoring, for smooth and efficient operations. The integration of Tradernet's back-office system with the trading platform allows for the efficient management of trading accounts and commissions, which helps to enable accurate reporting and payment processing. Compliance and risk management are integral parts of Tradernet's back-office solutions.
Our subsidiaries engage in a broad range of activities including securities brokerage, securities dealing for customers and for our own account, market making activities, investment research, investment counseling, investment banking services, retail and commercial banking, insurance products, payment services, and information processing services.
Our subsidiaries engage in a broad range of activities including securities brokerage, securities dealing for customers and for our own account, market making activities, investment research, investment counseling, retail and commercial banking, and insurance products.
According to the NBK, as of March 31, 2024, Freedom Insurance had an approximately 7% share of the total Kazakhstan general insurance market based on total assets and had an approximately 3% share of the Kazakhstan car owners liability insurance market based on insurance premiums received.
According to the NBK, as of March 31, 2025, Freedom Insurance had an approximately 6% share of the total Kazakhstan general insurance market based on total assets and had an approximately 7% share of the Kazakhstan car owners liability insurance market based on insurance premiums received.
In Kazakhstan and Uzbekistan, commercial banks are currently focusing their financing activities on large or state-owned enterprises, and commercial lending sources impose loan structures and debt covenants that preclude many companies from obtaining such lending. This has created growing interest in and demand for our investment banking services in those countries.
In particular, in Kazakhstan many commercial banks are primarily focusing their financing activities on large or state-owned enterprises, and commercial lending sources impose loan structures and debt covenants that preclude many companies from obtaining such lending. This has created growing interest in and demand for our investment banking services in Kazakhstan.
We provide internal mentoring and training programs to enable new hires to quickly adapt to our work culture and demands. Our mentorship program helps foster relationships within our companies that engender loyalty and unity in our work.
We provide internal mentoring and training programs to enable new hires to quickly adapt to our work culture and demands. Our mentorship program helps foster relationships within our companies to engender loyalty and unity among employees.
Freedom EU is subject to the European Union Markets in Financial Instruments Directive ("MiFID") and/or related regulations and must, when holding funds belonging to customers, make adequate arrangements to safeguard the rights of customers and maintain their records and accounts in a way that ensures their accuracy.
Freedom EU is subject to the European Union Markets in Financial Instruments Directive ("MiFID") and/or related regulations and must, when holding funds belonging to customers, maintain segregated accounting of its own and customers' assets, make adequate arrangements to safeguard the rights of customers and maintain their records and accounts in a way that ensures their accuracy.
For both individual and institutional brokerage clients, we may enter into arrangements for securities financing transactions in respect of financial instruments held by us on behalf of the client or may use such financial instruments for our own account or the account of another client.
For individual and institutional brokerage customers, we may enter into arrangements for securities financing transactions in respect of financial instruments held by us on behalf of the customer or may use such financial instruments for our own account or the account of another customer.
Our regulated insurance subsidiaries are subject to regulations and standards in their respective jurisdictions, which require these subsidiaries to maintain specified levels of statutory capital, as defined by each jurisdiction, and restrict the timing and amount of dividends and other distributions which may be paid to their parent company.
Our regulated insurance subsidiaries are subject to regulations and standards in Kazakhstan, which require these subsidiaries to maintain specified levels of statutory capital, as defined by Kazakhstan law, and restrict the timing and amount of dividends and other distributions which may be paid to their parent company.
We are subject to laws and regulations in relation to the privacy of such information in the various jurisdictions where we conduct business or have customers. These include the laws of Kazakhstan, the EU, the UK and the U.S., as well as the rules and regulations of their various state agencies and self-regulatory organizations.
We are subject to laws and regulations in relation to the privacy of such information in the various jurisdictions where we conduct business or have customers. This includes the requirements under the laws of Kazakhstan, the EU, the UK and the U.S., as well as the rules and regulations of their various state agencies and self-regulatory organizations.
FRHC has entered into an agreement with Sum and Substance, a third-party service provider, for the use by the Freedom group of the Sum and Substance all-in-one KYC/AML compliance suite. This compliance suite enables companies to stay compliant while ensuring that users can quickly access services digitally.
FRHC has entered into an agreement with a leading third-party identity verification service provider, for the use by the Freedom group of its all-in-one KYC/AML compliance suite. This compliance suite enables companies to stay compliant while ensuring that users can quickly access services digitally.
Insurance Segment On May 17, 2022, we acquired two insurance companies in Kazakhstan, a life insurance company, Freedom Life, and a direct insurance carrier, excluding life, health and medical, Freedom Insurance. Prior to our acquiring these companies, each was wholly owned by our controlling shareholder, chairman and chief executive officer, Timur Turlov.
Insurance Segment In May 2022, we acquired two insurance companies in Kazakhstan, a life insurance company, Freedom Life, and a direct insurance carrier, excluding life, health and medical, Freedom Insurance. Prior to our acquiring these companies, each was wholly owned by our controlling shareholder, chairman of the Board of Directors and chief executive officer, Mr Timur Turlov.
Freedom EU complies with the requirements and/or obligations implemented by the following laws and regulations under the applicable legal framework: • Directive 2014/65/EU of the European Parliament and of the Council of May 15, 2014 on Markets in Financial Instruments and amending Directive 2002/92/EC and Directive 2011/61/EU. • Cyprus Investment Services and Activities and Regulated Markets Law of 2017 (The Law 87(I)/2017) regarding the provision of investment services, the exercise of investment activities and the operation of regulated markets (the “Investment Services and Activities and Regulated Markets Law 2017”). • Directive of 2020 of CySEC for the Prevention and Suppression of Money Laundering and Terrorist Financing • ESMA Final Report (ESMA35-42-1227) on the European Commission mandate on certain aspects relating to retail investor protection as of April 29, 2022.
Freedom EU complies with the requirements implemented by the laws and regulations under the applicable legal framework, including but not limited to: • Directive 2014/65/EU of the European Parliament and of the Council of May 15, 2014 on Markets in Financial Instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, 23 Table of Contents • Cyprus Investment Services and Activities and Regulated Markets Law of 2017 (The Law 87(I)/2017) regarding the provision of investment services, exercise of investment activities and operation of regulated markets (the "Cyprus Securities Market Law"), • Directive of 2020 of CySEC for the Prevention and Suppression of Money Laundering and Terrorist Financing, and • ESMA Final Report (ESMA35-42-1227) on the European Commission mandate on certain aspects relating to retail investor protection as of April 29, 2022.
These features cater to both beginner traders, who benefit from the platform's simplicity, and advanced traders, who appreciate its sophisticated analytical tools. 13 Table of Contents • Data Platform and Operational Efficiency. Tradernet features an advanced order routing system that ensures trades are executed at the best possible prices by directing orders to the most favorable markets.
These features cater to both beginner traders, who benefit from the platform's simplicity, and advanced traders, who appreciate its sophisticated analytical tools. • Data platform and operational efficiency. Tradernet features an advanced order routing system that facilitates trades to be executed at the best possible prices by directing orders to the most favorable markets.
The platform allows users to trade a diverse array of financial instruments, including stocks, options, and ETFs from major global exchanges such as KASE, AIX, NYSE, Nasdaq, ATHEX, the London Stock Exchange, the Chicago Mercantile Exchange, the Hong Kong Stock Exchange and Deutsche Börse. • Accessibility and User Interface.
The platform allows users to trade a diverse array of financial instruments, including stocks, options, and ETFs from major global exchanges such as KASE, AIX, NYSE, Nasdaq, ATHEX, the London Stock Exchange, the Chicago Mercantile Exchange, the Hong Kong Stock Exchange and Deutsche Börse, EUREX, ICE, SGX, HKFE, CFE, CBOE Europe and ITS. • Accessibility and user interface.
To support sustainable development and growth of a digital fintech ecosystem, we focus on the continuous development of our information technology systems in order to empower business users with accelerated time-to-market for digital products while enhancing predictability. We seek to harmonize technology governance approaches across all of our businesses and centralize key IT processes.
To support sustainable development and growth of a digital fintech ecosystem, we focus on the continuous development of our information technology systems empowering customers with accelerated time-to-market for digital products while enhancing predictability. We seek to harmonize technology governance approaches across all of our businesses and centralize key IT and information security processes.
We are continuously adapting to the rapidly evolving digital landscape and aligning our technological capabilities with the changing needs of our customers and stakeholders. By fostering innovation, enhancing collaboration, and prioritizing business continuity and growth, we aim to establish a strong technological foundation that supports our strategic objectives. See " Digital Fintech Ecosystem and Product Expansion " above.
We seek to continuously adapt to the rapidly evolving digital landscape and to align our technological capabilities with the changing needs of our customers and stakeholders. By fostering innovation, enhancing collaboration, and prioritizing business continuity and growth, we aim to establish a strong technological foundation that supports our strategic objectives. See " Digital Fintech Ecosystem " above.
AFSA-A-LA-2020-0019 issued by the AFSA on May 20, 2020 to carry out the following major regulated activities: • dealing in investments as principal; • dealing in investments as agent; • managing investments; • advising on investments; and • arranging deals in investments.
AFSA-A-LA-2020-0019 issued by the AFSA on May 20, 2020 to carry out the following major regulated activities: • dealing in investments as principal; • dealing in investments as agent; • managing investments; • arranging deals in investments; • advising on investments; • managing a collective investment scheme; and • arranging deals in investments in relation to digital assets.
Freedom EU currently holds licenses in Cyprus and the EU for conducting investment services, including: • reception and transmission of orders in relation to one or more financial instruments indicated in our license; • execution of orders on behalf of clients; • dealing on own account; • provision of investment advice; and • provision of portfolio management services, as well as the following ancillary services: • safekeeping and administration of financial instruments, including custodianship and related services; • granting credits or loans to one or more financial instruments, where the firm granting the credit or loan is involved in the transaction; • foreign exchange services where these are connected to the provision of investment services; and • investment research and financial analysis or other forms. 21 Table of Contents U.S.
Freedom EU currently holds a license in Cyprus and the EU for conducting investment services, including: • receipt and transmission of orders in relation to one or more financial instruments indicated in its license, • execution of orders on behalf of customers, • dealing on own account, • provision of investment advice, and • portfolio management, as well as the following ancillary services: • safekeeping and administration of financial instruments, including custodianship and related services, • granting credits or loans to one or more financial instruments, where the firm granting the credit or loan is involved in the transaction, • foreign exchange services where these are connected to the provision of investment services, and • investment research and financial analysis or other forms.
As of March 31, 2024, we had 1,404 employees in our Brokerage segment, including 1,402 full-time employees and 2 part-time employees. • Securities brokerage services . We provide a comprehensive range of securities brokerage services to individuals, businesses and financial institutions. Depending on the region, our brokerage services may include securities trading and margin lending.
As of March 31, 2025, we had 1,784 employees in our Brokerage segment, including 1,779 full-time employees and 5 part-time employees. • Securities brokerage services . We provide a comprehensive range of securities brokerage services to individuals, businesses and financial institutions. Depending on the region, our brokerage services may include securities trading and margin lending.
The Other segment accounted for $62.5 million, or 4%, of our total revenue, net for the fiscal year ended March 31, 2024. This revenue was mainly derived from provision of payment processing services, retail online ticket sales and online aggregation of purchasing air and railway tickets.
The Other segment accounted for $144.0 million, or 7%, of our total revenue, net for the fiscal year ended March 31, 2025. This revenue was mainly derived from provision of payment processing services, retail online ticket sales and online aggregation of purchasing air and railway tickets.
Additional information regarding our segments can be found in the narrative and tabular descriptions of segments and operating results under Item 7. Management’s discussion and analysis of results of operations and financial condition of this Report; and Note 30 Segments of business of the notes to consolidated financial statements included in Item 8 of this Report.
Additional information regarding our segments can be found in the narrative and tabular descriptions of segments and operating results under " Management's Discussion and Analysis of Results of Operations and Financial Condition " included in Part II Item 7 of this annual report and Note 29 " Segment Reporting " in the notes to consolidated financial statements included in Part II Item 8 of this annual report.
The system includes advanced compliance features to ensure all trading activities adhere to relevant regulations, which is crucial for maintaining the platform's integrity. Additionally, risk management tools help monitor client positions, margins, and overall exposure, providing timely alerts and advice to manage risks effectively. • Education and Support.
The system includes advanced compliance features to enable trading activities to adhere to relevant regulations, which is crucial for maintaining the platform's integrity. Additionally, risk 14 Table of Contents management tools help monitor customer positions, margins, and overall exposure, providing timely alerts and advice to manage risks effectively. • Education and support.
We have implemented a Technology Development and Ecosystem Growth strategy centered on building a robust technological infrastructure, fostering innovation, and enhancing user experiences. This strategy is designed to leverage technology as a key driver of success within our group.
We have implemented a technology strategy aimed at building a robust technological infrastructure, fostering innovation, and enhancing user experiences. This strategy is designed to leverage technology as a key driver of success within our group.
As of March 31, 2024, Freedom Life's market share in the Kazakhstan life insurance market was 12% based on gross written premiums for life insurance, and it held an approximately 56% market share in the Kazakhstan voluntary life-related accident insurance market, in each case according to the NBK. • Freedom Insurance.
As of March 31, 2025, Freedom Life's market share in the Kazakhstan life insurance market was 25% based on gross written premiums for life insurance, and it held an approximately 74% market share in the Kazakhstan voluntary life-related accident insurance market, in each case according to the National Bank of Kazakhstan (NBK). • Freedom Insurance.
World-Check allows identification of hidden risks associated with individuals or companies that have been included in sanctions lists, involved in money laundering (AML) or the financing of terrorist activities, including the proliferation of weapons of mass destruction (CFT and/or WMD).
It also allows identification of hidden risks associated with individuals or companies that have been included in sanctions lists, involved in money laundering (AML) or the financing of terrorist activities, including the proliferation of weapons of mass destruction (CFT and/or WMD) or associated with Politically Exposed Persons (PEP).
Cyprus, Kazakhstan, Ukraine, Uzbekistan, Turkey, Azerbaijan, and the United Arab Emirates have entered into Model 1 intergovernmental agreements with the U.S. containing provisions regulating the process for financial institutions in these countries to collect information on U.S. taxpayer accounts and provide that information to the IRS.
Cyprus, Kazakhstan, Uzbekistan, Turkey, and the United Arab Emirates have entered into Model 1 intergovernmental agreements while Armenia has entered into Model 2 agreement. These agreements with the U.S. contain provisions regulating the process for financial institutions in these countries to collect information on U.S. taxpayer accounts and provide that information to the IRS.
We seek to establish a new independent telecommunications operator in Kazakhstan to provide a diverse range of telecommunications and telecommunications-related services to customers which may include, among others, high-quality internet connectivity, mobile virtual network operator (MVNO) services, WiFi access, over-the-top (OTT) streaming, internet protocol television (IPTV), traffic transit for operators and cloud solutions, subject to obtaining applicable licenses or entering into partnerships where required.
We are seeking to establish a new independent telecommunications operator in Kazakhstan to provide a diverse range of telecommunications and telecommunications-related services to customers which may include, among others, high-quality internet connectivity, fixed wireless access (FWA), WiFi access, over-the-top (OTT) streaming, internet protocol television (IPTV), traffic transit for operators and cloud solutions, subject to obtaining applicable licenses, acquisitions of telecom assets or entering into partnerships where required.
During the fiscal year ended March 31, 2024, Freedom Insurance had an 84% increase in written insurance premiums received as compared to fiscal 2023 and recognized net profit of approximately $16 million.
During the fiscal year ended March 31, 2025, Freedom Insurance had an 107% increase in written insurance premiums received as compared to fiscal 2024 and recognized net profit of approximately $15.3 million.
We also believe the value associated with our "Freedom" and other brands contributes to the appeal and success of our services. Despite our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy or otherwise obtain and use our brands and technology.
We also believe our "Freedom" and other brands contribute to the appeal and success of our services. Despite our efforts to protect our intellectual property 18 Table of Contents rights, unauthorized parties may attempt to copy or otherwise obtain and use our brands and technology.
The Law of the Republic of Kazakhstan No. 461-II "On the Securities Market", dated 2 July 2003 (the "Securities Market Law") is the main law regulating the brokerage and dealer activities in the securities market and portfolio management activities in Kazakhstan.
The securities market in Kazakhstan is regulated in accordance with Kazakhstan law and the by-laws of the ARDFM. The Law of the Republic of Kazakhstan No. 461-II "On the Securities Market", dated July 2, 2003 (the "Securities Market Law") is the main law regulating the brokerage and dealer activities in the securities market and portfolio management activities in mainland Kazakhstan.
Freedom KZ and Freedom Finance Global PLC ("Freedom Global") are professional participants on the KASE and the Astana International Exchange ("AIX"). Foreign Enterprise LLC Freedom Finance ("Freedom UZ") is a professional participant on the Republican Stock Exchange of Tashkent ("UZSE") and the Uzbek Republican Currency Exchange ("UZCE"). PrimeEx is a professional participant on the New York Stock Exchange ("NYSE").
Freedom KZ and Freedom Finance Global PLC ("Freedom Global") are professional participants on the Kazakhstan Stock Exchange ("KASE") and the Astana International Exchange ("AIX"). Foreign Enterprise Freedom Finance LLC ("Freedom UZ") is a professional participant on the Republican Stock Exchange of Tashkent ("UZSE"), the Uzbek Republican Currency Exchange ("UZCE") and International Trading System Limited ("ITS").
A failure by our subsidiaries to comply with FATCA could result in adverse financial and reputational consequences to us as well as the imposition of sanctions or penalties, including responsibility for the taxes on any funds distributed without the proper withholdings having been made.
A failure by our subsidiaries to comply with FATCA could result in adverse financial and reputational consequences to us as well as the imposition of sanctions or penalties, including responsibility for the taxes on any funds distributed without the proper withholdings having been made. AVAILABLE INFORMATION Our investor relations website is located at https://ir.freedomholdingcorp.com.
We have agreements with such institutional clients in which they have agreed to comply with AML/CTF controls that are applicable to brokers in the U.S. and EU, and we audit their frameworks and systems by regular risk-based sampling and have access to their underlying customer records for purposes of compliance monitoring.
