Uzbekistan may remove barriers for citizens to purchase shares of foreign companies

The Capital Market Development Agency proposes to remove barriers to the acquisition of securities of foreign issuers by residents of the republic. 

“We want to offer citizens of Uzbekistan to invest in the securities of foreign issuers. For example, there are large successful companies from the S&P 500 list. Why should not we give our citizens the opportunity to acquire them,” head of the agency Atabek Nazirov said.

According to him, there are different options for technical pursuance. “Uzbek depositary receipts (UDRs) can be issued. That is, our investment intermediaries will buy there and resell here. The second option is to simplify the process of opening brokerage accounts. There are many options,” he added. 

Currently, the procedure for placement and circulation of non-resident securities on the territory of Uzbekistan is regulated by the provision according to which the ownership of such assets is confirmed by UDR. 

“So far we have no such papers, but we are planning to have them,” the agency told Kun.uz.

It is noted that the purchase of shares by the country’s residents through foreign brokers does not meet the requirements of the legislation of Uzbekistan. These are often price difference contracts that do not give ownership of shares. Moreover, such operations can be carried out through dubious intermediaries, which increases the risk of capital loss. 

“Therefore, if our intermediaries begin to provide such services, let’s say through UDR, then people will be able to purchase shares legally, and a private investor will be protected by the regulator in case of infringement of his rights,” the source said.

To develop the capital market infrastructure, the agency proposes to introduce the procedure for remote opening of depo accounts by individuals and legal entities, including non-residents of Uzbekistan and filing applications for the purchase of all types of securities without physical presence.

It is also planned to merge existing exchanges into a single national stock exchange group, create a single national securities depository, granting it the right to carry out settlement banking operations, introduce a customer verification system and create a self-regulatory organization (SRO) of professional capital market participants.