How Nasdaq and Franklin Templeton Can Accelerate Evolution of Uzbekistan’s Securities Market

In September 2025, President Shavkat Mirziyoyev held talks with Nasdaq CEO Adena Friedman on the modernisation of the Tashkent Stock Exchange (RSE). Earlier, in May, the company Franklin Templeton began managing the National Investment Fund (UzNIF) in Uzbekistan. In partnership with the American exchange, its experience and technology could set a new standard for the development of the domestic capital market. How global investment innovations can change Uzbekistan’s securities market is the focus of this Kursiv Uzbekistan report.

Contents of the Article:

• Reasons for Transformation
• Weaknesses of the Local Stock Market
• The Example of Kazakhstan
• What Nasdaq and Franklin Templeton Can Offer
• Three Keys to a Start

Transformation in Action

UzNIF owns shares ranging from 25% to 40% in 15 Uzbek joint-stock companies worth about $2 bn. The global goal of Franklin Templeton is the transformation of enterprises and the launch of IPOs for both the fund itself and the companies under its management. Listings are planned both on foreign platforms and on the local Tashkent Stock Exchange, but the placement dates have not yet been officially announced.

Uzbekistan already has experience working with foreign investors in the securities market, as the country has issued sovereign bonds, and commercial entities have attracted significant investments through them. One recent example is the $400 mln Eurobond issue by Ipoteka Bank.

However, local issuers have not yet carried out IPOs on foreign exchanges. There is some experience with placements on the local exchange, but the volumes did not exceed $5 mln, which is rather modest for the Uzbek economy. When it comes to Eurobonds, investors understand how this instrument works: securities are placed on European exchanges such as London, Vienna, and others, and the reliability of these platforms’ infrastructure raises no concerns.

It is a different matter with the Tashkent Stock Exchange. For foreign investors, the infrastructure of Uzbekistan’s market remains relatively new and largely unexplored. They need to be confident in the protection of capital, the transparency of procedures, and adherence to fair trading principles. These expectations create a demand for further development of technological and supervisory infrastructure that would ensure predictability and trust in the local exchange.

This is why the President of Uzbekistan held negotiations on transforming the local exchange with the support of the American stock market. In an interview with Kursiv Uzbekistan, Nasdaq’s Director of Sales and Solutions Dmitry Zelentsov said that the modernisation of the RSE should begin with a technological upgrade of its trading, clearing, and supervisory infrastructure.

According to him, it is above all important to introduce modern cloud or hybrid solutions that will provide scalability, resilience, and a high level of accessibility for market participants. The Nasdaq representative also mentioned the importance of launching a real-time market surveillance system capable of detecting anomalies and market abuse.

Zelentsov emphasised the need to integrate the Uzbek market with international depositories and clearing organisations to facilitate access for foreign investors and make operations more transparent and standardised.

A Market with Low Liquidity

Uzbekistan’s stock market began to develop in the 1990s as part of the state enterprise privatisation program. In 1994, the Republican Stock Exchange Toshkent was established. The government adopted the Law on the Securities Market in 2008, and by 2016, they modernised the exchange’s technological infrastructure and launched the UCI index to reflect market dynamics. They collaborated with the Korea Exchange to upgrade the trading engine, but the infrastructure has not seen updates in nearly ten years.

As of October 21, 2025, 93 companies were listed. A significant share belongs to the banking sector, which accounts for 22.8% of all issuers, followed by energy (15.2%), industry (14.1%) and the agro-industrial complex (12%). Transport companies (8.7%) and insurance organisations (7.6%) also occupy notable positions, while mechanical engineering holds a smaller share (4.3%).

The UCI index, which took 1000 points as its base in 2016, fluctuated from a low of 303 in 2019 to a peak of 1443 in 2021, and by October 2025; it stands close to 700 points.

The year 2024 became a record year for the RSE in terms of transaction value — the total volume of trading reached 22 trillion soums ($1.71 bn), an increase of 19.06 trillion soums or 659.3% compared with the previous year. However, when assessing the market, it should be taken into account that the lion’s share of operations took place on the Nego Board negotiation auction platform, where large targeted transactions (from 1%) occur between buyers and sellers who know each other.

