The bill aims to align Uzbekistan’s capital market with international standards, introduce new financial instruments for investors, and modernize the country’s capital market infrastructure. Under the draft law, Uzbekistan plans to introduce several new financial instruments, including:
- Sukuk (Islamic bonds);
- Sustainability bonds;
- Covered bonds;
- Securitized bonds.
These instruments are expected to provide companies and investors with new fundraising mechanisms while diversifying sources of financing. During the parliamentary discussions, lawmakers highlighted several key provisions of the draft law. The legislation proposes to:
- strengthen the protection of investors’ rights;
- enhance corporate disclosure requirements;
- improve corporate governance standards;
- increase the transparency of the capital market infrastructure.
The bill also seeks to align the powers of the market regulator with internationally recognized standards.
Aligning with IOSCO principles
Another important aspect of the draft law is the alignment of Uzbekistan’s capital market regulator with the principles of the International Organization of Securities Commissions (IOSCO).
IOSCO is the world’s leading international organization of securities regulators. Its principles are designed to protect investors, ensure fair and transparent markets, and strengthen the stability of the global financial system. The legislation also proposes further improvements to the operations of the Central Depository and credit rating agencies.
One of the most notable provisions of the draft law is the introduction of sukuk. Unlike conventional bonds, sukuk are asset-backed Islamic financial instruments that comply with Shariah principles by avoiding interest-based financing. Their introduction is expected to expand investment opportunities for Islamic finance investors and facilitate greater participation in Uzbekistan’s capital market.
The development of Islamic capital market instruments has become one of the government’s priorities in recent months. In June, during a presentation to the President on capital market development, officials announced plans to establish the legal framework necessary for issuing sukuk.
In addition, representatives of the National Agency for Prospective Projects (NAPP) stated at the CIS Islamic Banking and Finance Forum held in Tashkent in July that international investor interest in sukuk instruments in Uzbekistan continues to grow. Once the law is fully adopted and implemented, it is expected to:
- expand access to capital;
- introduce new investment instruments for domestic and foreign investors;
- bring Uzbekistan’s capital market closer to international standards;
- strengthen investor protection mechanisms;
- increase the country’s ability to attract private investment.
The draft law has passed its first reading and will undergo further parliamentary review before its final adoption.