We have representations from such institutional customers by which they have agreed to comply with AML/CTF controls that are applicable to brokers, and we also audit their frameworks and systems by regular risk-based sampling and have access to their underlying customer records for purposes of compliance monitoring.
Other Segment As of March 31, 2024, in our Other segment we had 43 offices and 1,848 employees , i ncluding 1,792 full-time employees and 56 part-time employees, providing a range of services including payment processing, entertainment ticketing sales, online air and railway ticket purchase aggregation and an online retail trade and e-commerce services.
Other Segment As of March 31, 2025, in our Other segment we had 67 offices and 2,981 employees , i ncluding 2,933 full-time employees and 48 part-time employees, providing a range of services including payment processing, entertainment ticketing sales, online air and railway ticket purchase aggregation and an online retail trade and e-commerce services.
FINRA regulates many aspects of PrimeEx's business, including registration, education and conduct of its broker dealer employees, examinations, rulemaking, enforcement of these rules and the federal securities laws, trade reporting and the administration of dispute resolution between investors and registered firms.
FINRA regulates many aspects of PrimeEx's business, including registration, education and conduct of its broker-dealer employees, examinations, rulemaking, enforcement of these rules and the federal securities laws, trade reporting and the administration of potential disputes between PrimeEx and its customers.
In addition, third parties may initiate litigation against us alleging infringement of their proprietary rights or declaring their non-infringement of our intellectual property rights. Effective intellectual property protection may not be 17 Table of Contents available in all jurisdictions in which we offer our services.
In addition, third parties may initiate litigation against us alleging infringement of their proprietary rights or declaring their non-infringement of our intellectual property rights. Effective intellectual property protection may not be available in all jurisdictions in which we offer our services. Further, we may be unable to obtain protection for our intellectual property in the future.
Our investment banking business consists of investment banking professionals in Kazakhstan, Uzbekistan and the United States who provide strategic advisory services and capital markets products. Our investment banking team focuses on multiple sectors including consumer and business services, energy, financial institutions, real estate, technology, media and communications.
Our investment banking business, which includes underwriting and market making activities, is carried out by professionals in Kazakhstan, Uzbekistan and the United States who provide strategic advisory services and capital markets products. Our investment banking team focuses on multiple sectors including consumer and business services, energy, financial institutions, real estate, technology, media and communications.
For the year ended March 31, 2023, our insurance subsidiaries paid their parent company dividends of $15.2 million. In the event one or more of our subsidiaries fails to maintain minimum/adequate net capital, we may be subject to fines and penalties, suspension of operations, and disqualification of our management from working in the relevant industry.
For the years ended March 31, 2025 and March 31, 2024, our insurance subsidiaries did not pay dividends to their parent company. I n the event one or more of our subsidiaries fails to maintain minimum/adequate net capital, we may be subject to fines and penalties, suspension of operations, and disqualification of our management from working in the relevant industry.
In December 2020 we completed the acquisition of JSC Kassa Nova Bank, a Kazakhstan consumer bank with 10 branch offices across Kazakhstan, which we subsequently renamed Bank Freedom Finance Kazakhstan JSC and which, in May 2024, we subsequently renamed to Freedom Bank Kazakhstan JSC ("Freedom Bank KZ"). In December 2020 we completed the acquisition of Prime Executions, Inc.
In December 2020, we acquired Kassa Nova Bank JSC, a Kazakhstan consumer bank with 10 branch offices across Kazakhstan, which in May 2024, we renamed Freedom Bank Kazakhstan JSC ("Freedom Bank KZ"). In December 2020, we acquired Prime Executions, Inc.
Protection of Customer Assets Our business is subject to extensive oversight by regulators around the world relating to, among other things, the fair treatment of customers, safeguarding of customer assets and our management of customer funds.
" in " Risk Factors " in Part I Item 1A of this annual report. Protection of Customer Assets Our business is subject to extensive oversight by regulators around the world relating to, among other things, the fair treatment of customers, safeguarding of customer assets and our management of customer funds.
It establishes a framework for brokers and dealers, portfolio management activities, registration and licensing requirements, and regulation of such activities by the ARDFM. Under the Securities Market Law, broker-dealer and portfolio management activities in the securities market are carried out on the basis of a license to carry out such activities issued by the ARDFM.
Under the Securities Market Law, broker-dealer and portfolio management activities in the securities market are carried out on the basis of a license to carry out such activities issued by the ARDFM.
We believe incorporating the offerings of these insurance companies with our existing brokerage and banking product and service lines, along with our developing fintech ecosystem in Kazakhstan, will allow us to create a significant sustainable competitive advantage in Kazakhstan as an integrated, efficient and convenient single source for financial services. • Freedom Life . Freedom Life was established in 2014.
We believe incorporating the offerings of these insurance companies with our brokerage and banking product and service lines, along with our developing fintech ecosystem in Kazakhstan, allows us to offer an integrated, efficient and convenient single source for financial services in Kazakhstan. • Freedom Life .
These laws include the data privacy and security frameworks in the European Union and the United Kingdom, each entitled the General Data Protection Regulations, Kazakhstan's Law on Personal Data and Its Protection, Information Technologies and Information Protection, as well as the laws of a number of states of the United States and SEC cybersecurity disclosure rules.
These laws include the law on data privacy and security frameworks in the European Union and the United Kingdom, Kazakhstan, as well as the laws of a number of states of the United States and SEC cybersecurity disclosure rules.
A "payment organization" is defined by the Law on Payments Kazakhstan limited liability partnership which is registered as a payment organization with the NBK and which activities are associated with rendering payment services.
A "payment organization" is defined by the Law on Payments as Kazakhstan limited liability partnership which is registered as a payment organization with the NBK and which activities are associated with rendering payment services. We provide payment services in Kazakhstan through Freedom Pay LLP and its subsidiaries under the brand "Freedom Pay".

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, where sanctions do not apply to particular transactions or activities due to a lack of a nexus to the jurisdiction that imposed the relevant sanctions, our subsidiaries aim to refrain from any conduct that could create exposure to secondary sanctions, taking into account potential conflicting law issues given that certain of these subsidiaries operate in highly-regulated industries in which a disregard of local law requirements results in regulatory and litigation risk. 37 Table of Contents Because Freedom Holding Corp. is a U.S.-domiciled holding company that operates through its subsidiaries, we are obliged to comply with Ukraine-Russia conflict-related sanctions imposed by the United States, but those sanctions do not apply to the fully independent activities of our non-U.S. subsidiaries where there is no U.S. nexus.
Biggest changeBecause Freedom Holding Corp. is a U.S. incorporated holding company that operates through its subsidiaries, we are obliged to comply with Ukraine-Russia conflict-related sanctions imposed by the United States, but those sanctions do not apply to the fully independent activities of our non-U.S. subsidiaries where there is no U.S. nexus.
If we fail to compete effectively with other firms and participants in any of the markets in which we operate, or with potential new entrants to such markets, this could have a material adverse effect on our business, results of operations, financial condition and cash flows. We plan to incur losses in our new telecommunications and media businesses.
If we fail to compete effectively with other firms and participants in any of the markets in which we operate, or with potential new entrants to such markets, this could have a material adverse effect on our business, financial condition, results of operations and cash flows. We plan to incur losses in our new telecommunications and media businesses.
Some customers might prefer to invest through our competitors that do not engage in these arrangements or engage in them differently than do we. Any such loss of customer engagement as a result of any negative publicity associated with our market maker customer arrangements could adversely affect our business, financial condition, results of operations and cash flows.
Some customers might prefer to invest through our competitors that do not engage in these arrangements or engage in them differently than we do. Any such loss of customer engagement as a result of any negative publicity associated with our market maker customer arrangements could adversely affect our business, financial condition, results of operations and cash flows.
Any technical or other breaches of the anti-money laundering laws and regulations by us could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Any technical or other breaches of the anti-money laundering laws and regulations by us could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If additional taxes are assessed with respect to these matters, they could have a material adverse effect on our business, financial condition, cash flows, and results of operations. Uncertainties and ongoing changes in Kazakhstan's tax regime may have an adverse impact on our business.
If additional taxes are assessed with respect to these matters, they could have a material adverse effect on our business, financial condition, results of operations and cash flows. Uncertainties and ongoing changes in Kazakhstan's tax regime may have an adverse impact on our business.
Additionally, to the extent our subsidiaries are restricted from making such distributions under applicable laws or regulations or under the terms of financing arrangements or are otherwise unable to provide funds to the extent of Freedom Holding Corp.'s needs, there could be a material adverse effect on our business, financial condition, cash flows and results of operations.
Additionally, to the extent our subsidiaries are restricted from making such distributions under applicable laws or regulations or under the terms of financing arrangements or are otherwise unable to provide funds to the extent of Freedom Holding Corp.'s needs, there could be a material adverse effect on our business, financial condition, results of operations and cash flows.
For example, the Civil Procedure Code of Kazakhstan, which became effective on January 1, 2016, provides that Kazakhstan courts should recognize and enforce foreign court judgments only if provided for by Kazakhstan law or an international treaty to which Kazakhstan is a party (based on reciprocity).
For example, the Civil Procedure Code of Kazakhstan, which became effective on January 1, 2016, provides that Kazakhstan courts should recognize and enforce foreign court judgments only if provided for by Kazakhstan law or an international treaty to which Kazakhstan is a party (or based on reciprocity).
In addition, there are substantial risks associated with acquisitions and expansion into new business areas, including risks that (i) our unfamiliarity with new lines of business may adversely affect the success of such acquisitions, (ii) revenue from such activities might not be sufficient to offset the development, regulatory and other implementation costs, (iii) competing products and services and shifting market preferences might affect the profitability of such activities, and (iv) our internal controls might be inadequate to manage the risks associated with new activities.
In addition, there are substantial risks associated with acquisitions and expansion into new business areas, including the risk that (i) our unfamiliarity with new lines of business may adversely affect the success of such acquisitions, (ii) revenue from such activities might not be sufficient to offset the development, regulatory and other implementation costs, (iii) competing products and services and shifting market preferences might affect the profitability of such activities, and (iv) our internal controls might be inadequate to manage the risks associated with new activities.
The industry has experienced increased scrutiny from a variety of regulators, including the SEC and FINRA in the United States, U.S. state regulators and regulators in non-U.S. jurisdictions. Penalties and fines sought by regulatory authorities have increased substantially. We may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities.
The industry has experienced increased scrutiny from a variety of regulators, including the SEC and FINRA in the United States, U.S. state regulators and regulators in non-U.S. jurisdictions. Penalties and fines sought by regulatory authorities have increased substantially. We may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these regulatory authorities.
As we introduce new products and services and expand existing product and service offerings we may become subject to additional regulations, restrictions, licensing requirements and related regulatory oversight. Compliance with many of the regulations applicable to us involves a number of risks, particularly in areas where applicable regulations may be subject to varying interpretation.
As we introduce new products and services and expand existing product and service offerings we may become subject to additional regulations, restrictions, licensing requirements, reporting and related regulatory oversight. Compliance with many of the regulations applicable to us involves a number of risks, particularly in areas where applicable regulations may be subject to varying interpretation.
We could experience negative publicity and reputational damage as a result of lawsuits or claims, in addition to potential significant costs incurred to defend ourselves or settle claims and judgments. Any of the foregoing could have a material adverse impact on our business, financial condition results of operations and cash flows.
We could experience negative publicity and reputational damage as a result of lawsuits or arbitration claims, in addition to potential significant costs incurred to defend ourselves or settle claims or judgments. Any of the foregoing could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Turlov could conflict with those of other stockholders. Any such conflict could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects. Mr. Turlov is prohibited from membership on the audit committee of our board under the terms of such committee's charter. As majority shareholder, Mr.
Turlov could conflict with those of other stockholders. Any such conflict could have a material adverse effect on our business, financial condition, results of operations and cash flows. Mr. Turlov is prohibited from membership on the audit committee of our board under the terms of such committee's charter. As majority shareholder, Mr.
Risks Related to Information Technology and Cybersecurity Our operations are highly dependent on the continued and proper functioning of our information technology systems. Our brokerage, financial services and banking businesses are highly dependent on processing, on a daily basis, a large number of communications and increasingly complex transactions across diverse markets, in various languages.
Risks Related to Information Technology and Cybersecurity Our operations are highly dependent on the continued and proper functioning of our information technology systems and infrastructure. Our brokerage, financial services and banking businesses are highly dependent on processing, on a daily basis, a large number of communications and increasingly complex transactions across diverse markets, in various languages.
Each of these factors increases the likelihood that an underwriter may be required to contribute to an adverse judgment or settlement of a securities lawsuit. We are subject to risks related to potential litigation. We may be subject to legal claims from our customers and counterparties, employment-related claims and other claims.
Each of these factors increases the likelihood that an underwriter may be required to contribute to an adverse judgment or settlement of a securities lawsuit. We are subject to risks related to potential litigation and arbitration. We may be subject to legal claims from our customers and counterparties, employment-related claims and other claims.
Our status as a controlled company and resulting available exemptions from corporate governance standards could make our common stock less attractive to some investors or otherwise harm our stock price. The interests of our controlling shareholder may conflict with those of other shareholders.
Our status as a controlled company and resulting available exemptions from corporate governance standards could make our common stock less attractive to some investors or otherwise harm our stock price. The interests of our controlling shareholder may conflict with those of other shareholders. Mr.
This includes the allowance for credit losses based on management’s estimates of current expected credit losses over the life of the respective credit exposures. These estimates are based on a review of past events, current conditions, and reasonable forecasts of future economic situations that might influence the recoverability of our loans.
This includes an allowance for credit losses based on management's estimates of current expected credit losses over the life of the respective credit exposures. These estimates are based on a review of past events, current conditions, and reasonable forecasts of future economic situations that might influence the recoverability of our loans.
Many of the requirements imposed by these regulations are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with us. New regulations may result in enhanced standards of duty on our subsidiaries in their dealings with their clients.
Many of the requirements imposed by these regulations are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with us. New regulations may result in enhanced standards of duty on our subsidiaries in their dealings with their customers.
We also may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or non-U.S. governmental regulatory authorities or self-regulatory organizations (e.g., FINRA) that supervise the financial markets.
We also may be adversely affected as a result of new, revised, or reinterpreted legislation or regulations imposed by the SEC, other U.S. or non-U.S. governmental regulatory authorities or self-regulatory organizations (e.g., FINRA) that supervise the financial markets.
Sanctions are subject to rapid change, and it is also possible that new sanctions programs could be established, or secondary sanctions could be imposed, by the U.S. or other jurisdictions without warning in relation to the Russia-Ukraine conflict.
Sanctions are subject to rapid change, and it is also possible that new sanctions programs could be established, or secondary sanctions could be imposed, by the U.S. or other jurisdictions without warning, including in relation to the Russia-Ukraine conflict.
In our underwriting business, we are exposed to substantial liability under U.S. federal, state and non-U.S. securities laws, other U.S. federal and state and non-U.S. laws, and court decisions, including decisions with respect to underwriters' liability and limitations on indemnification of underwriters by issuers.
In our underwriting business, we are exposed to substantial potential liability under U.S. federal, state and non-U.S. securities laws, other U.S. federal and state and non-U.S. laws, and court decisions, including decisions with respect to underwriters' liability and limitations on indemnification of underwriters by issuers.
We currently utilize an exemption to allow Timur Turlov to sit on our nominating and corporate governance committee. The charters for each of our board committees provide for annual performance evaluations. Currently we have a majority of independent directors on our board of directors.
We currently utilize an exemption to allow Mr. Timur Turlov to sit on our nominating and corporate governance committee. The charters for each of our board committees provide for annual performance evaluations. Currently we have a majority of independent directors on our board of directors.
If our customers or potential customers believe that they might get better execution quality (including better price improvement) directly from stock exchanges or from our competitors that have different execution arrangements, or if our customers perceive our arrangements with our market maker customers to create a conflict of interest between us and them, or if they begin to disfavor the specific market maker customers with which we do business due to. among other things, any negative media attention regarding our arrangements, they might come to have an adverse view of our business model and might decide to limit or cease the use of our platform.
If our customers or potential customers believe that they might get better execution quality (including better price improvement) directly from stock exchanges or from our competitors that have different execution arrangements, or if our customers perceive our arrangements with our market maker customers to create a conflict of interest between us and them, or if they begin to disfavor the specific market maker customers with which we do business due to, among other things, any negative media attention regarding our arrangements, they might come to have an adverse view of our business model and might decide to limit or cease the use of our services.
The availability and cost of reinsurance are dependent on market conditions beyond our control. As a result, reinsurance may not be continuously available to us to the extent and on the terms we require to write new business.
The availability and cost of reinsurance are dependent on market conditions beyond our control. As a result, reinsurance may not be available to us to the extent and on the terms we require to write new business.
In addition, changes to laws, rules and regulations or changes in the enforcement of existing laws, rules or regulations, could: • limit the lines of business we conduct; • require us to reduce our ownership stake in a subsidiary; • compel us to terminate certain lines of business in affected jurisdictions; • require us to reduce our investment position in a particular instrument; • result in material cost increases including our cost of capital; • otherwise adversely affect our ability to compete effectively with other institutions that are not similarly impacted; • require us to modify existing business practices; • force us to relocate operations or personnel; • require us to invest significant management attention and resources and legal costs to evaluate and make necessary changes to our compliance, risk management, treasury and operations functions; • make it uneconomical for us to provide certain services in particular countries; and • influence how we manage our capital and liquidity.
In addition, changes to laws, rules and regulations or changes in the enforcement of existing laws, rules or regulations, could: • limit the lines of business we conduct; • require us to reduce our ownership stake in a subsidiary; • compel us to terminate certain lines of business in affected jurisdictions; • require us to reduce our investment position in a particular instrument; • result in material cost increases including our cost of capital; • otherwise adversely affect our ability to compete effectively with other institutions that are not similarly impacted; • require us to modify existing business practices; • force us to relocate operations or personnel, or to amend or terminate arrangements with senior management; • require us to invest significant management attention and resources and legal costs to evaluate and make necessary changes to our compliance, risk management, treasury and operations functions; • make it uneconomical for us to provide certain services in particular countries; and • influence how we manage our capital and liquidity.
