Uzbekistan overhauls financial regulations to simplify access for foreign investors

The significance of the domestic capital market has grown rapidly in recent years, driven by ongoing economic liberalization, state-owned enterprise transformation, and privatization initiatives. A major milestone in this direction occurred last month when the National Investment Fund successfully launched its initial public offering on both the London and Tashkent stock exchanges.

The presentation highlighted expanding interest from international investors in the Uzbek market. Specifically, major financial institutions such as the Asian Development Bank, the International Finance Corporation, and the European Bank for Reconstruction and Development have expressed interest in issuing local currency bonds on the domestic stock exchange.

To accommodate this growing demand, a new edition of the law "On the Capital Market" has been drafted in cooperation with international financial institutions. Comprising 16 chapters and 123 articles, the bill aims to regulate the capital market based on modern market principles, protect investor rights, and advance market infrastructure.

The draft law introduces several financial instruments previously unavailable in Uzbekistan. These include derivative financial instruments such as options, swaps, futures, and forwards, alongside a formalized system for executing transactions under netting agreements.

Additionally, the bill establishes a legal framework for commercial banks to issue covered bonds and special bonds backed by mortgage loan obligations. This mechanism is expected to attract long–term financial resources and stimulate the development of the domestic mortgage market.

Islamic finance instruments also received significant attention during the presentation. For the first time, Uzbekistan is setting clear conditions for issuing sukuk securities, incorporating partnership, lease, trade, and agency sukuk models.

Efforts to upgrade the securities market infrastructure are also underway. Under the new plans, the authorities will expand the powers of the Central Securities Depository, granting it the right to centralize dividend payments and open correspondent accounts with foreign banks.

The discussions further covered simplifying procedures for foreign investors accessing the local market, developing professional securities custody and accounting services, and aligning regulatory powers with international standards. To secure investor assets and facilitate the listing of national enterprises on global financial markets, amendments are currently being drafted for more than 10 laws and codes.

President Mirziyoyev emphasized that the capital market plays a vital role in drawing long-term resources into the economy, transforming enterprises, and expanding private investment flows. Following the presentation, the head of state instructed officials to review the draft law with international partners and upgrade the market infrastructure in line with global standards.