Эволюция и тенденции формирования финансового рынка Наманганской области Текст научной статьи по специальности «Экономика и бизнес»

Жамият ва инновациялар –

Общество и инновации –

Society and innovations

Journal home page:

https://inscience.uz/index.php/socinov/index

Evolution and tendencies of formation of the financial market

of Namangan region

Khadicha KADIROVA1

Institute of Engineering and Technology Namangan, Uzbekistan

ARTICLE INFO ABSTRACT

Article history: The article describes the formation and evolution of the

Received January 2021 regional financial market. The available prerequisites for its

Received in revised form formation, the stages of privatization, the infrastructure of the

15 January 2021 financial market are considered. The existing problems are

Accepted 20 February 2021

identified and the main directions for solving them are worked

Available online

7 March 2021 out.

2181-1415/© 2021 in Science LLC.

Keywords: This is an open access article under the Attribution 4.0 International

Financial market (CC BY 4.0) license (https://creativecommons.org/licenses/by/4.0/deed.ru)

Stocks and Bods market

Privatization

Joint-stock companies

Infrastructure of financial

market

Issue

Depository

Stock exchange

Namangan viloyati moliya bozorini shakllantirish evolyutsiyasi

va tendensiyalari

АННОТАЦИЯ

Калит сўзлар: Maqolada mintaqaviy moliya bozorining shakllanishi va

Moliyaviy bozor evolyutsiyasi ko'rib chiqiladi. Uning shakllanishi uchun mavjud

Aktsiyalar va obligatsiyalar

bozori

shart-sharoitlar, xususiylashtirish bosqichlari, moliya

Xususiylashtirish bozorining infratuzilmasi ko'rib chiqildi. Mavjud muammolar

Aktsiyadorlik jamiyatlari aniqlandi va ularni hal etishning asosiy yo'nalishlari ishlab

Moliya bozori infratuzilmasi chiqildi.

Emissiya

Depozitariy

Fond birjasi

1

Candidate of Economic Sciences, Associate Professor of the Department of Economics and Organization of Industrial

Production of the Namangan Institute of Engineering and Technology, Namangan, Uzbekistan

E mail: [email protected]

Жамият ва инновациялар – Общество и инновации – Society and innovations

Special Issue – 2 (2021) / ISSN 2181-1415

Эволюция и тенденции формирования финансового рынка

Наманганской области

АННОТАЦИЯ

Ключевые слова: В статье рассматривается становление и эволюция

Финансовый рынок регионального финансового рынка. Рассмотрены

Рынок акций и облигаций

Приватизация

имеющиеся предпосылки его формирования, этапы

Акционерные общества приватизации, инфраструктура финансового рынка.

Инфраструктура Выявлены существующие проблемы и выработаны

финансового рынка основные направления их решения.

Эмиссия

Депозитарий

Фондовая биржа

INTRODUCTION

The transition of Uzbekistan from a super-centralized planned economic system to

a socially oriented market economy has fundamentally changed the nature of social

production: property relations, the structure and functioning mechanism of economic

entities, forms of financial ties between them, the degree of interest of all sectors of society

in the final results of economic activity. The main form of all economic relations, the most

important regulator of the process of social reproduction in the republic are commodity-

money relations. The implementation of this trend is inextricably linked with the

formation of a developed financial market, which forms the foundation of the economic

system of any society and positively affects the pace and quality of the socio-economic

transformations taking place in it. The formation of this market in Uzbekistan is based on

the principle of phasing, and the transition to each new stage of its formation depends on

the emergence of objective structural prerequisites and the reform of the entire economic

mechanism both on a sectoral and territorial scale. Thus, the state’s strategy aimed at

creating an effective financial mechanism is based on the economic potential of the

republic, based on an assessment of the real situation, and is aimed at realizing the main

goals of the socio-economic development of Uzbekistan. At the same time, the state is

taking steps to increase the level of synchronization of economic reform measures in

creating competitive domestic segments of this market and phased liberalization of

economic activity.