Damage to or the loss of our relationships with the U.S. registered securities broker-dealer and clearing firm on which we currently rely could impair our ability to continue to provide our customers access to the U.S. markets at the volumes and in the manner they are accustomed to and could result in higher transaction costs for us or our customers, any of which could have a material adverse impact on our business, results of operations, financial condition and cash flows.
Damage to or the loss of our relationships with the U.S. registered securities broker-dealer and clearing firms on which we currently rely could impair our ability to continue to provide our customers access to the U.S. markets at the volumes and in the manner to which they are accustomed and could result in higher transaction costs for us or our customers, any of which could have a material adverse impact on our business, financial condition, results of operations and cash flows.
CPC is the main oil export route (at least two thirds of total oil exports), which runs from fields in the west of the country to a terminal near the Russian port of Novorossiysk.
CPC is the main oil export route (for at least two thirds of total oil exports), which runs from fields in the west of the country to a terminal near the Russian port of Novorossiysk.
Risks Related to Legal and Regulatory Matters: • We are subject to extensive regulation, and the failure to comply with laws and regulations could subject us to monetary penalties or sanctions. • Financial services firms have been subject to increased regulatory scrutiny increasing the risk of financial liability and reputational harm resulting from adverse regulatory actions. • As a U.S. public company listed on Nasdaq we have substantial regulatory reporting obligations. • We are subject to risks related to anti-corruption laws in effect in the United States and the non-U.S. jurisdictions where we conduct business. • A failure by our subsidiaries to meet capital adequacy and liquidity requirements could affect our operations, financial condition and cash flows. • The countries in which we operate have changing regulatory regimes, regulatory policies, and interpretations. • Our measures to prevent money laundering and terrorist financing violations may not be completely effective. • If we violate securities laws, or are involved in litigation in connection with a violation, our reputation and results of operations may be adversely affected. • We are subject to risks related to potential litigation.
Risks Related to Legal and Regulatory Matters : 27 Table of Contents • We are subject to extensive regulation, and the failure to comply with laws and regulations could subject us to monetary penalties or sanctions. • Financial services firms have been subject to increased regulatory scrutiny increasing the risk of financial liability and reputational harm resulting from adverse regulatory actions. • As a U.S. public company listed on Nasdaq we have substantial regulatory reporting obligations. • We are subject to risks related to anti-corruption laws in effect in the United States and the non-U.S. jurisdictions where we conduct business. • A failure by our subsidiaries or our company to meet capital adequacy and liquidity requirements could affect our business, financial condition, results of operations and cash flows. • The countries in which we operate have changing regulatory regimes, regulatory policies, and interpretations. • Our measures to prevent money laundering and terrorist financing violations may not be completely effective. • If we violate securities laws, or are involved in litigation in connection with a violation, our reputation and results of operations may be adversely affected. • We are subject to risks related to potential litigation and arbitration.
On October 19, 2022, Timur Turlov, our former Ukrainian subsidiary Freedom UA (which has been deconsolidated from our financial statements starting from the first quarter of fiscal 2024 due to the uncertainty of our ability to control it) and our two former Russian subsidiaries (which Russian subsidiaries have since been divested) were included on the National Security and Defense Council of Ukraine sanctions list, which included more than 2,500 companies and individuals.
On October 19, 2022, our CEO Mr Timur Turlov, our former Ukrainian subsidiary Freedom UA (which has been deconsolidated from our financial statements starting from the first quarter of fiscal 2024 due to the uncertainty of our ability to control it) and our two former Russian subsidiaries (which have since been divested) were included on the National Security and Defense Council of Ukraine sanctions list, which included more than 2,500 companies and individuals.
Although our subsidiaries have implemented cybersecurity strategies for mitigating these risks, we cannot be sure that our network and information technology systems will not be subject to such issues, or, if they are, that we will be able to maintain the integrity of our customers' and employees' data or that malware or other technical or operational issues will not disrupt our network or systems and cause significant harm to our operations.
Although our subsidiaries have implemented cybersecurity controls for mitigating these risks, we cannot be sure that our network and information technology systems will not be subject to such issues, or, if they are, that we will be able to maintain the integrity of our customers' and employees' data or that malware or other technical or operational issues will not disrupt our network or systems and cause significant harm to our operations.
Substantially all of our investing and market-making positions are marked-to-market on a daily basis, and declines in asset values directly and immediately impact our earnings.
Substantially all of our investing and market-making positions are marked-to-market on a daily basis, and declines in asset values directly impact our earnings.
Due to the omnibus brokerage accounts we maintain for certain institutional brokerage clients, penalties and other enforcement actions could be brought against us under relevant AML/CTF laws due to breaches by those clients of those laws and regulation and similar laws despite the fact that we have no direct control over the activities or policies of such clients.
Due to the omnibus brokerage accounts we maintain for certain institutional brokerage customers, penalties and other enforcement actions could be brought against us under relevant AML/CTF laws due to breaches by those customers of those laws and regulation and similar laws despite the fact that we have no direct control over the activities or policies of such customers.
In addition, we currently project that our recently established Freedom Media subsidiary will incur losses in the calendar years from 2024 to 2026 with profitability forecasted to commence from the 2027 calendar year onwards, based on assumptions included in our financial model. We may be unable to implement our digital fintech ecosystem strategy successfully.
In addition, we currently project that our recently established Freedom Media subsidiary will incur losses in the calendar years from 2025 to 2026 with profitability forecasted to commence from the 2027 calendar year onwards, based on assumptions included in our financial model. We may be unable to implement our digital fintech ecosystem strategy successfully.
Our measures to prevent money laundering and terrorist financing violations may not be completely effective. Notwithstanding the anti-money-laundering (“AML”) regulations that are in place in Kazakhstan, the EU, the U.S. and other jurisdictions in which we operate, we are subject to the risk that our subsidiaries that are financial institutions could be used as vehicles for money laundering.
Our measures to prevent money laundering and terrorist financing violations may not be completely effective. Notwithstanding the anti-money-laundering ("AML") regulations that are in place in Kazakhstan, the EU, the U.S. and other jurisdictions in which we operate, we are subject to the risk that our subsidiaries that are financial institutions could be used as vehicles for money laundering.
At the same time, we must maintain a consistent level of client services and current operations to avoid loss of business or damage to our reputation. If we fail to adequately manage growth, such failure may have a material adverse effect on our business, results of operations, financial condition and cash flows.
At the same time, we must maintain a consistent level of customer services and current operations to avoid loss of business or damage to our reputation. If we fail to adequately manage growth, such failure may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Under these circumstances, we may need to seek funds from alternative sources, potentially at higher costs than has previously been the case, or may be required to consider disposals of other assets not previously identified for disposal, in order to reduce our funding commitments.
Under these circumstances, we may need to seek funds from alternative sources (if available), potentially at higher costs than has previously been the case, or may be required to consider disposals of other assets not previously identified for disposal, in order to reduce our funding commitments.
The effects of the Russia-Ukraine conflict could also limit our ability to, or make it difficult for us to, enter into agreements with certain counterparties. The materialization of any of the foregoing factors could have a material adverse effect on our business, financial condition, results of operations and stock price.
The effects of the Russia-Ukraine conflict could also limit our ability to, or make it difficult for us to, enter into agreements with certain counterparties. The materialization of any of the foregoing factors could have a material adverse effect on our business, financial condition, and results of operations.
Under Nasdaq rules, a company of which more than 50% of the voting power is held by one individual is a "controlled company" and may elect not to comply with certain corporate governance standards, including the requirements that: • a majority of its board of directors consist of independent directors; • its nominating and corporate governance committee and compensation committee be composed entirely of independent directors; 48 Table of Contents • each committee have a written charter addressing such committee's purpose and responsibilities; and • an annual evaluation of the nominating and corporate governance committee and compensation committee be performed.
Under Nasdaq rules, a company of which more than 50% of the voting power is held by one individual is a "controlled company" and may elect not to comply with certain corporate governance standards, including the requirements that: • a majority of its board of directors consist of independent directors; • its nominating and corporate governance committee and compensation committee be composed entirely of independent directors; • each committee have a written charter addressing such committee's purpose and responsibilities; and • an annual evaluation of the nominating and corporate governance committee and compensation committee be performed.
Our ability to meet our obligations, and the cost of funds to do so, depend on our ability to access identified sources of liquidity at a reasonable cost. Liquidity risk is the risk that we will not be able to meet our obligations, including financial commitments, as they come due.
Our ability to meet our obligations, and the cost of funds to do so, depend on our ability to access identified sources of liquidity at a reasonable cost. We face liquidity risk, which is the risk that we will not be able to meet our obligations, including financial commitments, as they come due.
However, customer deposits are subject to fluctuation due to certain factors outside our control, such as increasing competitive pressures for retail or corporate customer deposits, changes in interest rates and returns on other investment classes, or a loss of confidence by customers in us or in the banking sector generally, any of which could result in a significant outflow of deposits within a short period of time.
However, customer term deposits and current accounts are subject to fluctuation due to certain factors outside our control, such as increasing competitive pressures for retail or corporate customer term deposits and current accounts, changes in interest rates and returns on other investment classes, or a loss of confidence by customers in us or in the banking sector generally, any of which could result in a significant outflow of term deposits and current accounts within a short period of time.
If any of our systems do not operate properly or are disabled or otherwise unavailable, or if there are other shortcomings or failures in our internal processes, personnel, or systems related to the electronic communications and functionality our operations depend on, we could suffer impairment to our liquidity, financial loss, a disruption of business, liability to customers, regulatory intervention, or reputational damage.
If any of our systems do not operate properly or are disabled or otherwise unavailable, or if there are other 47 Table of Contents shortcomings or failures in our internal processes, personnel, or systems related to the electronic communications and functionality our operations depend on, we could suffer impairment to our liquidity, financial loss, a disruption of business, liability to customers, regulatory intervention, and reputational damage.
These third-parties may have weaker cybersecurity practices than our own. A cyberattack, data breach, or system failure originating within a third-party system could disrupt our operations, compromise sensitive data, or damage our reputation. Despite measures to manage third-party risks, we cannot fully eliminate these exposures. To remain competitive, we must keep pace with rapid technological change.
These third-parties may have weaker cybersecurity practices than our own. A cyber-attack, data breach, or system failure originating within a third-party system could disrupt our operations, compromise sensitive data, or damage our reputation. Despite measures to manage third-party risks, we cannot fully eliminate these exposures. To remain competitive, we must keep pace with rapid technological change.
Many of the firms with which we currently compete, or will compete in the future, are larger, provide additional and more diversified services and products, provide access to more international markets, and have greater technical, and financial resources.
Many of the firms with which we currently compete, or may compete in the future, are larger, provide additional and more diversified services and products, provide access to more international markets, and have greater technical, and financial resources.
Prior to the end of fiscal 2024, we had such an arrangement indirectly with an institutional market maker customer of our affiliate FST Belize, and since approximately the end of fiscal 2023 we have had such an arrangement directly with an institutional market maker customer of our Freedom Global subsidiary.
Prior to the end of fiscal 2024, we had such an arrangement indirectly with an institutional market maker customer of our affiliate FST Belize, and since approximately the beginning of fiscal 2024 we have had such an arrangement directly with an institutional market maker customer of our Freedom Global subsidiary.
Turlov also has interests in other companies, certain of which, in particular FST Belize, have conducted significant amounts of business with our company and have significantly contributed to our revenues. Such related party transactions give increase to a risk of the conclusion of transactions on terms less favorable than could be obtained in arm’s length transactions. The interests of Mr.
Turlov also has interests in other companies, certain of which have conducted significant amounts of business with our company and have significantly contributed to our revenues. Such related party transactions give increase to a risk of the conclusion of transactions on terms less favorable than could be obtained in arm's length transactions. The interests of Mr.
If, however, it were determined that Freedom Holding Corp. facilitated activities of its subsidiaries that are prohibited under U.S. sanctions, Freedom Holding Corp. could be subject to civil or criminal penalties under OFAC regulations.
If, however, it was determined that Freedom Holding Corp. facilitated activities of its subsidiaries that are prohibited under U.S. sanctions, Freedom Holding Corp. could be subject to civil or criminal penalties under OFAC regulations.
While we have established systems and processes designed to manage risks related to our clearing and execution services, we face a risk that such systems and processes might be inadequate. Any liability arising from clearing 30 Table of Contents and margin operations could have an adverse effect on our business, financial condition, results of operations and cash flows.
While we have established systems and processes designed to manage risks related to our clearing and execution services, we face a risk that such systems and processes might be inadequate. Any liability arising from clearing and margin operations could have an adverse effect on our business, financial condition, results of operations and cash flows.
If our services are affected by attacks or malware and this degrades our services, our products and services may be perceived as being vulnerable to cyber risk and the integrity of our data protection systems may be questioned.
If our services are affected by attacks or malware and this degrades our services, our products and services may be perceived as being vulnerable to cybersecurity risk and the integrity of our data protection systems may be questioned.
Damage to or the loss of our relationships with these U.S. registered securities broker-dealer and clearing firms could also impair our ability to continue to offer such services to our customers which 45 Table of Contents could have a material adverse impact on our business, results of operations, financial condition and cash flows.
Damage to or the loss of our relationships with these U.S. registered securities broker-dealer and clearing firms could also impair our ability to continue to offer such services to our customers which could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Foreign Corrupt Practices Act ("FCPA") and similar non-U.S. anti-corruption laws that generally prohibit companies and their intermediaries from making improper payments or providing anything of value to influence foreign government officials for the purpose of obtaining or retaining business or obtaining an unfair advantage.
We are subject to the U.S. Foreign Corrupt Practices Act ("FCPA") and similar non-U.S. anti-corruption laws that generally prohibit companies and their intermediaries from making improper payments or providing anything of value to influence foreign government officials for the purpose of obtaining or retaining business or obtaining an unfair advantage.
There is also substantial cost and time expended to complete post-closing integration of acquisitions, including human resource training, data and technology systems and operational processes. We may also incur potential dilution of our brand, assumption of known and unknown liabilities, indemnities and potential disputes with the sellers.
There is also substantial cost and time expended to complete post-closing integration of acquisitions, including human resource training, data and technology systems and operational processes, and implementation of cybersecurity measures. We may also incur potential dilution of our brand, assumption of known and unknown liabilities, indemnities and potential disputes with the sellers.
However, there can be no assurance that we will be able to continue to grow our business through acquisitions as we have done historically, that businesses acquired will perform in accordance with our expectations or that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove to be correct.
However, there can be no assurance that we will be able to continue to grow our business through acquisitions as we have done historically, 29 Table of Contents that businesses acquired will perform in accordance with our expectations or that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove to be correct.
These issues may include, but are not limited to, any of the risks discussed in this Item 1A, including but not limited to legal and regulatory requirements and actions, measures to prevent money laundering, terrorist financing and 36 Table of Contents sanctions violations and management of risks in relation to related party transactions and arrangements .
These issues may include, but are not limited to, any of the risks discussed in this Item 1A, including legal and regulatory requirements and actions, measures to prevent money laundering, terrorist financing and sanctions violations and management of risks in relation to related party transactions and arrangements.
Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many different aspects of financial services, including, but not limited to, the authority to fine us and to grant, cancel, 40 Table of Contents restrict or otherwise impose conditions on the right to continue operating particular businesses.
Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many different aspects of financial services, including, but not limited to, the authority to fine us and to grant, cancel, restrict or otherwise impose conditions on the right to continue operating particular businesses.
Non-compliance with these laws may result in criminal or civil penalties, which could result in a material adverse effect on our business, financial condition, result of operations and cash flows. A failure by our subsidiaries to meet capital adequacy and liquidity requirements could affect our operations, financial condition and cash flows.
Non-compliance with these laws may result in criminal or civil penalties, which could result in a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. A failure by our subsidiaries or our company to meet capital adequacy and liquidity requirements could affect our business, financial condition, results of operations and cash flows.
Certain of our directors, substantially all of our officers, and our controlling shareholder reside outside the U.S., and a substantial portion of our assets are located outside the U.S. in jurisdictions that are not parties to treaties or other agreements with the U.S. for the mutual enforcement of U.S. court judgments.
Certain of our directors, substantially all of our officers, and our controlling shareholder reside outside the U.S., and a substantial portion of our assets are located outside the U.S. in jurisdictions that are not parties to treaties or other 54 Table of Contents agreements with the U.S. for the mutual enforcement of U.S. court judgments.
From time to time, we have been, and in the future may be, subject to investigations, audits, inspections and subpoenas, as well as regulatory proceedings and fines and penalties brought by regulators. We are subject to regulation from numerous regulators, which include, but are not limited to, the NBK, the AFSA, the ARDFM, CySEC and the SEC.
From time to time, we have been, and in the future may be, subject to investigations, audits, inspections and subpoenas, as well as regulatory proceedings and fines and penalties brought by regulators. We are subject to regulation from numerous regulators, which include the NBK, the AFSA, the ARDFM, CySEC and the SEC.
Failure to comply with the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") or the Dodd-Frank Wall Street Reform and Consumer Protection Act could potentially subject us to sanctions or investigations by the SEC or other regulatory, exchange or market authorities, and related penalties, fines and litigation.
Failure to comply with the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") or the Dodd-Frank Wall Street Reform and Consumer Protection Act, applicable securities or other laws could potentially subject us to sanctions or investigations by the SEC or other regulatory, exchange or market authorities, and related penalties, fines and litigation.
While our estimates account for current conditions and anticipated changes during the portfolio's lifetime, actual outcomes could be worse than expected, significantly impacting our financial results, condition and cash flows. We extend margin loans to our brokerage customers.
While our estimates account for current conditions and anticipated changes during the portfolio's lifetime, actual outcomes could be worse than expected, significantly impacting our business, financial condition, results of operations and cash flows. We extend margin loans to our brokerage customers.
When executing trades directly in the U.S. market, we rely on the services of a limited number of third-party U.S.-registered securities broker dealer and clearing firms. We also routinely evaluate opportunities to establish relationships with other U.S.-registered securities broker-dealer and clearing firms.
When executing trades directly in the U.S. market, we rely on the services of a limited number of third-party U.S.-registered securities broker dealer and clearing firms. We also routinely evaluate opportunities to establish relationships with other U.S.-registered securities 33 Table of Contents broker-dealer and clearing firms.
