Why is this important
CDA in the sandbox is the first foreign depository opening the Uzbek capital market for Armenian and international investors. It will simplify access to Uzbek stocks and bonds through Armenian infrastructure. The BBB rating and ISO certificates confirm the reliability of the CDA. This is a step towards integrating the Uzbek capital market into the Eurasian space, attracting foreign capital ($100+ million potential).
What happened
- The NAPP registered the CDM in the regulatory sandbox for the capital market;
- Purpose: international practices, access of foreign investors, new mechanisms;
- CDA — operator of accounting for securities of Armenia;
- Certificates: ISO 9001:2015, ISO/IEC 27001:2013;
- BBB rating from Thomas Murray;
- Member of ANNA and AECSD.
Regulating sandbox
- What is this: a special legal regime that allows companies to test innovative financial products, services, and technologies in real conditions with temporary regulatory relaxations.
- The purpose of the Uzbekistan Sandbox is to attract foreign participants, implement international practices, and develop the capital market.
- CDA is the first foreign depository: before that, local companies (banks, brokers, FinTech) were participants.
Central Depository of Armenia
- Function: operator of the unified system of accounting and settlements for securities in Armenia. Keeps stocks, bonds, ensures settlements between buyers and sellers.
- Certificates:
- ISO 9001:2015 (quality management);
- ISO/IEC 27001:2013 (information security).
- BBB rating from Thomas Murray: a British agency specializing in depository valuation. BBB — investment level, confirms reliability.
- Membership:
- ANNA (Association of National Numbering Agencies) — assigns ISIN codes to securities;
- AECSD (Association of Central Depositories of Eurasia) — unites depositories of the CIS, Central Asia, Transcaucasia.
Why is CDA in the sandbox
- Access for foreign investors: Armenian, Russian, and European investors will be able to purchase Uzbek shares and bonds through the CDA without opening accounts in Uzbek depositories.
- International practices: CDA will bring ISO standards, experience working with foreign investors, and calculation technologies.
- New mechanisms: testing of cross-border settlements, integration of accounting systems of Uzbekistan and Armenia, creation of a single space for investors.
Uzbek capital market
- Capitalization: ~$10 billion (stock exchange).
- Problems: low liquidity, limited access for foreign investors, lack of international integration.
- Solution: attracting foreign depositories (CDA), simplifying access through the regulatory sandbox.
Potential
The integration of the Central Asian Development Bank (CDA) could attract $100 million from Armenian, Russian, and European investors to Uzbek stocks and bonds. This will increase liquidity, reduce volatility, and improve the capitalization of companies.
Context
- Regulatory sandbox is a trend: many countries (Great Britain, Singapore, UAE, Kazakhstan) use sandboxes to attract FinTech, foreign participants.
- CDA is the first foreign depositary: a signal for others (Kazakhstan, Russia, Azerbaijan) about Uzbekistan’s readiness for integration.
- AECSD: The membership of the Central Bank and the Uzbek depository in AECSD creates a foundation for transboundary settlements, a unified Eurasian space.
- Armenia is a bridge: the Armenian capital market is connected with Russia, Europe. Uzbek assets will become available to these investors through the Central Asian Development Bank.