PREREQUISITES FOR THE FORMATION OF THE FINANCIAL MARKET IN NAMANGAN

REGION

The following prerequisites positively affected the pace and quality of the

institutional and functional development of the financial market of the Namangan region:

expanding the independence of territorial government bodies in resolving issues of socio-

economic development of regions; the formation of a government securities market in the

form of a market for state short-term bonds of Uzbekistan; government measures to

strengthen the financial condition of commercial banks and the development of the

banking services market for legal entities and individuals; the active process of

privatization of enterprises in the form of open joint stock companies, the expansion of the

issue and circulation of shares of securities of privatized enterprises; targeted support for

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the process of forming a civilized infrastructure of the national securities market, the core

of which was the Republican Stock Exchange “Tashkent”, the national depository “Vakt”,

the Agency “Konsauditinform” and others; state support of investment institutions of the

stock market and their activities in the securities market through the provision of financial

assistance at the stage of their formation; government measures to establish collective

financing institutions in the form of privatized investment funds (UIFs).The presence of

these prerequisites and favorable factors contributed to the formation of a civilized

financial space, the definition of the circle of its main participants, the establishment of

financial relations between them and the formation of the infrastructure of the financial

market of Namangan region. The process of formation of the financial market in Namangan

region, along with trends common to all regions of the republic, had its own characteristics,

due to the specific limitations and place of this region in the economy and social life of

Uzbekistan.

ANALYSIS OF THE CURRENT STATE OF THE REGIONAL FINANCIAL MARKET

From the analysis of the formation of the financial market in the Namangan region,

it follows that some of its segments, for example, the money market, the credit market, and

the insurance services market, had a certain backlog and were in a certain sense developed

even before Uzbekistan gained independence. In addition, certain instruments of the

government borrowing market in the form of government bonds were circulated here.

However, since market relations in the pre-perestroika period were not widespread, and

the financial market infrastructure was generally absent, there was no talk of its other

segments (stock market, real estate market, mortgage market, derivatives market) as well

as the issue of shares, corporate bonds, mortgage certificates, municipal securities and any

other modern financial instruments for ownership. Among the factors restraining the

formation of the financial market include the protracted process of privatization and

privatization, the lack of share ownership in the country, and the underdeveloped financial

market infrastructure. The radical changes in the economic mechanism in the Republic of

Uzbekistan, which began in the mid-eighties of the XX century, most seriously affected the

sphere of formation of financial resources of legal entities and individuals of the Namangan

region. The policy taken during this period by the state to reduce budgetary financing of

economic bodies, to form a multistructure market economy and introduce elements of

market competition in the real sector of the national economy had a positive effect on the

pace of institutional formation of the financial market in the region.

In particular, the practice of intra-industry and inter-industry redistribution of

funds, which previously undermined incentives to increase production efficiency at the

primary level, gradually began to stop. Profit and other available funds of well-functioning

enterprises have ceased to be sources of covering losses of low-profitable business

entities. At the same time, the volumes of medium-term and long-term loans allocated by

banks for business entities were significantly reduced, and control over their intended use

was strengthened. At the same time, the negative consequences of the severe structural

crisis that Uzbekistan inherited from the command and administrative system continued

to affect. The destruction of economic ties, the deterioration of contractual obligations and

payment discipline led to disruption of production programs, and hence to the failure to

fulfill profit plans. All this ultimately reduced the efficiency of social production and

significantly limited the possibilities of self-financing of enterprises. In addition, since the

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mid-80s of the twentieth century. inflationary processes began to develop intensively in

the country, negatively affecting the state of the money market, and, consequently, the

entire aggregate payment turnover. So, in 1992-1993. the inflation rate in the Namangan

region amounted to over 1500 percent per year .

The imbalances and shortcomings in the economic and financial spheres required

the intensification of efforts of state, industry, territorial authorities and business entities

themselves to form the financial market and its attributes. As a result of measures taken

for 1993-1995. The dynamics of the GDP deflator, retail, consumer and wholesale price

indices began to show a tendency to a consistent and steady decline. This trend was the

result of the implementation of the economic stabilization policy pursued by the

Government of the Republic of Uzbekistan, the Ministry of Finance and the Central Bank of

the country. Of particular interest is the evolution of the financial market of the Namangan

region, which clearly reflects the most characteristic trends in the formation of market

relations and the ongoing socio-economic transformations. Although in 1992 only 3

segments functioned in the financial market of Namangan region, as in many other areas

of our country (cash and non-cash money market, credit resources market, government

loan bond market), its emergence and development is largely connected with trends and

features of reforming the entire financial system of the country. After all, it was precisely

the specific problems of socio-economic development of Uzbekistan that existed at one

time or another that led to the emergence of a specific type of financial instruments, and

after them new segments of this market.