In addition, our operations are conducted almost entirely through our subsidiaries. As such, to 51 Table of Contents the extent that we determine in the future to pay dividends on our common stock, none of our subsidiaries will be obligated to make funds available to us for the payment of such dividends.
In addition, our operations are conducted almost entirely through our subsidiaries. As such, to the extent that we determine in the future to pay dividends on our common stock, none of our subsidiaries will be obligated to make funds available to us for the payment of such dividends.
If, based upon these models, forecasts or other factors, we misprice our products or fail to correctly 34 Table of Contents estimate the associated risks, our business, results of operations, financial condition and cash flows may be materially adversely affected.
If, based upon these models, forecasts or other factors, we misprice our products or fail to correctly estimate the associated risks, our business, financial condition , results of operations and cash flows may be materially adversely affected.
The countries in which we operate have changing regulatory regimes, regulatory policies, and interpretations . The countries in which we operate have differing, and sometimes conflicting, regulatory regimes governing the delivery of financial services in each country, the transfer of funds to and from such countries, and other aspects of the broker-dealer, finance, investment, banking, and insurance industries.
The countries in which we operate have differing, and sometimes conflicting, regulatory regimes governing the delivery of financial services in each country, the transfer of funds to and from such countries, and other aspects of the broker-dealer, finance, investment, banking, and insurance industries.
The BEPS package of measures represents a substantial revision of international tax rules. In light of the new measures, it is 46 Table of Contents expected that profits will be reported where the economic activities that generate them are carried out and where value is created.
The BEPS package of measures represents a substantial revision of international tax rules. In light of the new measures, it is expected that profits will be reported where the economic activities that generate them are carried out and where value is created.
If we do not meet our strategic objectives or achieve the results initially expected, we may be unable to recover our investments, which may have a material adverse effect on our business, financial condition and results of operations.
If we do not meet our strategic objectives or achieve the results initially expected, we may be 31 Table of Contents unable to recover our investments, which may have a material adverse effect on our business, financial condition, and results of operations.
To the extent there is heightened competition among Kazakh banks for retail customer deposits, this competition may increase the cost of procuring new deposits and/or retaining existing deposits, and otherwise negatively affect our ability to grow our deposit base.
To the extent there is heightened competition among Kazakh banks for retail customer term deposits and current accounts, this competition may increase the cost of procuring new term deposits and current accounts and/or retaining existing term deposits and current accounts, and otherwise negatively affect our ability to grow our term deposit and current accounts base.
While we have agreements with such institutional clients in which they have agreed to comply with AML/CTF controls that are applicable to brokers in the U.S. and EU, and we test their frameworks and systems by regular risk-based sampling and have access to their underlying customer records for purposes of compliance monitoring, because we do not have direct access to such institutional clients' underlying customers or screening systems, we cannot provide assurance that the beneficial owners who are the beneficiaries of trades being carried out through such omnibus accounts are conducting trades in compliance with applicable AML/CTF laws.
While we have agreements with such institutional customers in which they have agreed to comply with AML/CTF controls that are 46 Table of Contents applicable to brokers in the U.S. and EU, and we test their frameworks and systems by regular risk-based sampling and have access to their underlying customer records for purposes of compliance monitoring, because we do not have direct access to such institutional customers' underlying customers or screening systems, we cannot provide assurance that the beneficial owners who are the beneficiaries of trades being carried out through such omnibus accounts are conducting trades in compliance with applicable AML/CTF laws.
Our ability to accomplish our goals in this business area on schedule and within budget, achieve our revenue targets or realize acceptable returns, is subject to a number of risks as a result of factors over which we have no control, including the need for regulatory approvals, the availability of equipment and labor, equipment breakdowns or accidents, adverse weather conditions, social unrest, unforeseen or uncontrollable cost increases and other risks associated with the deployment of new telecommunications infrastructure.
Our ability to accomplish our goals in this business area on schedule and within budget, achieve our revenue targets or realize acceptable returns, is subject to a number of risks as a result of factors over which we have no control, including the need for regulatory approvals, the availability of equipment and labor, equipment breakdowns or accidents, adverse weather conditions, social unrest, IT, information security and data protection incidents, unforeseen or uncontrollable cost increases and other risks associated with the deployment of new telecommunications infrastructure.
Among the factors that could affect our stock price are: • the Russia-Ukraine conflict and related sanctions and their direct and indirect effects; • geopolitical and civil unrest in any of the markets in which we operate; • planned or completed acquisitions or disposals; • investigations, lawsuits, enforcement actions, and other claims by third parties or governmental authorities; • new regulatory pronouncements and changes in regulatory guidelines; • actual or anticipated fluctuations in our quarterly operating results; • changes in market valuations or earnings of similar companies; 50 Table of Contents • any future sales of our common stock or other securities; • material breaches of regulations by our employees; • changes in securities analysts' estimates of our financial performance or lack of research coverage and reports by industry analysts; • domestic and international economic factors unrelated to our performance; • pandemic and epidemic disease; • announcements by us of significant impairment charges; • investor perception of us and our industry; • announcements by us or our competitors of significant contracts, acquisitions, dispositions or strategic partnerships; and • speculation in the press or investment community.
Among the factors that could affect our stock price are: • the Russia-Ukraine conflict and related sanctions and their direct and indirect effects; • geopolitical and civil unrest in any of the markets in which we operate; • global trade policies and the implementation of tariffs; • planned or completed acquisitions or disposals; 55 Table of Contents • investigations, lawsuits, enforcement actions, and other claims by third parties or governmental authorities; • global economy policy changes, new regulatory pronouncements and changes in regulatory guidelines; • actual or anticipated fluctuations in our quarterly operating results; • changes in market valuations or earnings of similar companies; • any future sales of our common stock or other securities; • breaches of regulations by our employees; • changes in securities analysts' estimates of our financial performance or lack of research coverage and reports by industry analysts; • domestic and international economic factors unrelated to our performance; • pandemic and epidemic disease; • announcements by us of significant impairment charges; • investor perception of us and our industry; • announcements by us or our competitors of significant contracts, acquisitions, dispositions or strategic partnerships; and • speculation in the press or investment community.
Abrupt changes in securities valuations and the failure to meet margin calls could result in substantial financial losses. Margin loans are collateralized by cash and securities in the customers' accounts. The risks associated with margin credit increase during periods of fast market movements, or in cases where collateral is concentrated and market movements occur.
Abrupt changes in securities valuations and the failure to meet margin calls could result in substantial financial losses. Margin loans advanced to customers are collateralized by cash and securities in the customers' accounts. The risks associated with margin credit increase during periods of rapid market movements, or in cases where collateral is concentrated and market movements occur.
As a result, we cannot assure that these guidelines and approval process will be effective in mitigating our underwriting risks. In our insurance business, we may not be able to obtain reinsurance at required levels or prices, or otherwise collect on reinsurance, which could increase our exposure or limit our ability to write new policies.
As a result, these guidelines and approval process may not be effective in mitigating our underwriting risks. In our insurance business, we may not be able to obtain reinsurance at required levels or prices, or otherwise collect on reinsurance, which could increase our exposure or limit our ability to write new policies.
Other businesses we currently operate, or that we will establish in the future pursuant to our digital fintech ecosystem strategy, including our planned telecommunications and media businesses, are also subject to rapid technological change. Furthermore, many of our competitors are larger, more experienced and have greater resources to devote to the development of new technologies and services.
Other businesses we currently operate, or that we will establish in the future pursuant to our digital fintech ecosystem strategy, are also subject to rapid technological change. Furthermore, many of our competitors are larger, more experienced and have greater resources to devote to the development of new technologies and services.
Because our business is conducted in multiple countries, we face exposure to movements in foreign currency exchange rates. This exposure may change over time as business practices evolve and can have a material impact on our financial statements. Our functional currency is the U.S. dollar.
We are exposed to foreign currency fluctuation risks. Because our business is conducted in multiple countries, we face exposure to movements in foreign currency exchange rates. This exposure may change over time as business practices evolve and can have a material impact on our financial statements. Our functional currency is the U.S. dollar.
Turlov and our former Ukrainian subsidiary on the list is not justified and we have been actively appealing the decision, there can be no assurance as to when they will be removed from the list, if at all. While our former Ukrainian subsidiary is not material in the context of our overall group, the inclusion of Mr.
Turlov and our former Ukrainian subsidiary on the list is not justified and we have appealed the decision, there can be no assurance as to when they will be removed from the list, if at all. While our former Ukrainian subsidiary is not material in the context of our overall group, the inclusion of Mr.
Errors, failures, delays, interruptions, disruptions, vulnerabilities, bugs, incompatibility, obsolescence, or similar issues with Tradernet, or the software or systems upon which Tradernet relies for its functionality, however caused, could result in business disruptions, financial loss, reputational damage, and other adverse impacts on our business.
Errors, failures, delays, interruptions, disruptions, vulnerabilities, bugs, incompatibility, obsolescence, or similar issues with Tradernet, or the software or systems upon which Tradernet relies for its functionality, however caused, could result in business disruptions, financial loss, reputational damage, and other adverse impacts on our business, financial condition, and results of operations.
Risks Related to Our Business and Operations : • Our relatively limited operational history has coincided with sustained market growth, which may not be predictive of future operating results. • We may not be able to manage our growth effectively. • We anticipate that acquisitions will continue to play a key role in our growth strategy, but we may be unable to identify, acquire, complete or integrate acquisition targets successfully. • We have engaged in related party transactions and arrangements, which exposes us to a number of risks. • Competition in the markets in which we operate may result in a decrease in our market share and/or profitability. • We plan to incur losses in our new telecommunications and media businesses. • We may be unable to implement our digital fintech ecosystem strategy successfully. • We could suffer significant losses from credit exposure. • Our revenues are concentrated in certain customers and products, which may materially adversely affect our business, results of operations, financial condition and cash flows. • Risks related to our business relationships with third-party broker-dealers, clearing firms and market makers could result in reduced profitability, increased compliance costs, regulatory violations and negative publicity. • We are subject to potential losses as a result of our clearing and execution activities. • A breakdown or interruption in our operational systems or processes may adversely affect our reputation, customers, clients, business activities, operational outcomes, and financial stability. • Our ability to meet our obligations, and the cost of funds to do so, depend on our ability to access identified sources of liquidity at a reasonable cost. • We may need to raise additional capital, and we cannot be sure that additional financing will be available or available on attractive terms. 25 Table of Contents • Reductions in our credit ratings or an increase in our credit spreads could adversely affect our business, liquidity and cost of funding. • Our investments expose us to a significant risk of capital loss. • We may suffer significant loss from changes in the KASE's requirements related to the discount coefficients on the securities in securities repurchase transactions. • Our risk management framework may not be effective in mitigating risks and/or losses to us. • Our modeling and assumptions used in assessing risks in our business may differ materially from actual r esults . • In our insurance business, we may not be able to obtain reinsurance at required levels or prices, or otherwise collect on reinsurance, which could increase our exposure or limit our ability to write new policies. • We are dependent on our executive management team, particularly Timur Turlov, and our ability to hire and retain skilled personnel. • Extraordinary events beyond our control could negatively impact our business. • Possible future pandemics may impact the global economy, global financial markets and our business, financial condition, results of operations and cash flows. • Our financial results depend on interest rate volatility. • We are exposed to foreign currency fluctuation risks. • Damage to our reputation could harm our business.
Risks Related to Our Business and Operations : • Our relatively limited operational history has coincided with sustained market growth, which may not be predictive of future operating results. • We may not be able to manage our growth effectively. • We anticipate that acquisitions will continue to play a key role in our growth strategy, but we may be unable to identify, acquire, complete or integrate acquisition targets successfully. • We have engaged in related party transactions and arrangements, which exposes us to a number of risks. • Competition in the markets in which we operate may result in a decrease in our market share and/or profitability. • We plan to incur losses in our new telecommunications and media businesses. • We may be unable to implement our digital fintech ecosystem strategy successfully. • We could suffer significant losses from credit exposure. • Our revenues are concentrated in certain customers and products, which may materially adversely affect our business, financial condition, results of operations and cash flows. • Risks related to our business relationships with third-party broker-dealers, clearing firms and market makers could result in reduced profitability, increased compliance costs, regulatory violations and negative publicity. • We are subject to potential losses as a result of our clearing and execution activities. • A breakdown or interruption in our operational systems or processes may adversely affect our reputation, customers, business activities, operational outcomes, and financial stability. • Our ability to meet our obligations, and the cost of funds to do so, depend on our ability to access identified sources of liquidity at a reasonable cost. • We may need to raise additional capital, and we cannot be sure that additional financing will be available or available on attractive terms. • Reductions in our credit ratings or an increase in our credit spreads could adversely affect our business, liquidity and cost of funding. • Our investments expose us to a significant risk of capital loss. • We may suffer significant loss from changes in the KASE's requirements related to the discount coefficients on the securities in securities repurchase transactions. • Our risk management framework may not be effective in mitigating risks and/or losses to us. • Our modeling and assumptions used in assessing risks in our business may differ materially from actual results. • In our insurance business, we may not be able to obtain reinsurance at required levels or prices, or otherwise collect on reinsurance, which could increase our exposure or limit our ability to write new policies. • We are dependent on our executive management team, particularly Timur Turlov, and our ability to hire and retain skilled personnel. • Extraordinary events beyond our control could negatively impact our business. • Our financial results depend on interest rate volatility. • We are exposed to foreign currency fluctuation risks. • Damage to our reputation could harm our business. • We may fail to adequately obtain, maintain, enforce and protect our intellectual property and similar proprietary rights, which may harm our business and competitive position.
Our inability to recover from reinsurers, for any reason, could have a material effect on our results of operations, financial condition, cash flows and business prospects. We are dependent on our executive management team, particularly Timur Turlov, and our ability to hire and retain skilled personnel.
Our inability to recover from reinsurers, for any reason, could have a material effect on our business, financial condition, results of operations and cash flows. 37 Table of Contents We are dependent on our executive management team, particularly Timur Turlov, and our ability to hire and retain skilled personnel.
We do not hold “key man” life insurance on Mr. Turlov or any of our other officers or directors. In addition to the importance of Mr. Turlov and other executive management in our continued growth and success, we are dependent, in part, on our continued ability to hire, adequately train and retain skilled employees.
We do not hold "key man" life insurance on Mr. Turlov or any of our other officers or directors. In addition to the importance of Mr. Turlov and other executive management in our continued growth and success, we are dependent, in part, on our continued ability to hire, adequately train and retain skilled employees.
As a "controlled company" under Nasdaq rules, we qualify for exemptions from certain corporate governance requirements that may adversely affect our stock price. Timur Turlov controls a majority of the voting power of our outstanding common stock. Accordingly, we qualify as a "controlled company" within the meaning of Nasdaq corporate governance standards.
As a "controlled company" under Nasdaq rules, we qualify for exemptions from certain corporate governance requirements that may adversely affect our stock price. 53 Table of Contents Mr. Timur Turlov controls a majority of the voting power of our outstanding common stock. Accordingly, we qualify as a "controlled company" within the meaning of Nasdaq corporate governance standards.
These laws, as well as the listing standards of Nasdaq, impose certain compliance requirements, costs and obligations on listed companies. This requires a significant commitment of resources and management oversight.
These laws, as well as the listing standards of Nasdaq, impose certain compliance requirements, costs and obligations on listed companies. This requires a significant commitment of resources and 44 Table of Contents management oversight.
If any such expansions into new product markets are not successful, there could be a material adverse effect on our business and results of operations. In particular, we can give no assurance as to our future ability to successfully implement our telecommunications strategy in Kazakhstan in a timely fashion or on profitable terms.
If any such expansions into new product markets are not successful, there could be a material adverse effect on our business, financial condition, and results of operations. In particular, we can give no assurance as to our future ability to successfully develop our telecommunications business in Kazakhstan in a timely fashion or on profitable terms.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe do not maintain insurance policies to mitigate cybersecurity risks because such insurance may not be available or may be more expensive than the perceived benefit. Further, any insurance that we may purchase to mitigate certain risks may not cover all losses.
Biggest changeThe potential impact of risks from IT incidents, including whether such IT incidents may be associated with cybersecurity threats to the Company, is assessed on an ongoing basis. We do not maintain insurance policies to mitigate cybersecurity risks because such insurance may not be available or may be more expensive than the perceived benefit.
We maintain an IT and cybersecurity incident management process that provides a framework for responding to actual or potential cybersecurity incidents, engagement of third parties, including external incident response professionals, and timely reporting of incidents with material impact or reasonably likely to materially impact to our Chief Technology Officer, Chief Financial Officer, who inform other senior management members and our board of directors as appropriate.
We maintain an IT and cybersecurity incident management process that provides a framework for responding to actual or potential cybersecurity incidents, engagement of third parties, including external incident response professionals, and timely reporting of incidents with a material or reasonably likely material impact to our Chief Technology Officer, Chief Financial Officer, who inform other senior management members and our board of directors as appropriate.
Our financial reporting department ensures financial performance reliability under U.S. regulatory requirements and provides an independent objective assurance to evaluate the effectiveness of IT and cybersecurity controls and governance. The department is directly subordinate to the Audit Committee of our board of directors. Notwithstanding our defensive measures and processes, the threats posed by IT failures and cyber-attacks are always present.
Our financial reporting department ensures financial performance reliability under U.S. regulatory requirements and provides an independent objective assurance to evaluate the effectiveness of our governance. The department is directly subordinate to the Audit Committee of our board of directors. Notwithstanding our defensive measures and processes, the threats posed by IT failures and cyber-attacks are always present.
In contrast, the program's implementation at our subsidiaries is largely delegated to the subsidiary staff. Significant subsidiaries provide updates on their implementation progress, significant cybersecurity incidents, and risks to their senior executives and the experts from our Technology Leadership Centre.
In contrast, the program's implementation at our subsidiaries is largely delegated to the subsidiary staff. Significant subsidiaries at least annually provide updates on their implementation progress, significant cybersecurity incidents, and risks to their senior executives and the experts from our Technology Leadership Centre.
Item 1C. Cybersecurity Risk Management and Strategy Cybersecurity is a critical component of our risk management program, given the increasing reliance on technology and potential cyber threats. Our Chief Technology Officer is leading cybersecurity risk management improvement initiatives as part of our Technology Strategy to 2025.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Cybersecurity is a critical component of our risk management program, given the increasing reliance on technology and potential cyber threats. Our Chief Technology Officer is leading cybersecurity risk management improvement initiatives as part of our technology strategy.
