Samarkand, the historic Silk Road city, hosted the fourth edition of the ConFEAS 2024 on April 19, marking a significant milestone in global financial discourse. Organized by the Federation of Euro-Asian Stock Exchanges, the event celebrated the 30th anniversary of Uzbekistan's major financial institutions, the Republican Stock Exchange "Toshkent" and the Uzbek Commodity Exchange. Featuring over 40 influential speakers and drawing around 200 international participants, ConFEAS 2024 facilitated critical discussions on the development and integration of capital markets, highlighted by strategic partnerships and the exploration of innovative financial instruments.
Konstantin Saroyan, FEAS Secretary General, stated: “This event presents a remarkable opportunity for all participants to expand their knowledge base and establish valuable connections through networking. I’d like to extend my congratulations to the Uzbek Commodity Exchange and the Republican Stock Exchange of “Toshkent” on their remarkable 30-year anniversary. Three decades of dedicated efforts have significantly contributed to the development of the capital and commodities markets in Uzbekistan.”
Mansurkhuja Tukhtasinov, Head of Business Development,Tashkent Stock Exchange, stated, “During the event, the Tashkent Stock Exchange achieved important goals. We signed a Memorandum of Understanding with the Abu Dhabi Securities Exchange (ADX). The MoU paves the way for the inclusion of Tashkent Stock Exchange as the fifth member of the Tabadul Digital Exchange Hub, the region’s first digital exchange center based on mutual market access, enhancing connectivity and opening new avenues for cross-border investment opportunities."
Tukhtasinov added that the Tashkent Stock Exchange also took part in the annual strategic session of the International Association of the CIS Exchange (MAB CIS) and FEAS (Federation of Euro-Asian Stock Exchanges). During this session current issues and the future plans of the organizations were discussed.
"The conference itself covered various topics, like how financial markets work, challenges they face, and ways to make them better. It also talked about new technologies and ways to manage risks and support investors who care about environmental and social issues," Tukhtasinov further elaborated.
Karen Srapionov, partner at Avesta Investment Group said, “Besides celebrating the 30th anniversary of both the Tashkent Stock Exchange and the Republican Commodity Exchange, the event facilitated the exchange of experiences and perspectives among market participants.
Srapionov highlight these key takeaways from the event:
a) Regulation is primarily focused on protecting customers and managing risks. While a regulator's role is not to shield customers from individual bad transactions, it should safeguard them against structural or macro risks that may be challenging to identify without a comprehensive understanding of the broader market landscape. To achieve this understanding, regulators must prioritize transparency and information disclosure.
b) Regional collaboration aimed at providing international investors, including retail investors, with access to neighboring markets is gaining traction, particularly in the Gulf and Central Asia regions.
c) Many countries have their own unique success stories and are willing to share their knowledge. Uzbekistan can draw inspiration from various aspects of these success stories, such as:
- Establishing a national exchange-traded investment vehicle that combines small portions of state ownership in leading State-Owned Enterprises (SOEs), inspired by Fondul Proprietatea in Romania.
- Introducing dollar bonds and implementing banking collateral/REPO operations with corporate securities, as seen in Georgia.
- Allowing international securities to be traded locally through local brokers, a model successfully implemented in Kazakhstan at KASE Global and elsewhere.
- Implementing online account opening for both local and international clients, a practice already adopted by Armenian brokers
Bekhruzbek Ochilov, Investment Banking Director at Alkes Research commented, “Uzbekistan hosted the conference for the first time, due to the anniversary of both the Tashkent Stock Exchange and Uzbekistan Commodity Exchange.
I was honored to be on a panel on financial intermediation. Sitting together with other, like-minded industry professionals and discussing the ways on how can the brokerage business and the investment industry be developed in Uzbekistan, or looking at the experience of other countries that they have already what they have already been through."
Ochilov shared, "It was enlightening to learn from Freedom Broker about the development of Kazakhstan and Ukraine's brokerage and capital markets. Discussions with TBC on Georgia's capital market, and Apricot on Armenia's, along with insights from Uzbek firms Portfolio Investments and Avesta Investment Group, provided valuable perspectives on potential applications in Uzbekistan."
"In my presentation, I recommended focusing on attracting non-financial system funds into capital markets, especially given the current high interest rates. I emphasized leveraging tax incentives on coupons, interests, dividends, and capital gains to enhance financial participation," Ochilov added.
Ochilov explained, "The current capital market development program, in place since last year, includes exciting initiatives valid until the end of 2028. These initiatives encompass innovative investment products such as individual investor accounts in pension schemes, which allow employees of IPO-bound enterprises to participate and gain more shares at lower prices, as well as foreign currency bonds."
Ochilov further added, "I've advocated for the accelerated introduction of Islamic finance instruments like sukuk, recognizing that two-thirds of Uzbekistan's unbanked population avoids traditional banking for religious reasons. Introducing Islamic finance could significantly enhance their access to financial services and enrich the industry. It was a pleasure to engage in discussions at other panels, and I'm grateful to the Tashkent Stock Exchange for the opportunity to speak at this conference."
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