Thus, the existing deficit of the state budget in 1991 led to the issuance of the first

state security of the Republic of Uzbekistan - the Uzbek winning 12 percent government

loan bonds of 1992. The growth of non-payments and receivables contributed to the

emergence of transferable bills, and the ongoing privatization of state property to the

development of the market corporate securities. One of the most effective means of

formation and development of market management methods in the Namangan region was

securities that made it possible to mobilize significant amounts of free financial resources

of the population and commercial structures for the needs of a radical renewal of the

region's economy.

Securities fixing the right to capital, allowed to redistribute the property of state

enterprises into the property of joint-stock companies, i.e. private owners, thereby

increasing the effectiveness of its management and freeing the state from functions

unusual for it.

The adoption of the Law of the Republic of Uzbekistan “On Securities and Stock

Exchange” on September 2, 1993 laid the foundation for the creation of a securities market

in the regions, as it regulated the issuance of five types of securities, determined the legal

basis for the creation and operation of stock exchanges and some others securities market

participants. [1] It is the securities market that has become one of the most powerful

mechanisms for introducing the principles of a market economy, an effective means of

deeply reforming property relations, forming qualitatively new sources of economic

growth, concentration and redistribution of investment resources. With the beginning of

the mass privatization and corporatization of state enterprises, in essence, a new direction

was identified for the development of the regional stock market - state enterprises that

were newly formed or privatized in the form of joint-stock companies became the first

issuers of shares, laying the foundation for the corporate securities market.

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The refusal in the republic of the idea of voucher privatization, which is being

introduced in a number of CIS countries, made it possible to mobilize considerable

financial resources to support privatized enterprises in the most difficult post-

privatization period for them. In addition, part of the proceeds from privatization was

aimed at creating the infrastructure of the financial market of the region.

In March 1994, the region embarked on a broad involvement of the population in

the process of privatization and privatization and the formation of joint stock companies

with a simultaneous reduction in the share of shares owned by the state. Many of the

established closed joint stock companies were transformed into open joint stock

companies, which increased the transparency of the stock space and the activity of small

and medium investors on it.Subsequently, in the Namangan region, the process of forming

a regional infrastructure of the stock market began, which includes a branch of the

Republican Stock Exchange “Tashkent”, an extensive network of investment institutions,

including independent second-tier depositories, investment and privatized funds (IFs),

brokerage houses and investment companies, registrars, investment advisors, etc.

At the same time, regional branches of the National Depository "VAKT", the Agency

"Konsauditinform", the Center for Information and Analytical Support of Stock Market

Participants "Tahlil Ahborot Markaz", and the State Investment Firm "Davinkom" began to

open here. [2] The increase in sales volumes of privatized enterprises was a condition not

only for the formation of a real class of owners, but also for “instilling a taste” in

entrepreneurship, for shareholders to recognize their rights and opportunities. The

development of the securities market in the Namangan region was facilitated by the

adoption in April 1996 of the Laws of the Republic of Uzbekistan “On Joint-Stock

Companies and the Protection of Shareholders' Rights” and “On the Mechanism of the

Operation of the Securities Market”, which streamlined the privatization process and the

activities of joint-stock enterprises[3].In July 1998, regional offices of two new

infrastructure institutions began to function on the regional securities market: the Elsis-

Savdo electronic off-exchange trading system and the Elsis-Clearing Settlement and

Clearing House, designed to serve OTC bidders. Their creation markedly intensified the

work of the regional stock market, contributed to the influx of investment resources into

the real sector of the regional economy, as well as increased income of domestic and

foreign investors owning securities of issuers in this region.