The cybersecurity incident management process facilitates coordination across multiple areas of our organization. Governance Our cybersecurity risk governance model consists of three lines of defense. Our Chief Technology Officer, supported by the experts in our Technology Leadership Centre and IT and cybersecurity teams at our subsidiaries represent the first line.
The cybersecurity incident management process facilitates coordination across multiple areas of our organization. 57 Table of Contents Governance Our cybersecurity risk governance model consists of three lines of defense. Our Chief Technology Officer, supported by the experts in our Technology Leadership Centre and IT and cybersecurity teams at our subsidiaries represent the first line.
Our Chief Technology Officer has over 15 years of information technology experience, including over a decade in leadership positions. He is supported by IT, cybersecurity and data protection professionals from our Technology Leadership Centre with extensive IT, cybersecurity and data protection education and experience, including from regulatory agencies.
Our Chief Technology Officer has over 15 years of information technology experience, including over a decade in leadership positions. He is supported by IT, information security and data protection professionals from our Technology Leadership Centre with extensive experience, including from regulatory agencies.
At the subsidiary level our IT and cybersecurity management team has varying degrees of technology, operational and cybersecurity experience, including experience in mitigating and responding to cybersecurity incidents and managing cyber risks. Our Chief Technology Officer leads cybersecurity risk management improvement initiatives as part of our Technology Strategy to 2025, coordinated and monitored by experts from our Technology Leadership Centre.
At the subsidiary level our management team has varying degrees of technology, operational and cybersecurity experience, including experience in mitigating and responding to cybersecurity incidents and managing associated risks. Our Chief Technology Officer leads cybersecurity risk management improvement initiatives as part of our technology strategy, coordinated and monitored by experts from our Technology Leadership Centre.
Our overall cybersecurity risk management objective is to avoid or minimize the impacts of threat events that could lead to penetration, disruption or misuse of our information systems and to ensure compliance with applicable legal and contractual obligations.
Our overall cybersecurity risk management covers IT, information security and data protection risk and its objective is to avoid or minimize the impacts of threat events that could lead to penetration, disruption or misuse of our information systems and to ensure compliance with applicable legal and contractual obligations.
The experts periodically consolidate and analyze information about the cybersecurity risk management program, cybersecurity and privacy incidents and risks, key initiatives, and other matters relating to cybersecurity processes for reporting to our Chief Technology Officer and our Chief Risk Officer. Both 52 Table of Contents officers periodically report to the Risk Committee of the board of directors.
The experts periodically consolidate and analyze information about the cybersecurity risk management program, cybersecurity incidents and risks, key initiatives, and other matters relating to cybersecurity processes for reporting to our Chief Technology Officer and our Chief Risk Officer. Both officers at least quarterly report to the Risk Committee of the board of directors.
Our Chief Technology Officer also regularly reports directly to the board of directors including on cybersecurity initiatives, notable incidents, and risks. Our Chief Risk Officer also periodically reports directly to the board of directors including on cybersecurity incidents and risks.
Our Chief Technology Officer also at least annually reports directly to the board of directors including on cybersecurity initiatives, notable incidents, and risks. Our Chief Risk Officer at least annually reports directly to the board of directors including on cybersecurity incidents and risks.
Our overall cybersecurity risk management is overseen by the Risk Committee of our board of directors who assists our senior management and the board of directors with their overall risk management responsibilities. Our audit procedures include testing of IT and cybersecurity.
Our overall cybersecurity risk management is overseen by the Risk Committee of our board of directors who assists our senior management and the board of directors with their overall risk management responsibilities. Audit or assurance procedures of Controlling Department, internal audit departments and other functions include testing of IT, information security and data protection controls.
We have established processes and systems designed to mitigate technology risk, including our corporate IT control system, to work towards a consistent minimal level of cybersecurity across all our subsidiaries. We engage in periodic or regular monitoring and assessments of our technology key infrastructure and processes using internal staff and third-party specialists.
We have established processes and systems designed to mitigate technology risk, including our corporate IT control system, to work towards a consistent minimal level of cybersecurity across all our subsidiaries.
For further discussion of risks from cybersecurity threats, see the section captioned “ Risks Related to Information Technology and Cybersecurity ” in Item 1A. Risk Factors.
Further, any insurance that we may purchase to mitigate certain risks may not cover all losses. For further discussion of risks from cybersecurity threats, see the section captioned " Risks Related to Information Technology and Cybersecurity" in " Risk Factors " in Part I Item 1A of this annual report.
We assess and manage risks, including IT and cybersecurity risks, associated with external service providers and our supply chain. Our audit procedures include testing of IT and cybersecurity controls to ensure reliability. The type, maturity, and formalization of controls in our subsidiaries is informed by the level of anticipated threats and their impacts associated with each organization.
The type, maturity, and formalization of controls in our subsidiaries is informed by the level of anticipated threats and their impacts associated with each organization.
Our cybersecurity risk management improvement initiatives are informed by regulatory guidance, industry standards, threat intelligence feeds, internal and external audits, external consultants, and insights from cybersecurity community. Experts from our Technology Leadership Centre, under the supervision of the Chief Technology Officer, periodically review our cybersecurity risk management processes to address changing threats and conditions.
Our cybersecurity risk management improvement initiatives are informed by regulatory guidance, industry standards (such as ISO, NIST, CIS, FAIR and others), threat intelligence feeds, internal and external audits, external consultants, and insights from cybersecurity community.
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While our subsidiaries have experienced cybersecurity incidents in the past, no cybersecurity incidents have had, either individually or in the aggregate, a material adverse effect on our business, financial condition, cash flows or results of operations as of the date of this report.
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Some of our subsidiaries are certified under ISO 27001, an international information security management systems standard, or undergo regular Payment Card Industry Data Security Standard (PCI) audits. Experts from our Technology Leadership Centre, under the supervision of the Chief Technology Officer, periodically review our cybersecurity risk management processes to address changing threats and conditions.
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We engage in periodic or regular monitoring and assessments of our technology key infrastructure and processes using internal staff and third-party specialists utilizing methods such as penetration testing, vulnerability scanning, code, configuration reviews. risk and security assessments.
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We assess and manage risks, including IT and cybersecurity risks, associated with external service providers and our supply chain, utilizing methods such as security assessments, SLAs, information security and data protection contractual clauses. Our audit procedures include testing of IT and cybersecurity controls to ensure reliability.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease and own a number of properties across our business segments: Brokerage, Banking, Insurance, and Other, through which we conduct our operations. We currently lease office space for 265 retail, executive, administrative and operational facilities in Kazakhstan, Cyprus, Uzbekistan, Azerbaijan, Armenia, the United States, Turkey, Germany, Spain, France, Greece and Kyrgyzstan.
Biggest changeITEM 2. PROPERTIES We lease and own a number of properties across our business segments: Brokerage, Banking, Insurance, and Other, through which we conduct our operations.
For additional information regarding our office lease commitments see Note 27 "Leases " in the notes to our consolidated financial statements contained in Part II Item 8 of this annual report.
For additional information regarding our office lease commitments see Note 26 " Leases " in the notes to our consolidated financial statements contained in Part II Item 8 of this annual report.
Our Insurance and Bank segment properties include our principal executive offices, which are located at "Esentai Tower" BC, Floor 7, 77/7 Al Farabi Ave., Almaty, Kazakhstan 050040, and which are leased. In our Other segment we own two buildings consisting of approximately 83,014 square feet.
Our Insurance and Banking segment properties include our principal executive offices, which are located at "Esentai Tower" BC, Floor 7, 77/7 Al Farabi Ave., Almaty, Kazakhstan 050040, and which are leased. In our Other segment we own 17 buildings consisting of approximately 57,898 square feet.
Our principal property in our Brokerage segment is our office building located at Christaki Kranou 20, Freedom Tower, 5th floor, 4041 Limassol, Cyprus with an area of 6,959 square meters (approximately 74,906 square feet), which we own.
Our principal property in our Brokerage segment is our office building located at Christaki Kranou 20, Freedom Tower, 4041 Limassol, Cyprus with an area of 3,399 square meters (approximately 36,587 square feet), which we own.
In our Insurance and Bank segments collectively, as of March 31, 2024, we owned 16 buildings consisting of approximately 129,992 square feet and we leased offices consisting of an aggregate of 112,688 square feet.
We own 37 buildings consisting of an aggregate of approximately 221,546 square feet, in Kazakhstan and Cyprus. In our Insurance and Banking segments collectively, as of March 31, 2025, we owned 19 buildings consisting of approximately 127,060 square feet and we leased offices consisting of an aggregate of 299,101 square feet.
As of March 31, 2024, the area of leased offices in our Other segment was 254,598 square feet. In our Brokerage segment we own 2 buildings consisting of approximately 74,907 square feet. As of March 31, 2024, the area of leased offices in our Brokerage segment was 195,094 square feet.
As of March 31, 2025, the area of leased offices in our Other segment was 373,457 square feet. 58 Table of Contents As of March 31, 2025, the area of leased offices in our Brokerage segment was 221,558 square feet.
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Our total aggregate leased square footage is approximately 562,380 square feet. We own 20 buildings consisting of an aggregate of approximately 287,913 square feet, in Kazakhstan and Cyprus.
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We currently lease office space for 257 retail, executive, administrative and operational facilities among other places in Kazakhstan, Cyprus, Uzbekistan, Azerbaijan, Armenia, the United States, Turkey, Germany, Spain, France, Greece, Austria, Bulgaria, Poland, Netherlands and Kyrgyzstan. Our total aggregate leased square footage is approximately 884,115 square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings The financial services industry is highly regulated. In recent years, there has been an increasing incidence of litigation involving the brokerage industry, including customer and shareholder class action suits that generally seek substantial damages, including in some cases punitive damages.
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ITEM 3. LEGAL PROCEEDINGS The information required to be set forth under this heading is incorporated by reference from Note 28 "Commitments and Contingencies" to the Consolidated Financial Statements included in Part II, Item 8 of this annual report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 59 Table of Contents PART II
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Compliance and trading problems that are reported to federal, state and provincial regulators, exchanges or other self-regulatory organizations by dissatisfied customers are investigated by such regulatory bodies, and, if pursued by such regulatory body or such customers, may increase to the 53 Table of Contents level of arbitration or disciplinary action.
Removed
We are also subject to periodic governmental and regulatory audits and inspections that might result in fines or other charges. From time to time, we or our subsidiaries may be named as defendants in various routine legal proceedings, claims, and regulatory inquiries arising out of the ordinary course of our business.
Removed
Management believes that the results of these routine legal proceedings, claims, and regulatory matters will not have a material adverse effect on our financial condition, or on our operations and cash flows.
Removed
However, we cannot estimate the legal fees and expenses to be incurred in connection with these routine matters and, therefore, are unable to determine whether these future legal fees and expenses will have a material impact on our operations and cash flows. It is our policy to expense legal and other fees as incurred.
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Estate of Toleush Tolmakov Litigation The Estate of Toleush Tolmakov (the “Estate”) commenced a legal action against Freedom Holding Corp., and our subsidiary FFIN Securities, Inc. in the Third Judicial District Court of Salt Lake County, State of Utah in December 2021. This proceeding relates to cash distributions arising from the 2011 sale of a subsidiary of BMB Munai, Inc.
Removed
(the predecessor to Freedom Holding Corp.) and shares of common stock of the Company belonging to Toleush Tolmakov, who was a shareholder of the Company at the time he died in 2011, and a now defunct British Virgin Islands corporation, in which Mr. Tolmakov may have had an interest. The Company has held the relevant assets since Mr.
Removed
Tolmakov's death because it does not know to whom they should be distributed and no party has yet established legal right of ownership of the assets.
Removed
On October 21, 2022, in accordance with an order entered into by the Third Judicial District Court of Salt Lake County, we deposited an amount of $8.4 million into the registry of the court, representing the amount of cash distributions claimed by the Estate. The Company continues to deny any and all liability in this matter.
Removed
We are currently in settlement discussions with the Estate. We do not believe that the outcome of this legal action could be material to our financial condition. Item 4. Mine Safety Disclosures Not applicable. 54 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe stock price performance shown in the graph and table below is not necessarily indicative of, nor is it intended to forecast, the future performance of our common stock 55 Table of Contents 3/19 3/20 3/21 3/22 3/23 3/24 Freedom Holding Corp. 100 163 613 685 826 811 S&P 500 100 91 140 160 145 185 S&P 500 Diversified Financials 100 89 142 170 148 188 The performance graph and table shall not be deemed "soliciting material" or to be "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act.
Biggest changeThe stock price performance shown in the graph and table below is not necessarily indicative of, nor is it intended to forecast, the future performance of our common stock. 60 Table of Contents 3/20 3/21 3/22 3/23 3/24 3/25 Freedom Holding Corp. 100 376 420 506 497 931 S&P 500 100 154 175 159 203 217 S&P 500 Diversified Financials 100 160 192 167 212 254 The performance graph and table shall not be deemed "soliciting material" or to be "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from March 31, 2019 to March 31, 2024. The comparisons shown in the graph and table below are based upon historical data.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from March 31, 2020 to March 31, 2025. The comparisons shown in the graph and table below are based upon historical data.
Recent Sales of Unregistered Equity Securities During fiscal 2024, we did not sell any unregistered shares of our equity securities. Issuer Repurchases of Equity Securities We did not repurchase any equity securities of the Company during fiscal 2024. Item 6. [Reserved]
Recent Sales of Unregistered Equity Securities During fiscal 2025, we did not sell any unregistered shares of our equity securities. Issuer Repurchases of Equity Securities We did not repurchase any equity securities of the Company during the fourth quarter of fiscal 2025. ITEM 6. [RESERVED]
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Capital Market under the symbol "FRHC". Our common stock also trades on the KASE under the symbol "US_FRHC". Holders As of May 13, 2024, we had approxima tely 479 shareh olders of record.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Capital Market under the symbol "FRHC". Our common stock also trades on the KASE under the symbol "US_FRHC" and on the AIX under the symbol "FRHC".
Dividends We have not declared or paid a cash dividend on our common stock for the past two fiscal years.
Dividends Historically, we have not declared or paid a cash dividend on our common stock.
Added
Recent Developments On May 29, 2025, we announced that FTSE Russell selected Freedom Holding Corp. for inclusion in the Russell 3000® Index as part of the 2025 annual reconstitution, effective after the close of U.S. trading on June 27, 2025.
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Management believes index inclusion may increase the visibility and trading liquidity of our common stock, although the Company cannot predict the magnitude or duration of any market impact. Holders As of March 31, 2025, we had approxima tely 506 shareh olders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInterest income The following table sets forth information regarding our revenue from interest income for the fiscal years presented: Year ended March, 31 2024 2023 Amount Change % Change 2022 (Recasted) Amount Change % Change Interest income on trading securities $ 426,428 $ 178,288 $ 248,140 139 % $ 78,327 $ 99,961 128 % Interest income on loans to customers 176,539 43,486 133,053 306 % 4,617 38,869 842 % Interest income on margin loans to customers 175,571 34,558 141,013 408 % 14,164 20,394 144 % Interest income on available-for-sale securities 32,821 27,003 5,818 22 % 22,437 4,566 20 % Interest income on reverse repurchase agreements and amounts due from banks 16,865 9,836 7,029 71 % 1,658 8,178 493 % Other interest income — 1,524 (1,524) (100) % 406 1,118 275 % Total interest income $ 828,224 $ 294,695 $ 533,529 181 % $ 121,609 $ 173,086 142 % The following table sets out the components of our interest income as a percentage of total interest income, net for the fiscal years presented: Year ended March 31, 2024 2023 2022 (Recasted) (as a % of total interest income) Interest income on trading securities 51.5 % 60.5 % 64.4 % Interest income on loans to customers 21.3 % 14.8 % 3.8 % Interest income on margin loans to customers 21.2 % 11.7 % 11.6 % Interest income on available-for-sale securities 4.0 % 9.2 % 18.5 % Interest income on reverse repurchase agreements and amounts due from banks 2.0 % 3.3 % 1.4 % Other interest income — % 0.5 % 0.3 % Total interest income 100 % 100 % 100 % Interest income for the fiscal year ended March 31, 2024, was $828.2 million, an increase of $533.5 million or 181% compared to $294.7 million for the fiscal year ended March 31, 2023.
Biggest changeInterest income The following table sets forth information regarding our interest income for the fiscal years presented: Year ended March, 31 2025 2024 Amount Change % Change Interest income on trading securities $ 378,350 $ 426,428 $ (48,078) (11) % Interest income on margin loans to customers 212,360 175,571 36,789 21 % Interest income on loans to customers 207,802 176,539 31,263 18 % Interest income on available-for-sale securities 40,297 32,821 7,476 23 % Interest income on reverse repurchase agreements and amounts due from banks 24,644 16,865 7,779 46 % Interest income on held-to-maturity securities 1,000 — 1,000 100 % Total interest income $ 864,453 $ 828,224 $ 36,229 4 % The following table sets out the components of our interest income as a percentage of total interest income, net for the fiscal years presented: Year ended March 31, 2025 2024 (as a % of total interest income) Interest income on trading securities 43.8 % 51.5 % Interest income on margin loans to customers 24.5 % 21.2 % Interest income on loans to customers 24.0 % 21.3 % Interest income on available-for-sale securities 4.7 % 4.0 % Interest income on reverse repurchase agreements and amounts due from banks 2.9 % 2.0 % Interest income on held-to-maturity securities 0.1 % — % Total interest income 100 % 100 % For the fiscal year ended March 31, 2025, we had interest income of $864.5 million, representing an increase of $36.2 million, or 4%, compared to the fiscal year ended March 31, 2024.
Net (Loss)/Gain on Derivatives The Company enters into various derivative financial instruments, including forwards and swaps, in the foreign exchange markets. These financial instruments are held for trading and are initially recognized at fair value.
Net Gain/(Loss) on Derivatives The Company enters into various derivative financial instruments, including forwards and swaps, in the foreign exchange markets. These financial instruments are held for trading and are initially recognized at fair value.
