The National Agency of Perspective Projects (NAPP) of Uzbekistan has registered new participants in the special legal regime for the capital market. Commercial Hamkorbank and investment company HBCapital will test the issuance of corporate bonds denominated in foreign currency.
What happened
According to specialized Telegram channels, NAPP officially registered JSCB Hamkorbank and HBCapital LLC as participants in the “Regulatory Sandbox”. The companies are entering the experimental regime with a specific joint project.
The roles of the pilot participants are strictly divided:
- Hamkorbank acts as the issuer. The bank plans to issue corporate debt securities in foreign currency.
- HBCapital takes on the infrastructural function of an investment intermediary. The company will be responsible for organizing the issuance, underwriting, and placement of securities among investors.
The regulatory sandbox mechanism allows financial organizations to launch new products in a controlled environment. During the testing phase, participants are exempt from the need to fully comply with all current standards, but operate under the direct supervision of the regulator.
Country and market
For Uzbekistan’s financial sector, this pilot solves a practical problem. The capital market in the country is in the formative stage, and local players need new instruments to attract funding.
The issuance of foreign currency bonds on the domestic market is usually associated with strict regulatory restrictions: they relate to currency control, risk assessment, and investor protection. The sandbox gives NAPP the opportunity to study the life cycle of such a financial instrument in practice, without exposing the entire market to systemic risk.
Why it matters
The admission of a classic bank and a broker to test foreign currency securities shows the regulator’s readiness to expand the range of available investment instruments. Banks constantly need foreign currency liquidity to lend to businesses engaged in foreign trade operations. Domestic foreign currency bonds can become an alternative to external borrowing or expensive syndicated loans.
The regulator uses targeted pilots with real issuers to test the mechanics of foreign currency borrowing within the country before changing general legislation.
What’s next
NAPP will analyze the results of HBCapital’s work on attracting investors, assess the level of real demand and potential settlement risks. Based on the results of this experiment, the regulator will be able to develop a permanent regulatory framework. The successful placement of Hamkorbank’s securities will create a precedent that will allow other banks and corporations to issue similar instruments in a standard regime.