ANALYSIS OF PRIVATIZATION PROCESSES IN UZBEKISTAN AND NAMANGAN

REGION

The transfer of the economy of Uzbekistan to market relations has necessitated the

privatization process, since privatization is the objectively necessary process

characteristic of countries implementing progressive political, economic and social

transformations. The privatization process in Uzbekistan began with the adoption of the

Law on Denationalization and Privatization in November 1991. [4] It was somewhat

different from the privatization processes of a number of countries. One of the main

differences was that privatization was carried out in stages, had a targeted focus, and was

also aimed at after privatization support and development of entrepreneurship. The

phased privatization in Uzbekistan can be defined as: the stage of small privatization

(1992-1993), during which the targeted orientation of privatization was shown - this is

the process of housing privatization. The possibility of redemption by members of labor

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collectives of the repurchase of the shares of their enterprises on preferential terms, as

well as the preferential procedure for privatizing the property of state farms by collectives

of agricultural enterprises; the stage of large-scale privatization (1994-1998),

characterized by the massive transfer of enterprises to joint-stock companies; a stage

characterized by the definition of a list of objects not subject to privatization (early 1998),

which continues to this day. Currently, the process of privatization of almost all facilities

and enterprises not included in this list is ongoing. Consider several periods of the last

stage of privatization. In the first half of 2004 alone, 660 manufacturing enterprises and

social facilities were transformed into non-state forms of ownership, which is 94.6%

compared to the same periods of the previous year.

Table 1. Non-state enterprises created during the privatization process.

Periods Total Including

Join-stock companies Limited liability Private

companies enterprises

Unit The lot. Unit The lot. Unit The lot.

weight weight weight

(%) (%) (%)

2003 643 24 3,7 63 9,8 556 86,5

year

2004 660 13 2,0 102 15,5 527 79,8

year

The relatively low specific weight in those years of the share of joint-stock

companies is explained by the fact that only enterprises whose authorized capital is

equivalent to at least 50 thousand US dollars are converted into joint-stock companies. The

sale of privately owned state and previously unallocated blocks of shares of a large number

of previously privatized enterprises, including using new mechanisms for the sale of state

assets, continued. In the sectoral category, most of the enterprises in the oil and gas

industry (61), public education (61), agriculture and water management (58), healthcare

(37) were privatized, and in the territorial breakdown of enterprises in Tashkent (124),

Fergana (73) Surkhandarya (58) and Syrdarya (53) regions. It should be noted that the

share of joint-stock companies in the total number of created non-state enterprises in

2003-2004 was low compared with the established limited liability companies and private

enterprises. The trend towards a decrease in the total number of AO continued in

subsequent years (chart No. 1). But at the same time, it should be noted that the growth of

AO emissions has a tendency to increase. The number of managers of AOs with the state

share of shares transferred to trust management also decreased (chart No. 3) from 2948

pcs. in 2000 up to 958 pcs. in 2005, and if we consider the structure of trust management,

trust attorneys occupy a greater share here - their trusts were 85.5% in 2000, by 2005 this

trend remained at the level of 86.3%. Since 2004, confidence has appeared in management

companies and their number has increased from 13 units. in 2004 to 71 units. - in

2005.The implementation of the state property privatization program continued (chart

No. 4), by 2008, there were 121 units left for enterprises where the state share of the

property was retained, -1269 units were fully sold for sale, 105 units were sold at zero

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cost, and others. The goal of introducing enterprise implementations at zero cost was to

preserve the enterprise’s activities while attracting these investments and creating jobs.

5000

4500

4000

3500

3000

2500 quantity AO

billion.sum

2000

1500

1000

500

0

2000 2001 2002 2003 2004 2005 2006

Chart 1. Dynamics of changes in the total number of AO and their envelopes of emission

for 2000-2006

The dynamics of changes in the number of business entities with a state share of

ownership is also prone to decrease (chart No. 2).

Dynamics of changes in the number of economic entities from the

state aid of shares

3500

3000

2500

2000

1500

1000

500

0

01.01.2001 01.01.2002 01.01.2003 01.01.2004 01.01.2005 01.01.2006

Chart 2. The diagram shows their number decreased from 2948 pcs. in 2000 to -958 pcs.

in 2005.

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3000

2500

2000

1500 State on the right

Trustee

1000

Management companies

500

0

Chart 3. The number of AO managers with state shares transferred to trust for 2001-2006

Maintained

Others; 29

Sold at zeroState share;

cost; 105 121

Fullu

implemented;

1269

Chart 4. Results of the implementation of the state property privatization program for

2006-2008

Data on the number of joint-stock companies having a state share of shares for 2000

- 2006 can be considered in chart No. 5.

