How to buy shares in Uzbekistan: a UZSE beginner guide

Buying your first share in Uzbekistan is less complicated than it may seem, but it helps to know who does what before you start. This guide explains how the stock exchange works, which organisations are involved when you buy a share, and the general steps from choosing a broker to seeing the share in your brokerage account. Exact procedures, fees and minimum amounts differ from broker to broker, so always check them with the broker you choose.

How the stock market in Uzbekistan is organised

Several organisations take part in every trade. Knowing their roles makes the whole process easier to follow.

• The exchange. Shares of Uzbek joint-stock companies are traded on the «Toshkent» Respublika fond birjasi, the Republican Stock Exchange «Toshkent», usually called UZSE. The exchange runs the trading system where buy and sell orders meet, and publishes trading results on uzse.uz.
• The broker. Private investors do not send orders to the exchange themselves. You trade through a broker, an investment intermediary licensed in Uzbekistan that is a member of the exchange. The broker opens your brokerage account, accepts your orders and places them on the exchange for you. UZSE publishes a list of its members (brokers) on its website.
• The depository. Shares in Uzbekistan exist as records, not paper certificates. Ownership is recorded in the depository system, with the Central Securities Depository (Qimmatli qogʻozlar markaziy depozitariysi) at its centre. When you buy a share, the record of who owns it changes to your name.
• The issuers. Companies whose shares are traded must disclose information about themselves: annual reports, material facts, dividend decisions and more. These disclosures are published on openinfo.uz.

Step by step: buying your first share

The steps below describe the general process. Your broker will tell you exactly which documents and forms it needs.

1. Learn the basics first. Make sure you understand what a share is, how its price can move and that you can lose money. The article stocks vs bonds is a good starting point.
2. Choose a licensed broker. Check that the company holds a valid licence to work as an investment intermediary and is a member of UZSE. Compare the commissions, the ways to deposit and withdraw money, and how you will place orders (in an office, by phone, in an app or online).
3. Open a brokerage account. You will go through identification, which usually means providing your passport or ID card details and signing an agreement with the broker. Along with the brokerage account, the broker usually arranges an account in the depository system where your shares will be recorded.
4. Deposit money. Transfer money to your brokerage account using a method the broker accepts. The money needs to be credited before you can place a buy order.
5. Research the company. Look at the share's recent trading and the company's disclosures. On Finmind, the stocks page shows each UZSE share with its own page, and openinfo.uz holds the company's reports.
6. Place an order. Tell the broker which share you want, how many and at what price (see the order types below). The order goes to the exchange and waits for a matching seller.
7. Check the result. Once your order is filled, the shares are recorded in your name. Your broker's statement shows the purchase, the price and the commission you paid.

Market orders and limit orders

When you place an order, you usually choose between two basic types:

• Market order. You buy at the best price currently available from sellers. It is quick, but you do not control the exact price, which matters for shares that trade rarely.
• Limit order. You set the highest price you are willing to pay. The order is filled only at that price or lower. If no seller agrees, the order may not be filled at all.

A hypothetical example: suppose the last trade in a share was at 10,000 soʻm, but the cheapest seller now asks 10,500 soʻm. A market order would buy at 10,500 soʻm or more. A limit order at 10,000 soʻm would wait until someone is willing to sell at that price. These numbers are only an illustration.

Things to check before you buy

A few points are especially important on a smaller market:

• Liquidity. Some shares trade often, others rarely. If few people trade a share, it can be hard to sell it quickly at a fair price. Look at how often and in what amounts it has traded recently.
• Costs. Broker commissions and exchange fees reduce your return, especially on small purchases. Ask your broker for its full list of charges before you trade.
• Disclosures. Read the company's recent reports and material facts on openinfo.uz. Check whether it has paid dividends before and how its profit has changed.
• Taxes. Dividends and gains from selling securities can be taxed. The rules are set by the Tax Code, published on lex.uz, and your broker can tell you how tax is handled on your brokerage account.
• Concentration. Putting all your money into one company is risky. Read diversification and risk before you build a portfolio.

How Finmind can help along the way

Finmind itself is not a broker, but it can make each step easier. Before you open a brokerage account anywhere, you can browse every UZSE share on the public stocks page and listed bonds on the UZSE bonds page without signing in.

If you want to practise first, create a free Finmind account and use the simulator to practise buying and selling with virtual money at real prices, or follow the free tutorials that explain orders, portfolios and risk. Once you have a brokerage account, you can connect it to Finmind to see your positions in one place; how that works and what is stored is explained in connecting your brokerage account to Finmind.

This article is for education only and is not investment advice. Investing in securities involves risk, including the loss of money you invest.