Dividends Any payment of cash dividends on our common stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual and legal restrictions and other factors deemed relevant by our Board of Directors.
Any payment of cash dividends on our common stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual and legal restrictions and other factors deemed relevant by our Board of Directors.
We currently intend to retain any future earnings to fund the operation, development and expansion of our business, and therefore we do not anticipate paying any cash dividends on common stock in the foreseeable future. Indebtedness Short-term Our short-term financing is primarily obtained through securities repurchase arrangements conducted through stock exchanges.
We currently intend to retain any future earnings to fund the operation, development and expansion of our business, and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. Indebtedness Short-term Our short-term financing is primarily obtained through securities repurchase arrangements conducted through stock exchanges.
We believe that our current cash and cash equivalents, cash expected to be generated from operating activities, and forecasted returns from our proprietary trading, combined with our ability to raise additional capital will be sufficient to meet our present and anticipated financing needs. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in conformity with U.S.
We believe that our current cash and cash equivalents, cash expected to be generated from operating activities, and forecasted returns from our proprietary trading, combined with our ability to raise additional capital will be sufficient to meet our present and anticipated financing needs. CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with U.S.
Total capital expenditures for the development of this business area are currently expected to be required for, among other things, construction of network infrastructure, including a backbone network, obtaining frequency licenses or other rights to provide services where required and acquisitions of smaller companies in the sector.
Total capital expenditures for the development of this business area are currently expected to be required for, among other things, construction of network infrastructure, including a backbone network, obtaining licenses or other rights to provide services where required and acquisitions of smaller companies in the sector.
Our subsidiaries engage in a broad range of activities including securities brokerage, securities dealing for customers and for our own account, market making activities, investment research, investment counseling, investment banking services, retail and commercial banking, insurance products, payment services, and information processing services.
Our subsidiaries engage in a broad range of activities including securities brokerage, securities dealing for customers and for our own account, underwriting, market making activities, investment research, investment counseling, retail and commercial banking, insurance products, payment services, and information processing services.
Prior to the end of fiscal 2024, we had such an arrangement indirectly with an institutional market maker customer of our affiliate FST Belize, and since approximately the beginning of fiscal 2024 we have had such an arrangement with an institutional market maker customer of our Freedom Global subsidiary.
Prior to the end of fiscal 2024, we had such an arrangement indirectly with an institutional market maker customer of our former affiliate FST Belize, and since approximately the beginning of fiscal 2024 we have had such an arrangement with an institutional market maker customer of our Freedom Global subsidiary.
Deferred acquisition costs (“DAC”) for traditional life insurance and long-duration health insurance are amortized over the estimated premium-paying period of the related policies. DAC for property insurance, accident insurance and health insurance is amortized over the effective period of the related insurance policies.
Deferred acquisition costs ("DAC") for traditional life insurance and long-duration health insurance are amortized over the estimated premium-paying period of the related policies. DAC for property insurance, accident insurance and health insurance is amortized over the effective period of the related insurance policies.
Our subsidiaries are also subject to various other rules and regulations, including liquidity and capital 84 Table of Contents adequacy ratios. Our operations that require the intensive use of capital are limited to the extent necessary to meet our regulatory requirements. Over the past several years, we have pursued an aggressive growth strategy both through acquisitions and organic growth efforts.
Our subsidiaries are also subject to various other rules and regulations, including liquidity and capital adequacy ratios. Our operations that require the intensive use of capital are limited to the extent necessary to meet our regulatory requirements. 83 Table of Contents Over the past several years, we have pursued an aggressive growth strategy both through acquisitions and organic growth efforts.
Our cash and cash equivalents include restricted cash, which principally consists of cash of our brokerage customers which are segregated in a special custody accounts for the exclusive benefit of our brokerage customers.
Our cash and cash equivalents include restricted cash, which principally consists of cash of our brokerage customers which are segregated in special custody accounts for the exclusive benefit of our brokerage customers.
A period of sustained downturns and/or volatility in the securities markets, and/or prolonged levels of increasing interest rates, could lead to a return to increased credit market dislocations, reductions in the value of real estate, and other negative market factors which could significantly impair our revenues and profitability.
A period of sustained downturns and/or volatility in the securities markets, and/or prolonged levels of increasing interest rates, could lead to a return to increased credit market dislocations, reductions in the value of real estate, and other negative market factors which could significantly impact our revenues and profitability.
We regularly monitor and manage our leverage and liquidity risk through various committees and processes we have established to maintain compliance with net capital and capital adequacy requirements imposed on securities brokerages and banks in jurisdictions where we do business.
We regularly monitor and manage our leverage and liquidity risk through various committees and processes we have established to maintain compliance with net capital and capital adequacy requirements imposed on securities brokerages, insurance companies and banks in jurisdictions where we do business.
Interest Expense Interest expense includes the expenses associated with our short-term and long-term financing, which consist of interest on securities repurchase agreement obligations, customer accounts and deposits, debt securities issued, and loans received. Payroll and Bonus Payroll and bonuses represent the costs incurred by a company in compensating its employees for their services and providing performance-based incentives.
Interest Expense Interest expense includes the expenses associated with our short-term and long-term financing, which consist of interest on securities repurchase agreement obligations, customer accounts and deposits, debt securities issued, and loans received. 66 Table of Contents Payroll and Bonus Payroll and bonuses represent the costs incurred by a company in compensating its employees for their services and providing performance-based incentives.
Professional Services Professional services represent the costs associated with engaging external experts and consultants. Stock Compensation Expense Stock compensation expense represents the cost associated with issuing stock grants to employees and executives as part of their compensation packages. Advertising Expense Advertising expense represents a component of operating expenses.
Professional Services Professional services represent the costs associated with engaging external experts and consultants. Stock Compensation Expense Stock compensation expense represents the cost associated with stock grants to employees and executives as part of their compensation packages. Advertising and Sponsorship Expense Advertising and sponsorship expense represents a component of operating expenses.
Long-term On October 21, 2021, our subsidiary Freedom Finance Special Purpose Company LTD ("Freedom SPC") issued U.S. dollar-denominated bonds due 2026, in an aggregate principal amount up to $66 million, which are listed on the A IX . The annual interest rate for such bonds is 5.5%. The bonds are guaranteed by FRHC.
Long-term On October 21, 2021, our subsidiary Freedom Finance Special Purpose Company LTD ("Freedom SPC") issued U.S. dollar-denominated bonds due 2026, in an aggregate principal amount of $66 million, which are listed on the A IX . The annual interest rate for such bonds is 5.5%. The bonds are guaranteed by FRHC.
Fees received for banking services consist primarily of commissions earned from merchants on acquiring operations, commission on transfer and payment processing and commissions on cash operations. Fees for payment processing services are mainly related to the charges for the service of handling and processing particular cash transfer transactions or operations.
Fees received for banking services consist primarily of commissions earned from merchants on acquiring operations, commission on transfer and payment processing and commissions on cash operations. Fees for payment processing services are mainly related to charges for handling and processing particular cash transfer transactions or operations.
We finance our assets primarily from revenue-generating activities and short-term and long-term financing arrangements. 81 Table of Contents Cash Flows The following table presents information from our statement of cash flows for the periods indicated.
We finance our assets primarily from revenue-generating activities and short-term and long-term financing arrangements. 80 Table of Contents Cash Flows The following table presents information from our statement of cash flows for the periods indicated.
In our acquisitions, we have also recognized goodwill at the amount by which the purchase price paid exceeds the fair value of the net assets acquired. 85 Table of Contents Our ongoing accounting for goodwill and the tangible and intangible assets acquired requires us to make significant estimates and assumptions as we exercise judgement to evaluate these assets for impairment.
In our acquisitions, we have also recognized goodwill at the amount by which the purchase price paid exceeds the fair value of the net assets acquired. Our ongoing accounting for goodwill and the tangible and intangible assets acquired requires us to make significant estimates and assumptions as we exercise judgement to evaluate these assets for impairment.
For additional information regarding these risks and uncertainties, see the disclosure under the heading "Risk Factors" in Part I Item 1A of this annual report. This discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources for fiscal 2024, 2023 and 2022.
For additional information regarding these risks and uncertainties, see the disclosure under the heading "Risk Factors" in Part I Item 1A of this annual report. This discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources for fiscal 2025 and 2024.
GAAP, we are required to revalue assets and liabilities denominated in foreign currencies into our reporting currency, the U.S. dollar, which can result in gains or losses on foreign exchange operations. Fluctuations in foreign currency exchange rates are beyond the Company's control, and the Company may suffer losses as a result of such fluctuations.
GAAP, we are required to revalue assets and liabilities denominated in foreign currencies into our reporting currency, the U.S. dollar, which can result in gains or losses on foreign exchange operations. The Company may suffer losses as a result of such fluctuations in foreign currency exchange rates.
Our arrangements with such market maker customers have provided us and our customers with a substantial liquidity pool for trading, including reduced settlement costs for us and enabling faster execution of trades for our customers.
Our arrangements with such market maker customers have provided us and our customers with substantial liquidity for trading, including reduced settlement costs for us and enabling faster execution of trades for our customers.
Brokerage commissions are charged on investment products in accordance with a schedule we have formulated that aligns with local practices. Part of our brokerage fees from customer trading consists of commissions we receive for from institutional market maker customers for execution of trades requested by them.
Brokerage commissions are charged on investment products in accordance with a schedule we have formulated that aligns with local practices. Part of our brokerage fees from customer trading consists of commissions we receive for from institutional market maker customers for execution of trades.
RESULTS OF OPERATIONS Comparison of Fiscal Years Ended March 31, 2024, 2023 and 2022 The following comparison of our financial results for the fiscal years ended March 31, 2024, 2023 and 2022, is not necessarily indicative of future results. Prior period presentations and disclosures were reclassified to provide comparability with current period classifications.
RESULTS OF OPERATIONS Comparison of Fiscal Years Ended March 31, 2025 and 2024 The following comparison of our financial results for the fiscal years ended March 31, 2025 and 2024 is not necessarily indicative of future results. Prior period presentations and disclosures for fiscal 2024 were reclassified to provide comparability with current period classifications.
For our insurance operations, fee and commission expense arises from the deferral and subsequent amortization of the costs of acquiring business, which are referred to as “deferred acquisition costs” (principally commissions, and other incremental direct costs of issuing policies).
For our insurance operations, fee and commission expense arises from the deferral and subsequent amortization of the costs of acquiring business, which are referred to as "deferred acquisition costs" (principally commissions, and other incremental direct costs of issuing policies).
Foreign Currency Translation Adjustments, Net of Tax The functional currencies of our operating subsidiaries are the Kazakhstan tenge, the euro, the U.S. dollar, the Uzbekistan som, Kyrgyzstani som, the Azerbaijani manat, the Armenian dram, the British pound sterling and the United Arab Emirates dirham. Our reporting currency is the U.S. dollar. Pursuant to U.S.
Foreign Currency Translation Adjustments, Net of Tax The functional currencies of our operating subsidiaries are the Kazakhstan tenge, the euro, the U.S. dollar, the Uzbekistan som, Kyrgyzstani som, the Azerbaijani manat, the Armenian dram, the British pound sterling, the Turkish lira, the Tajikistani somoni and the United Arab Emirates dirham. Our reporting currency is the U.S. dollar. Pursuant to U.S.
Insurance Underwriting Income 63 Table of Contents Life insurance premiums are recognized as revenue when due; accident and health insurance premiums are recognized as revenue over the premium paying period and property; and casualty insurance premiums are recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided.
Insurance Underwriting Income Life insurance premiums are recognized as revenue when due; accident and health insurance premiums are recognized as revenue over the premium paying period and property; and casualty insurance premiums are recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided.
This discussion contains certain forward-looking statements that involve known and unknown risks, uncertainties, and other factors as described under the heading "Special Note About Forward-Looking Information" in this annual report. Actual results could differ materially 56 Table of Contents from those projected in any forward-looking statements.
This discussion contains certain forward-looking statements that involve known and unknown risks, uncertainties, and other factors as described under the heading "Special Note About Forward-Looking Information" in this annual report. Actual results could differ materially from those projected in any forward-looking statements.
We use repurchase arrangements, among other things, to finance our liquidity positions. As of March 31, 2024, $2.8 billion, or 75% of the trading securities held in our proprietary trading account were subject to securities repurchase obligations compared to $1.5 billion, or 63% as of March 31, 2023.
We use repurchase arrangements, among other things, to finance our liquidity positions. As of March 31, 2025, $1.4 billion, or 63% of the trading securities held in our proprietary trading account were subject to securities repurchase obligations compared to $2.8 billion, or 75% as of March 31, 2024.
We receive a commission from such institutional market maker customers for executing their trades, and in the past we earned such commissions indirectly through commissions we received from FST Belize.
We receive a commission from such institutional market maker customers for executing their trades, and in the past we earned such commissions indirectly through commissions we received from FS T Belize.
We had an unrealized net gain in the year ended March 31, 2024, due to securities positions we continued to hold at March 31, 2024, having appreciated by $95.7 million.
We had an unrealized net gain in the year ended March 31, 2024, due to securities positions we held at March 31, 2024, having appreciated by $95.7 million.
The following table provides a summary of the monthly average balances and average interest rates for the major categories of interest-bearing liabilities for the fiscal years ended March 31, 2024, 2023 and 2022.
The following table provides a summary of the monthly average balances and average interest rates for the major categories of interest-bearing liabilities for the fiscal years ended March 31, 2025, and 2024.
Business Segment Operations We report our results of operations through the following four business segments: Brokerage, Banking, Insurance, and Other. These operating segments are based on how our CODM will be making decisions about allocating resources and assessing performance.
BUSINESS SEGMENT OPERATIONS We report our results of operations through the following four business segments: Brokerage, Banking, Insurance, and Other. These operating segments are based on how our CODM makes decisions about allocating resources and assessing performance.
The following table provides a summary of the monthly average balances and average interest rates for the major categories of interest-earning assets for the fiscal years ended March 31, 2024, 2023 and 2022.
The following table provides a summary of the monthly average balances and average interest rates for the major categories of our interest-earning assets for the fiscal years ended March 31, 2025 and 2024.
The following table sets forth the effects of changing rates and volumes on interest. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume).
The following table sets forth the effects of changing rates and volumes on interest. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns.
During the periods covered in this report our operations were primarily funded through a combination of existing cash on hand, cash generated from operations, returns generated from our proprietary trading and proceeds from the sale of bonds and other borrowings.
LIQUIDITY AND CAPITAL RESOURCES During the periods covered in this report our operations were primarily funded through a combination of existing cash on hand, cash generated from operations, returns generated from our proprietary trading and proceeds from the issuance of bonds and other borrowings.
While we are confident in the risk management monitoring and processes we have in place, a significant portion of our trading securities and cash and cash equivalents are subject to collateralization agreements. This significantly enhances our risk of loss in the event financial markets move against our positions. When this occurs our liquidity, capitalization and business can be negatively impacted.
While we have in place the risk management monitoring and processes, a significant portion of our trading securities and cash and cash equivalents are subject to collateralization agreements. This significantly enhances our risk of loss in the event financial markets move against our positions which can negatively impact our liquidity, capitalization and business.
We currently plan to finance our capital expenditures for this business area with a combination of own funds and borrowings, including vendor financing, including the proceeds of a $200 million U.S. dollar domestic bond placement on the AIX that we completed on December 19, 2023. For further information, see "Indebtedness - Long-term" below.
We currently plan to finance our capital expenditures for this business area with a combination of own funds and borrowings, including vendor financing, including the proceeds of a $200 million U.S. dollar domestic bond placement on the AIX that we completed on December 19, 2023.
General and Administrative Expense 64 Table of Contents General and administrative expense includes lease cost, depreciation and amortization, communications services, software support, representative expenses, business travel expenses, utilities, charity, sponsorship, fines and penalties, taxes other than income tax, rent and other operating expenses.
General and Administrative Expense General and administrative expense includes lease cost, depreciation and amortization, communications services, software support, representative expenses, business travel expenses, utilities, charity, fines and penalties, taxes other than income tax, rent and other operating expenses.
Each of our subsidiaries that is subject to net capital or capital adequacy requirements exceeded the minimum required amount at March 31, 2024.
The Company and each of our subsidiaries that is subject to net capital or capital adequacy requirements exceeded the minimum required amount at March 31, 2025.
For additional information regarding our transactions with FST Belize, see Note 24 "Related Party Transactions " in the notes to our consolidated financial statements contained in Part II Item 8 of this annual report.
For additional information regarding our related party transactions see Note 23 " Related Party Transactions " in the notes to our consolidated financial statements contained in Part II Item 8 of this annual report.
Our effective tax rate for fiscal 2024 decreased to 13.9%, from 18.1% during fiscal 2023 as a result of changes in the composition of the revenues we realized from our operating activities and the tax treatment of those revenues in the various jurisdictions where our subsidiaries operate along with the incremental U.S. tax on GILTI.
Our effective tax rate for fiscal 2025 increased to 25.2%, from 13.9% during fiscal 2024 as a result of changes in the composition of the revenues we realized from our operating activities and the tax treatment of those revenues in the various jurisdictions where our subsidiaries operate along with the incremental U.S. tax on GILTI.
There are many transactions and calculations for which the ultimate tax determination is uncertain. As a result, actual future tax consequences relating to uncertain tax positions may be materially different than our determinations or estimates.
Significant judgement is required in determining the provision for income tax. There are many transactions and calculations for which the ultimate tax determination is uncertain. As a result, actual future tax consequences relating to uncertain tax positions may be materially different than our determinations or estimates.
Net Cash Used In Investing Activities During fiscal 2024, net cash used in investing activities was $638.2 million compared to net cash used in investing activities of $1.5 billion during fiscal 2023 ($629.7 million of which relates to discontinued operations), and net cash used in investing activities of $146.3 million during fiscal 2022 ($4.4 million of which relates to discontinued operations).
Net Cash Used In Investing Activities During fiscal 2025, net cash used in investing activities was $905.5 million compared to net cash used in investing activities of $638.2 million during fiscal 2024, and net cash used in investing activities of $1.5 billion million during fiscal 2023 ($629.7 million of which relates to discontinued operations).