On the main exchange platform, the Main Board, where retail investors dominate, the volume of share trading in 2024 fell from 362.9 bn to 131.6 bn soums (from $29.4 mln to $10.2 mln), that is, almost threefold. The number of transactions increased by 8.4% — from 400,000 to 432,300.

Thus, retail investors accounted for only about 0.6% of total stock trading volume, with a comparable share in the bond market. The remaining volume consisted of M&A deals and other large transactions in which retail investors do not participate.

Experts describe Uzbekistan’s stock market as low-liquidity. For example, the volume of share trading in the Uzbek Republican Commodity and Raw Materials Exchange (UzRCE) on October 17, 2025, amounted to 643 mln soums ($53,200), which is considered a very good result. By comparison, on October 16, the amount of transactions in these shares did not even reach $1,000. This stock is among the most highly liquid on the local market.

Good liquidity is one of the main arguments for institutional investors, who can bring in substantial investments.

AFC Uzbekistan Fund’s Chief Investment Officer Scott Osheroff told Kursiv Uzbekistan that «Institutional investors first and foremost want equities and bonds to invest into. If there isn’t enough supply and liquidity which enables them to invest more than a token amount of money, they are likely to be turned off from the market. At present, this is the biggest impediment to the local capital markets development.»

Following Kazakhstan’s Path

Investor interest in Kazakhstan’s stock market is many times higher than in Uzbekistan. Let us compare trading volumes: in 2024, the total value of transactions in corporate bonds alone on the Kazakhstan Stock Exchange (KASE) amounted to 4.3 trillion tenge ($8.3 bn), almost double that of 2023. In Uzbekistan, this figure was 130.7 bn soums ($10.1 mln), meaning the neighbouring country’s market outperformed Uzbekistan’s by hundreds of times.

However, it was not always this way. For a long time, KASE did not show significant results. The market was narrow and dependent on the banking sector, said Freedom Broker’s Chief Investment Analyst, Mukhammadkamron Murodov.

«The turning point came when the government began actively listing large resource companies on the exchange, while the platform itself modernised its infrastructure and opened access to foreign investors. The emergence of anchor issuers, improved regulation, and transparency enabled Kazakhstan to turn its market from a formal structure into a truly effective tool for attracting capital,» said Mukhammadkamron Murodov.

Denis Spirin, Director of Corporate Governance at Prosperity Capital Management, noted that in the 2000s and 2010s Kazakhstan built its financial infrastructure, launched a pension savings system — creating a domestic investor — conducted IPOs both domestically and on recognised foreign exchanges, purposefully attracted international portfolio investors, and worked to promote the country in all major investment ratings — thereby creating a positive image in the eyes of investors.

According to him, Uzbekistan began developing its stock market much later, and this is a key factor. The Republic is currently at a stage where it can still achieve in a shorter time what took Kazakhstan 15–20 years, taking into account others’ mistakes and already available technologies.

«There is political will, international partners and, importantly, trust in the reforms — this is a rare combination. Therefore, the lag is a fact, but it is not critical. Uzbekistan’s window of opportunity is still open. Capital market development, investor attraction and protection of portfolio investors’ rights must become strategic priorities. Then, with the right sequence of actions, the results will follow,» said Spirin.

The Freedom Broker expert explained the slow development of Uzbekistan’s market by several systemic factors: the high share of the state in the economy, delays in privatising large state enterprises, limited access for non-residents to trading infrastructure and necessary data, a weak institutional base (mutual and investment funds), and the low level of investment culture among the population.

A New Approach

Experts agree that the participation of Nasdaq and Franklin Templeton could become a turning point for Uzbekistan — not just a technological upgrade, but a systemic change in the rules of the capital market.

A representative of Freedom Broker noted that there are many examples in the world where international partnerships have helped developing markets make a qualitative leap. One such example is Romania and its Fondul Proprietatea fund, also managed by Franklin Templeton. According to him, the experience of this fund proved that competent management of state assets, transparency, and corporate reforms can multiply the capitalisation of a national market.

From a technological perspective, Nasdaq has already modernised exchanges in the Baltic states, the Middle East, and Asia, introducing unified platforms and supervisory standards, which led to increased investor trust and integration with global depositories.

AFC Uzbekistan Fund’s Chief Investment Officer Scott Osheroff believes that Nasdaq’s involvement in improving Uzbekistan’s capital market will serve as a vote of confidence in the country’s potential.

«If the Nasdaq indeed gets involved with improving Uzbekistan’s capital market, it would be a vote of confidence in Uzbekistan’s potential and hopefully with it come more streamlined infrastructure, enabling more market participation and hopefully more listings,» Osheroff emphasised.

He added that the involvement of Franklin Templeton and other international asset managers will likely directly enhance the transparency and accountability of the capital market ecosystem. Their presence makes Uzbekistan a more attractive investment destination and may contribute to increased liquidity and a wider range of available instruments.

This assessment is shared by Prosperity Capital Management’s Director of Corporate Governance, Denis Spirin. According to him, the arrival of Franklin Templeton is «an extremely positive event for the market,» as the company brings with it reputation, expertise, and access to global investors.

«They act as a reputable anchor portfolio investor, signalling to the market that ‘it is safe to enter’. They have experience in preparing state companies for IPOs and understand how to make listings transparent and appealing to major funds,» Spirin noted.

However, the expert cautioned that such a partnership also entails serious obligations: the government must honour its agreements, heed recommendations, and raise corporate governance standards. «Otherwise, the effect could be the opposite — instead of growing confidence, there may be reputational risks for the entire market,» he added.

According to Mukhammadkamron Murodov, Nasdaq can provide Uzbekistan not just with technology but with a ready-made standard of operation for developed markets — including a modern trading engine, a system for monitoring manipulations, and compatibility with global brokers. This increases trust and reduces operational risks, allowing the country to adopt a proven model.

«It is important to understand that technology alone does not create a market. If other elements of transformation are not completed in parallel, the effect will be limited,» added Denis Spirin.

The Freedom Broker representative believes that the joint presence of Nasdaq and Franklin Templeton lays the groundwork for launching unsponsored listings, under which foreign shares are traded without the participation of the issuers themselves. In Uzbekistan, plans have already been discussed to include the securities of Apple, Google, and other global giants on the Tashkent Stock Exchange. For investors, this means direct access to global brands, and for the market, an inflow of liquidity and increased interest from both private and institutional players. A similar mechanism was successfully launched earlier by Kazakhstan’s KASE Global, ensuring an additional inflow of capital.

Three Keys to a Strong Start

Experts expressed similar opinions on which immediate measures are most needed for Uzbekistan’s market today.

Mukhammadkamron Murodov notes that the key to sustainable development is transparent privatisation of large state-owned enterprises with mandatory listing and a genuine free float. This, he says, will form the core of liquidity and give the market a foundation to build upon.

Equally important is the development of infrastructure and the regulatory framework — the introduction of international standards for settlements, clearing, and corporate governance.

According to the Freedom Broker expert, it is also necessary to create institutional demand: launch pension and investment funds, support market makers, and introduce tax incentives for long-term investment. All this will allow the market to become not episodic but stable and attractive for long-term capital.

Prosperity Capital Management’s Director of Corporate Governance, Denis Spirin, also believes that the tasks of developing the stock market must be addressed simultaneously in three directions.

Firstly, privatisation. According to him, large companies with state participation should place shares both on the national exchange and on recognised international platforms, with a free float of at least 25 percent and a clear IPO/SPO schedule. This will require thorough preparation and a comprehensive transformation of the enterprises themselves, but this very step will create the foundation for a liquid market.

Secondly, attracting domestic and foreign investment. Within the country, Spirin stressed, «long money» should appear — pension savings, insurance, and investment funds that will become constant buyers of securities. At the same time, it is necessary to connect the national financial infrastructure with the global one: simplify the exercise of shareholder rights, ensure reliable settlements, provide clear rules for capital entry and exit, and encourage the participation of anchor international portfolio investors.

The third direction is to introduce better standards of corporate governance and investor protection. This includes updating corporate laws, the Corporate Governance Code, and listing rules, and applying the «comply or explain» principle in major state-owned companies.

Spirin adds that it is equally important to continuously promote Uzbekistan as an emerging capital centre in the eyes of institutional investors, demonstrating its transformation in all the areas mentioned above.

Experts interviewed by Kursiv Uzbekistan are confident that the president’s chosen course is the right one and that Uzbekistan’s potential is high. With sustained political will and consistent action, the country is capable of completing in a few years what has taken other markets decades.