Each of these factors is discussed in more detail below. Market and Economic Conditions Performance in the financial services industry is heavily influenced by the overall strength of economic conditions and financial market activity, which generally have a direct and material impact on our results of operations and financial condition.
Market and Economic Conditions Performance in the financial services industry is heavily influenced by the overall strength of economic conditions and financial market activity, which generally have a direct and material impact on our results of operations and financial condition.
As of March 31, 2024 , there was an aggregate of $64.5 million and $200.4 million i n principal amount of Freedom SPC Bonds due 2026 and Freedom SPC bonds due 2028, respectively, outstanding.
As of March 31, 2025 , there was an aggregate of $64.8 million and $200.3 million i n principal amount of Freedom SPC Bonds due 2026 and Freedom SPC bonds due 2028, respectively, outstanding.
Foreign currency translation adjustments, net of tax Due to a 1.1% appreciation of the Kazakhstan tenge against the U.S. dollar during the year ended March 31, 2024, we realized a foreign currency translation gain of $12.1 million for the year ended March 31, 2024, as compared to a foreign currency translation gain of $5.2 million for the year ended March 31, 2023.
Foreign currency translation adjustments, net of tax Due to a 12.9% depreciation of the Kazakhstan tenge against the U.S. dollar during the year ended March 31, 2025, we realized a foreign currency translation loss of $104.1 million for the year ended March 31, 2025, as compared to a foreign currency translation gain of $12.1 million for the year ended March 31, 2024.
The increase was mainly attributable to an increase of agency fees expense of $79.5 million in fiscal 2024 as compared to fiscal 2023. The increase was mainly due to an increase of insurance product sales by Freedom Finance Life, which are outsourced to outside agents.
The increase was mainly attributable to an increase of agency fee expense of $181.0 million in fiscal 2025 as compared to fiscal 2024. The increase was mainly due to an increase of insurance product sales by Freedom Life, which are outsourced to outside agents.
For the year ended March 31, 2024, we earned fee and commission income from the market maker customer at our Freedom Global subsidiary in an amount of $196.7 million, representing 12% of our total fee and commission income for fiscal 2024.
For the year ended March 31, 2025, we earned fee and commission income from the market maker customer at our Freedom Global subsidiary of $284.7 million, representing 56% of our total fee and commission income for fiscal 2025.
As a result, such subsidiaries may be restricted in their ability to transfer cash between different jurisdictions and to FRHC. Additionally, transfers of cash between international jurisdictions may have adverse tax consequences that could discourage such transfers.
This is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries may be restricted in their ability to transfer cash between different jurisdictions and to FRHC. Additionally, transfers of cash between international jurisdictions may have adverse tax consequences that could discourage such transfers.
At March 31, 2024, these minimum net capital and capital adequacy requirements for each company ranged from approximatel y $0.2 million to $ 196.6 million and fluctuate depending on various factors. At March 31, 2024, the aggregate net capital and capital adequacy requirements of our subsidiaries was approximately $245.9 million .
At March 31, 2025, these minimum net capital and capital adequacy requirements for each company ranged from approximatel y $0.3 million to $ 175.4 million and fluctuate depending on various factors. At March 31, 2025, the aggregate net capital and capital adequacy requirements of our subsidiaries was approximately $441.1 million .
For the year ended March 31, 2024, we earned interest income from margin lending from the market maker customer at our Freedom Global subsidiary in an amount of approximately $100 million, representing 6% of our total interest income from margin lending for fiscal 2024.
For the fiscal year ended March 31, 2025, we earned interest income from margin lending from a market maker customer of our Freedom Global subsidiary in an amount of approximately $32.8 million, representing 15% of our total interest income from margin lending for that period.
Year ended March 31, 2024 2023 2022 (Recasted) (as a % of total fee and commission income) Brokerage services 76 % 88 % 95 % Commission income from payment processing 9 % 2 % — % Bank services 6 % 5 % 2 % Underwriting and market-making services 4 % 4 % 2 % Other fee and commission income 5 % 1 % 1 % Total fee and commission income 100 % 100 % 100 % Fee and commission income for the fiscal year ended March 31, 2024, amounted to $440.3 million, reflecting an increase of $113.1 million or 35% compared to $327.2 million in the fiscal year ended March 31, 2023.
Year ended March 31, 2025 2024 (as a % of total fee and commission income) Brokerage services 85 % 76 % Commission income from payment processing 6 % 9 % Agency fee income 3 % 4 % Bank services 3 % 6 % Underwriting and market-making services 2 % 4 % Other fee and commission income 1 % 1 % Total fee and commission income 100 % 100 % Fee and commission income for the fiscal year ended March 31, 2025 amounted to $505.0 million, reflecting an increase of $64.7 million or 15% compared to $440.3 million in the fiscal year ended March 31, 2024.
A net gain or loss is comprised of both realized and unrealized gains and losses during the period. Realized gains or losses are recognized when we close an open position in a security and recognize a gain or a loss on that position. U.S.
Realized gains or losses are recognized when we close an open position in a security and recognize a gain or a loss on that position. U.S.
Our processes and accounting policies for evaluating impairments are further described in Note 2 " Summary of Significant Accounting Policies " to our consolidated financial statements contained in Part II Item 8 of our annual report. As of March 31, 2024, the Company had goodwill of $52.6 million.
Our processes and accounting policies for evaluating impairments are further described in Note 2 " Summary of Significant Accounting Policies " to our consolidated financial statements contained in Part II Item 8 of our annual report.
Our strategy and budget for Freedom Telecom are currently being reassessed and are subject to revisions, which may be material.
Our plans and budget for Freedom Telecom continue to be regularly reassessed and are subject to revisions, which may be material .
Net cash from financing activities for fiscal 2024, consisted principally of proceeds from securities repurchase agreement obligations in the amount of $1,191.2 million, bank customer deposits received in the amount of $217.6 million due to the growth of banking activity, mortgage loans sold to JSC Kazakhstan Sustainability Fund as the Program Operator, net of repurchase, under the state mortgage program "7-20-25" in the amount of $60.2 million, proceeds from the issuance, net of repurchase, of debt securities in the amount of $206.3 million and proceeds from loans received of $2.5 million.
Cash flows used in financing activities during the fiscal year 2025 consisted principally of repayment of securities repurchase agreement obligations in the amount of $1.1 billion, bank customer deposits received in the amount of $829.1 million due to the growth of banking activity, proceeds from the issuance, net of repurchase, of debt securities in the amount of $201.7 million, and mortgage loans sold to JSC Kazakhstan Sustainability Fund as the Program Operator, net of repurchase, under the state mortgage program "7-20-25" in the amount of $26.6 million.
GAAP we are required to revalue our assets from our functional currencies to our reporting currency for financial reporting purposes. Net Income/(Loss) Attributable to Non-controlling Interest Net income/(loss) attributable to non-controlling interest includes our net income/(loss) attributable to our non-controlling interests in Arbuz and ReKassa.
GAAP, we are required to revalue our assets from our functional currencies to our reporting currency for financial reporting purposes. Net (Loss)/Income Attributable to Non-controlling Interest Net (loss)/income attributable to non-controlling interest includes our net (loss)/income attributable to our non-controlling interests in ReKassa. As of March 31, 2025, we held 90% of the ownership interest in ReKassa.
Income tax expense We had net income before income tax of $435.4 million, $235.9 million and $363.7 million in fiscal 2024, 2023, and 2022 respectively.
Income tax expense We had net income before income tax of $112.9 million and $435.4 million in fiscal 2025 and 2024, respectively.
We have a presence in Kazakhstan, Uzbekistan, Kyrgyzstan, Cyprus, Germany, the United Kingdom, Greece, Spain, France, Poland, Austria, Bulgaria, Italy, Netherlands, Belgium, the United States, Turkey, Armenia, Azerbaijan, and the United Arab Emirates. We divested our Russian subsidiaries in February 2023. Our subsidiaries in the United States include an SEC- and FINRA-registered broker dealer.
Our principal executive office is in New York, United States. We have a presence in Kazakhstan, Uzbekistan, Kyrgyzstan, Cyprus, Germany, the United Kingdom, Greece, Spain, France, Poland, Lithuania, Austria, Bulgaria, Italy, Netherlands, Belgium, the United States, Turkey, Armenia, Azerbaijan, Tajikistan, and the United Arab Emirates. We divested our Russian subsidiaries in February 2023.
This increase was driven by multiple factors, including: • Fee and commission income from brokerage services generated $333.4 million, representing a 16% increase from $286.7 million in fiscal 2023. This growth was primarily due to an increase in number of retail brokerage 66 Table of Contents customers from 370,000 in 2023 to 530,000 in 2024.
This increase was driven by multiple factors, including the factors discussed below. Fee and commission income from brokerage services generated $430.1 million, representing a 29% increase from $333.4 million in fiscal 2024. This growth was primarily due to an increase in the number of retail brokerage customers from 530,000 in 2024 to 683,000 in 2025.
The majority of the unrealized net gain was attributable to 67 Table of Contents appreciated debt securities of the Ministry of Finance of the Republic of Kazakhstan, which appreciation was primarily due to a decline in the NBK's base interest rate during the year ended March 31, 2024 .
The majority of the unrealized net gain was attributable to appreciated Kazakhstan sovereign bonds, which appreciation was primarily due to a decline in the National Bank of the Republic of Kazakhstan's base interest rate during the year ended March 31, 2024.
Year ended March 31, 2024 2023 2022 (Recasted) (as a % of total fee and commission expense) Agency fees expense 67 % 36 % 14 % Bank services 12 % 17 % 10 % Brokerage services 11 % 40 % 70 % Exchange services 2 % 4 % 2 % Central Depository services — % 1 % — % Other commission expenses 8 % 2 % 4 % Total fee and commission expense 100 % 100 % 100 % Fee and commission expense increased by $88.7 million, or 135% in f iscal 2024 , as compared to fiscal 2023 .
Year ended March 31, 2025 2024 (as a % of total fee and commission expense) Agency fee expense 82 % 67 % Brokerage services 6 % 11 % Bank services 5 % 12 % Exchange services 1 % 2 % Central Depository services — % — % Other commission expenses 6 % 8 % Total fee and commission expense 100 % 100 % Fee and commission expense increased by $191.7 million, or 124% in f iscal 2025 , as compared to fiscal 2024 .
Summary of Results of Operations The highlights of our consolidated results for fiscal 2024 are as follows: • We had total revenues, net of $1,635.1 million for fiscal 2024, as compared to $795.7 million for fiscal 2023, respectively.
Summary of Results of Operations The highlights of our consolidated results for fiscal 2025 are as follows: • We had total revenues, net of $2,050.5 million for fiscal 2025, as compared to $1,666.4 million for fiscal 2024.
Market Maker Customer Arrangements We have derived a significant portion of our fee and commission income and interest income from margin loans to customers from trading activity of certain institutional market maker customers with whom we internalize the execution of trades of our customers.
Market Maker Customer Arrangements 64 Table of Contents We have derived a significant portion of our fee and commission income and interest income from margin loans to customers from trading activity of certain institutional non-US market maker customers with whom we internalize the execution of trades of our brokerage customers by accepting short sales from this institutional market maker, which match our customers’ purchase orders.
Year ended March 31, 2024 2023 2022 (Recasted) Fee and commission expense 12 % 12 % 26 % Interest expense 42 % 37 % 24 % Insurance claims incurred, net of reinsurance 12 % 14 % 17 % Payroll and bonuses 15 % 15 % 14 % Professional services 3 % 3 % 4 % Stock compensation expense 2 % 2 % 2 % Advertising expense 3 % 2 % 4 % General and administrative expense 10 % 11 % 7 % Allowance for expected credit losses 2 % 5 % 1 % Other (income)/expense, net (1) % (1) % 1 % Total expense 100 % 100 % 100 % 72 Table of Contents Fee and commission expense The following table sets forth information regarding our fee and commission expense for the periods presented.
Year ended March 31, 2025 2024 Fee and commission expense 18 % 12 % Interest expense 28 % 41 % Insurance claims incurred, net of reinsurance 15 % 11 % Payroll and bonuses 15 % 15 % Professional services 2 % 3 % Stock compensation expense 3 % 2 % Advertising and sponsorship expense 6 % 3 % General and administrative expense 8 % 10 % Allowance for expected credit losses 3 % 2 % Cost of sales 2 % 1 % Total expense 100 % 100 % 73 Table of Contents Fee and commission expense The following table sets forth information regarding our fee and commission expense for the periods presented.
The increase was driven by the expansion of our insurance operations and increase in the number of active insurance contracts from 681,667 as of March 31, 2023 to 807,173 as of March 31, 2024. • We had net income of $375.0 million for fiscal 2024, as compared to $205.6 million for the fiscal year ended March 31, 2023. • Our total assets increased to $8.3 billion as of March 31, 2024 from $5.1 billion as of March 31, 2023.
The increase was driven by the expansion of our insurance operations such as pension annuity and accident insurance classes and increase in the number of customers from 534,000 as of March 31, 2024 to 1,170,000 as of March 31, 2025. • We had net income of $84.5 million for fiscal 2025, as compared to $375.0 million for the fiscal year ended March 31, 2024. • Our total assets increased to $9.9 billion as of March 31, 2025 from $8.3 billion as of March 31, 2024.
Other (income)/expense, net For the fiscal year ended March 31, 2024, we had other income, net of $13.7 million, an increase of $10.3 million or 298% compared to other income, net of $3.4 million in fiscal 2023.
Other income For the fiscal year ended March 31, 2025, we had other income of $17.1 million , an increase of $7.4 million or 76.1% compared to other income of $9.7 million in fiscal 2024.
The following sets out certain information regarding our assets as of the dates presented: As of March 31, 2024 2023 Cash and cash equivalents (1) $ 545,084 $ 581,417 Trading securities $ 3,688,620 $ 2,412,556 Total assets $ 8,301,930 $ 5,084,558 Net liquid assets (2) $ 3,137,383 $ 1,852,886 (1) Of the $545.1 million in cash and cash equivalents we held at March 31, 2024, $135.0 million, or approximately 25%, were subject to reverse repurchase agreements.
The following sets out certain information regarding our assets as of the dates presented: As of March 31, 2025 2024 Cash and cash equivalents (1) $ 837,302 $ 545,084 Restricted cash (2) $ 807,468 $ 462,637 Trading securities $ 2,275,286 $ 3,688,620 Total assets $ 9,914,017 $ 8,301,930 Net liquid assets (3) $ 5,013,290 $ 3,137,383 (1) Of the $837.3 million in cash and cash equivalents we held at March 31, 2025, $81.1 million, or approximately 10%, were subject to reverse repurchase agreements.
Key Factors Affecting Our Results of Operations Our operations have been, and may continue to be, affected by certain key factors as well as certain historical events.
The operating results for any period are not necessarily indicative of the results that may be expected for any future period. Key Factors Affecting Our Results of Operations Our operations have been, and may continue to be, affected by certain key factors as well as certain historical events.
Year ended March 31, 2024 2023 2022 (Recasted) Fee and commission income 27 % 41 % 49 % Net gain on trading securities 8 % 9 % 22 % Interest income 51 % 37 % 18 % Insurance underwriting income 16 % 14 % 10 % Net gain on foreign exchange operations 4 % 7 % 1 % Net (loss)/gain on derivatives (6) % (8) % — % Total revenue, net 100 % 100 % 100 % Fee and commission income The following table sets forth information regarding our fee and commission income for the fiscal years presented.
Year ended March 31, 2025 2024 Fee and commission income 25 % 26 % Net gain on trading securities (3) % 8 % Interest income 41 % 50 % Insurance underwriting income 30 % 16 % Net gain on foreign exchange operations 3 % 4 % Net gain/(loss) on derivatives 1 % (6) % Sales of goods and services 2 % 1 % Other income 1 % 1 % Total revenue, net 100 % 100 % Fee and commission income The following table sets forth information regarding our fee and commission income for the fiscal years presented.
As a further step in implementing our strategy to build a digital fintech ecosystem, on January 25, 2024, Freedom Telecom established a subsidiary, Freedom Media, in Kazakhstan for the purposes of providing media content to customers in Kazakhstan. Total capital expenditures required in connection with Freedom Media over the next five years are estimated to be approximately $54 million.
As a further step in implementing our strategy to build a digital fintech ecosystem, on January 25, 2024, Freedom Telecom established a subsidiary, Freedom Media, in Kazakhstan for the purposes of providing media content to customers in Kazakhstan. Total capital expenditures incurred during the fiscal year 2025 amounted to $9.2 million.
As of March 31, 2024 we held 94.73% of the ownership interest in Arbuz and 90% of the ownership interest in ReKassa. The remaining 5.27% of the ownership interest in Arbuz and 10.00% of the ownership interest in ReKassa are considered as non-controlling interests in our Consolidated Statements of Operations and Statements of Other Comprehensive Income.
The remaining 10.00% ownership interest in ReKassa is considered as non-controlling interests in our Consolidated Statements of Operations and Statements of Other Comprehensive Income.
Net Capital and Capital Requirements A number of our subsidiaries are required to satisfy minimum net capital and capital adequacy requirements to conduct their brokerage, banking and insurance operations in the jurisdictions in which they operate. This is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions.
Net Capital and Capital Requirements A number of our subsidiaries (and, in certain instances, the Company as their owner) are required to satisfy minimum net capital and capital adequacy requirements to conduct their brokerage, banking and insurance operations in the jurisdictions in which they operate.
Fee and commission income as a percentage of our total revenue was 27%, 41% and 49% in the fiscal years ended , March 31, 2024, 2023 and 2022 respectively.
Fee and commission income as a percentage of our total revenue was 25% and 26% in the fiscal years ended, March 31, 2025 and 2024 respectively. Retail brokerage service fee and commission income as a percentage of our total fee and commission income was 85% and 76% in the fiscal years ended March 31, 2025 and 2024, respectively.
For the fiscal year ended March 31, 2023, we realized a net loss on derivatives of $64.8 million compared to a realized net gain of $0.9 million for the fiscal year ended March 31, 2022.
Net gain/(loss) on derivatives For the fiscal year ended March 31, 2025, we had a net gain on derivatives of $12.4 million compared to a net loss of $103.8 million for the fiscal year ended March 31, 2024.
The key factors affecting our business and the results of operations include, in particular: market and economic conditions, the growth of retail brokerage activity in our key markets, the effects of the Russia-Ukraine conflict, acquisitions and divestitures, the entry into new business areas and markets, our transactions with related parties, our arrangements with market maker customers and governmental policies.
The key factors affecting our business and the results of operations include, in particular: market and economic conditions, expansion of our digital ecosystem, acquisitions and expansion into new business areas and markets, our transactions with related parties, our arrangements with market maker customers and governmental policies. Each of these factors is discussed in more detail below.
Year ended March 31, 2024 2023 2022 Net cash used in operating activities $ (1,064,362) $ (951,683) $ (406,365) Net cash used in investing activities (638,222) (1,463,244) (146,323) Net cash from financing activities 1,674,572 2,133,381 618,528 Effect of changes in foreign exchange rates on cash and cash equivalents and restricted cash 8,788 78,191 (54,420) NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH $ (19,224) $ (203,355) $ 11,420 Net Cash Used In Operating Activities Net cash used in operating activities during fiscal 2024 was comprised of net cash from operating activities and net income adjusted for non-cash movements (changes in deferred taxes, unrealized gain on trading securities, net change in accrued interest, change in insurance reserves, and allowance for credit losses).
Year ended March 31, 2025 2024 Net cash from/(used in) operating activities $ 1,681,058 $ (1,064,362) Net cash used in investing activities (905,472) (638,222) Net cash (used in)/from financing activities (1,578) 1,674,572 Effect of changes in foreign exchange rates on cash and cash equivalents and restricted cash (137,038) 12,194 Effect of expected credit losses on cash and cash equivalents and restricted cash 79 (3,406) NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH $ 637,049 $ (19,224) Net Cash From Operating Activities Net cash used in operating activities during fiscal 2025 was comprised of net cash from operating activities and net income adjusted for non-cash movements (changes in deferred taxes, unrealized gain on trading securities, net change in accrued interest, change in insurance reserves, and allowance for credit losses).
(2) Resulted from increased funds in brokerage accounts from new and existing customers. (3) Resulted from an increase in volume of margin lending receivables. (4) Resulted from increased volume of margin lending payables. Net cash used in operating activities increased to $1.1 billion for fiscal 2024 from $951.7 million for fiscal 2023.
(2) Resulted from increased funds in brokerage accounts from new and existing customers. (3) Resulted from an increase in volume of margin lending receivables. (4) Resulted from increased volume of margin lending payables.
Year ended March 31, 2024 2023 2022 Increases in trading securities $ (1,048,205) (1) $ (1,019,191) (608,622) Increases/(decreases) in brokerage customer liabilities $ 112,258 (2) $ 105,942 (23,167) (Increases)/decreases in margin lending, brokerage and other receivables $ (1,272,652) (3) $ (253,301) (103,756) Increases in margin lending and trade payables $ 734,605 (4) 163,763 26,062 (1) Resulted from an increase in the amount of securities held in our proprietary account.
Year ended March 31, 2025 2024 Decreases/(Increases) in trading securities (1) $ 827,157 $ (1,048,205) Increases in brokerage customer liabilities (2) $ 1,516,767 $ 112,258 Increases in margin lending, brokerage and other receivables (3) $ (1,743,595) $ (1,272,652) Increases in margin lending and trade payables (4) $ 474,087 $ 734,605 (1) Resulted from an decrease in the amount of securities held in our proprietary account.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

20 edited+7 added−7 removed23 unchanged
Biggest changeThe table below presents the current credit ratings of issuers of securities in our proprietary portfolio as of March 31, 2024 and 2023: March 31, 2024 >BB Not rated Total Non-U.S. sovereign debt $ 2,399,328 $ 9,258 $ 540 $ 2,409,126 Corporate debt 988,374 99,627 20,869 1,108,870 Corporate equity 88,787 855 36,461 126,103 U.S. sovereign debt 43,173 — — 43,173 Exchange traded notes 57 — 1,291 1,348 Total $ 3,519,719 $ 109,740 $ 59,161 $ 3,688,620 March 31, 2023 >BB Not rated Total Corporate debt $ 1,167,769 $ 92,279 $ 9,831 $ 1,269,879 Non-U.S. sovereign debt 1,018,255 11,216 386 1,029,857 Corporate equity 58,511 503 6,727 65,741 U.S. sovereign debt 45,022 — — 45,022 Exchange traded notes — — 2,057 2,057 Total $ 2,289,557 $ 103,998 $ 19,001 $ 2,412,556 88 Table of Contents Margin lending receivables risk We extend margin loans to our customers.
Biggest changeThe table below presents the current credit ratings of issuers of securities in our proprietary portfolio as of March 31, 2025 and 2024: 86 Table of Contents March 31, 2025 >BB Not rated Total Non-U.S. sovereign debt $ 1,257,719 $ 24,376 $ 355 $ 1,282,450 Corporate debt 702,564 94,980 10,441 807,985 Corporate equity 67,432 1,999 36,796 106,227 U.S. sovereign debt 73,787 — — 73,787 Exchange traded notes 1,326 — 3,511 4,837 Total trading securities $ 2,102,828 $ 121,355 $ 51,103 $ 2,275,286 Non-US sovereign debt 207,659 572 — 208,231 Corporate debt 231,770 11,533 427 243,730 US sovereign debt 21,626 — — 21,626 Total available-for-sale securities, at fair value $ 461,055 $ 12,105 $ 427 $ 473,587 Non-US sovereign debt 65,860 — — 65,860 Total held-to-maturity securities $ 65,860 $ — $ — $ 65,860 Total investment securities $ 2,629,743 $ 133,460 $ 51,530 $ 2,814,733 March 31, 2024 >BB Not rated Total Non-U.S. sovereign debt $ 2,399,328 $ 9,258 $ 540 $ 2,409,126 Corporate debt 988,374 99,627 20,869 1,108,870 Corporate equity 88,787 855 36,461 126,103 U.S. sovereign debt 43,173 — — 43,173 Exchange traded notes 57 — 1,291 1,348 Total trading securities $ 3,519,719 $ 109,740 $ 59,161 $ 3,688,620 Corporate debt 125,648 47,729 191 173,568 Non-US sovereign debt 26,450 566 — 27,016 US sovereign debt 16,037 — — 16,037 Total available-for-sale securities, at fair value $ 168,135 $ 48,295 $ 191 $ 216,621 Total investment securities $ 3,687,854 $ 158,035 $ 59,352 $ 3,905,241 Margin lending receivables risk We extend margin loans to our customers.
Margin lending is subject to various regulatory requirements of MiFID and of the AFSA and the NBK. Margin loans are collateralized by cash and securities in the customers' accounts. The risks associated with margin lending increase during periods of fast market movements, or in cases where collateral is concentrated and market movements occur.
Margin lending is subject to various regulatory requirements of MiFID, the AFSA and the NBK. Margin loans are collateralized by cash and securities in the customers' accounts. The risks associated with margin lending increase during periods of fast market movements, or in cases where collateral is concentrated and market movements occur.
To the extent inflation result in rising interest rates and has adverse impacts upon securities markets, it may adversely affect our results of operations and financial condition. 90 Table of Contents
To the extent inflation result in rising interest rates and has adverse impacts upon securities markets, it may adversely affect our results of operations and financial condition. 89 Table of Contents
For a description of related risks, see the information under the headings "Risks Related to our Business and Operations" and " Risks Related to Information Technology and Cybersecurity " in " Risk Factors " in Part I Item 1A of this annual report.
For a description of related risks, see the information under the headings " Risks Related to our Business and Operations " in " Risk Factors " in Part I Item 1A of this annual report.
Market risk is the risk of economic loss arising from the adverse impact of market changes to the market value of our trading and investment positions. We are exposed to a variety of market risks, including interest rate risk, foreign currency exchange risk and equity price risk.
Market risk is the risk of economic loss arising from the adverse impact of market changes to the market value of our trading and investment positions. We are exposed to a variety of market risks, including, but not limited to, interest rate risk, foreign currency exchange risk and equity price risk.
Operational Risk Operational risk generally refers to the risk of loss, or damage to our reputation, resulting from inadequate or failed operations or external events, including, but not limited to, business disruptions, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems and inadequacies or breaches in our control processes including cybersecurity incidents.
Operational Risk Operational risk generally refers to the risk of loss, or damage to our reputation, resulting from inadequate or failed operations or external events, including, but not limited to, business disruptions, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems.
Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and damage to our reputation as a result of failure to comply with laws, regulations, rules, related self-regulatory organization standards and codes of conduct applicable to our business activities. Legal and compliance risk includes compliance with AML, terrorist financing, anti-corruption and sanctions rules and regulations.
Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and damage to our reputation as a result of failure to comply with laws, regulations, rules, related self-regulatory organization standards and codes of conduct applicable to our business activities.
Based on an analysis of the March 31, 2024 and 2023 (not including assets held for sale) balance sheets we estimate that a decrease of 10% in the equity price would have reduced the value of the equity securities or instruments we held by approximately $12.6 million and $6.6 million, respectively.
Based on an analysis of the March 31, 2025 and 2024 (not including trading portfolio) balance sheets we estimate that a decrease of 10% in the equity price would have reduced the value of the equity securities or instruments we held by approximately $11.1 million and $12.6 million, respectively.
As of March 31, 2024, and 2023, our exposure to equity investments at fair value was $126.1 million and $65.7 million, respectively.
As of March 31, 2025, and 2024, our exposure to equity investments at fair value was $111.1 million and $126.1 million, respectively.
To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of the investment portfolio assuming a 100 basis point parallel shift in the yield curve.
To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of the investment portfolio assuming a 200 basis point and 50 basis point parallel shift in the yield curve for non USD/EUR and USD/EUR denominated securities.
Foreign Currency Exchange Risk We have a presence in Kazakhstan, Uzbekistan, Kyrgyzstan, Cyprus, Germany, the United Kingdom, Greece, Spain, France, Poland, Austria, Bulgaria, Belgium, Italy, Netherlands, the United States, Turkey, Armenia, Azerbaijan, and the United Arab Emirates.
Such gains and losses would only be realized if we sold the investments prior to maturity. Foreign Currency Exchange Risk We have a presence in Kazakhstan, Uzbekistan, Kyrgyzstan, Cyprus, Germany, the United Kingdom, Greece, Spain, France, Poland, Lithuania, Austria, Bulgaria, Belgium, Italy, Netherlands, the United States, Turkey, Armenia, Azerbaijan, Tajikistan and the United Arab Emirates.
We are subject to regulation 89 Table of Contents from numerous regulators, which include, but are not limited to, the AFSA, the ARDFM, CySEC, OFAC and the SEC. We have received various inquiries and formal requests for information on various matters from certain regulators, with which we have cooperated and will continue to do so.
We have received various inquiries and formal requests for information on various matters from certain regulators, with which we have 88 Table of Contents cooperated and will continue to do so.
Based on investment positions as of March 31, 2024 and 2023 (not including assets held for sale), a hypothetical 100 basis point increase in interest rates across all maturities would have resulted in $128.9 million and $80.9 million incremental decline in the fair market value of the portfolio, respectively.
Based on investment positions as of March 31, 2025 and 2024, a hypothetical increase in interest rates across all maturities would have resulted in $87.7 million and $252.6 million incremental decline in the fair market value of the trading portfolio and in $13.8 million and $12.5 million in incremental decline in the fair market value of the portfolio available-for-sale, respectively.
We must make judgments and interpretations about the application of these inherently complex tax laws when determining the provision for income taxes. Geopolitical Risk The Russia-Ukraine conflict has led to disruptions in financial markets that has negatively impacted the global economy and created significant uncertainty.
We must make judgments and interpretations about the application of these inherently complex tax laws when determining the provision for income taxes. Geopolitical Risk Geopolitical conflicts, such as the ongoing Russia-Ukraine war and escalating tensions in the Middle East and other regions, have contributed to increased volatility and uncertainty in global financial markets.
To mitigate our risk, we also continuously monitor customer accounts to detect excessive concentration, large orders or positions, patterns of day trading and other activities that indicate increased risk to us.
To mitigate our risk, we also monitor customer accounts to detect excessive concentration, large orders or positions, patterns of day trading and other activities that indicate increased risk to us. Our credit exposure is substantially mitigated through our policy of closing positions for accounts identified as under-margined based on the automatic evaluation of each account throughout the trading day.
Such losses would only be realized if we sold the investments prior to maturity. A hypothetical 100 basis point decrease in interest rates across all maturities would have resulted in a $138.3 million and $87.0 million incremental increase in the fair market value of the portfolio (not including assets held for sale), respectively.
A hypothetical 100 basis point decrease in interest rates across all maturities would have resulted in a $50.7 million and $138.3 mill 85 Table of Contents ion incremental increase in the fair market value of the trading portfolio and in $10.3 million and $3.3 million incremental increase in the fair market value of the portfolio available-for-sale, respectively.
It also includes contractual and commercial risk, such as the risk that a counterparty's performance obligations will be unenforceable. From time to time, we have been, and in the future may be, subject to investigations, audits, inspections and subpoenas, as well as regulatory proceedings and fines and penalties brought by regulators.
We are, have been, and in the future may be, subject to investigations, audits, inspections and subpoenas, as well as regulatory proceedings and fines and penalties brought by regulators. We are subject to regulation from numerous regulators, which include, but are not limited to, the AFSA, the ARDFM, CySEC, OFAC and the SEC.
Because Kazakhstan's economy is highly dependent on oil exports, any significant decrease in oil prices lead to a devaluation of local currency, which can lose up to 17% quarterly (during COVID-19 outbreak) of its value relative to the U.S. dollar. 87 Table of Contents Based on an analysis of our March 31, 2024 and 2023 (not including assets held for sale) balance sheets we estimate that the net impact of a 10% adverse change in the value of the U.S. dollar relative to all other currencies would have resulted in an increase of income before income tax in the amount of $121.5 million and decrease of $88.7 million, respectively.
Because Kazakhstan's economy is highly dependent on oil exports, any significant decrease in oil prices lead to a devaluation of local currency, which can lose up to 17% quarterly (during COVID-19 outbreak) of its value relative to the U.S. dollar.
We continually monitor and evaluate our risk management policies, including the implementation of policies and procedures to enhance the detection and prevention of potential events to mitigate margin loan losses.
In situations where no liquid market exists for the relevant securities or commodities, liquidation for certain accounts is performed following a corresponding analysis. We regularly monitor and evaluate our risk management policies, including the implementation of policies and procedures to enhance the detection and prevention of potential events aimed at minimizing margin loan losses.
As of March 31, 2024, we had $1,635.4 million in margin lending receivables from our customers, none of which was due from FST Belize.
As of March 31, 2025, we had 87 Table of Contents $3.3 billion in margin lending receivables from our customers, $2.3 billion of which was attributable to three non-related party customers.
Removed
Our credit exposure is to a great extent mitigated by our policy of automatically evaluating each account throughout the trading day and closing out positions for accounts that are found to be under-margined.
Added
In addition to its dependence on oil, the Kazakhstani economy is influenced by the economic conditions in Russia due to historically strong trade ties, which manifests in a correlation between the exchange rate of the local currency to the US dollar and that of the Russian ruble to the US dollar.
Removed
While this methodology is effective in most situations, it may not be effective in situations where no liquid market exists for the relevant securities or commodities or where, for any reason, automatic liquidation for certain accounts has been disabled.
Added
As of March 31, 2025 and 2024, based on our analyses, we estimate that a 10% adverse change in the value of the U.S. dollar relative to all other currencies would result in the following: • A total loss of $90.0 million in 2025 and $76.5 million in 2024. • A loss of $131.3 million on trading securities in 2025 and $342.5 million in 2024. • A gain of $41.3 million, excluding trading securities, in 2025 and a gain of $266.0 million in 2024.
Removed
The Russia-Ukraine conflict has resulted in the imposition by many countries of economic sanctions and export controls against certain Russian industries, companies and individuals. In response, Russia has implemented its own countermeasures against countries, businesses and investors deemed "unfriendly".
Added
Cybersecurity Risk Cybersecurity risk refers to the risk of loss, or damage to our reputation, resulting from inadequacies or breaches in our control processes, including IT, information security and data protection incidents, that could lead to penetration, disruption, integrity violation or misuse of our information systems and data.
Removed
Partly as a result of the effects of the Russia-Ukraine conflict, businesses worldwide have experienced shortages in materials and increased costs for transportation, energy and raw materials.
Added
For a description of these risks, see " Risks Related to Information Technology and Cybersecurity " in " Risk Factors " in Part I Item 1A of this annual report. For cybersecurity risk management and governance practices see " Cybersecurity " in Part I Item 1C of this annual report.
Removed
The continuation or escalation of the Russia-Ukraine conflict or other hostilities presents heightened risks relating to cyber attacks, supply chain disruptions, higher interest rates and greater frequency and volume of failures to settle securities transactions, as well as increased financial market volatility.
Added
Legal and compliance risk includes compliance with AML, counter terrorist financing, anti-corruption and sanctions rules and regulations. It also includes contractual and commercial risk, such as the risk that a counterparty's performance obligations will be unenforceable.
Removed
The extent and duration of the war, sanctions and resulting market disruptions, as well as the potential adverse consequences for our business, liquidity and results of operations, are difficult to predict.
Added
Such conflicts frequently result in sanctions, trade restrictions, and countermeasures between countries, leading to disruptions in international trade flows, financial transactions, and economic activities. These developments may trigger shortages or price increases for critical commodities, energy resources, and transportation services, amplifying inflationary pressures and influencing central banks' interest-rate policies worldwide.
Removed
For more information regarding the financial impact to our operations from the Russia-Ukraine conflict for the fiscal year ended March 31, 2023 please refer to " Russia-Ukraine Conflict " section in " Management's Discussion and Analysis of Financial Condition and Results of Operations " in Part II Item 7 and Note 30 " Segment Reporting " in the notes to our consolidated financial statements in Part II Item 8 of this annual report.
Added
Furthermore, heightened geopolitical tensions increase the risks associated with cybersecurity threats, supply chain disruptions, payment delays, and failures to settle financial transactions. The extent, severity, and duration of these conflicts, sanctions, and associated market disruptions remain uncertain, making it challenging to accurately predict their potential impact on our business, liquidity, financial condition, and results of operations.

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