427

Chart 5.Data on the number of joint stock companies having a state share for 2000-2006

01.01.2000 01.01.2001 01.01.2002 01.01.2003 01.01.2004 01.01.2005 01.01.2006

Quantity billion. Quantity billion. Quantity billion. Quantity billion. Quantity billion. Quantity billion. Quantity billion.

Indicators

AO Sum AO Sum AO Sum AO Sum AO Sum AO Sum AO Sum

Total joint

stock

1 1 1 2 2

companies 4709 394,90 4555 815,30 4654 4716 4287 2271 2114

617,10 895,60 993,90 217,70 787,30

and their

emissions

The number

of AO with 1 1 1 1 2

3123 289,90 3109 652,90 3187 3074 2319 1170 1036

state assets, 413,90 623,40 659,70 810,40 325,10

incl

State share

1 1

held by the 3000 4,50 2869 159,40 2591 841,90 2406 857,00 1631 876,00 402 290

013,50 014,80

state

Government

assets to be 785 33,80 945 308,00 1205 350,20 1119 460,10 837 486,00 566 506,30 420 766,90

sold

Including

unredeemed

share of the 418 1,00 184 20,60 173 17,70 191 15,90 120 5,80 76 1,50 48 1,90

labor

collective

State assets

transferred

to the

authorized 283 1,60 245 85,50 1203 221,80 789 306,30 654 297,70 567 290,50 586 543,40

fund of

business

associations

Continuing a retrospective analysis of the quantity, structure of capital and the

volume of emissions of joint stock companies for 2012-2016. (table No. 2,3), we are

considering a trend towards a decrease in the total number of AOs from 1232 units. in

2012 to - 615 units. in 2017. A decrease is also observed in the structural plan, the share

of state property and business entities is decreasing, but at the same time, the share of

foreign investors in 2015 was 334 units, 2016 - 309 units, 2017 - 319 units.

2-Table

Information on the structure and number of joint stock companies.

Indicators 2013year 2014 year 2015 year 2016 year 2017 year

The number of

1232 1090 717 631 615

AO (pieces)

With a share of

state ownership 424 395 241 170 174

(pieces)

With a share of

business entities 456 445 294 283 269

(pieces)

With a share

without business

500 392 237 178 219

entities

(pieces)

With a share of

- - 334 309 319

foreign investors

With a share of

foreign investors

- - 87 179 172

of 15 percent or

more (units)

The trend of increasing emissions over the years also remains.

Tabel 3.

The capital structure of joint stock companies

Republic of Uzbekistan for 2012-2016

Indicators Unit 2012year 2013 year 2014 year 2015 year 2016 year

Volume of

issues Billion

9111, 48 10249,37 12 725,58 16472,85 30463,50

(circulating sums

shares)

Share in

Percent 2,14 0,81 0,92 2,05 7.25

GDP

Gos. share

in the total

Percent 53,42 55,00 56,33 60,59 73,01

volume of

share issues

Share of

households

in the total Percent 12,93 11,85 10,10 12,63 11,34

volume of

share issues

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One of the fundamental directions of economic reforms is the formation of an

effective multistructure economy, the deepening of privatization processes and the

formation of a real competitive environment. An effective and final solution to property

issues is the most acute and significant in the system of measures to create a market

economy both at the first and second stages of economic reforms, and in the further

development of our republic. An important task in the republic was the elimination of the

monopoly of state ownership and the creation of various forms of ownership. This, in turn,

led to the process of denationalization and privatization in the country. Denationalization

and privatization, being an integral part of the system of measures to enter the market,

should have been carried out in stages, taking into account real preparedness for them, the

interests of the labor collectives themselves, with the indispensable observance of the

principles of social justice.

Reform of state-owned enterprises in general, and corporatization in particular, is

part of a package of broader reforms aimed at achieving the interconnected goals of

stabilization and structural transformation. Given that many unprofitable enterprises

were in state ownership, privatization is considered necessary to establish firm financial

discipline at enterprises during the stabilization period. Regarding structural issues, the

privatization or transformation of state-owned enterprises into a joint-stock company is

probably the only way to quickly introduce private property rights: it also opens up

prospects for establishing effective corporate control over the enterprise. As of

01.01.2020, we can consider the regional sectoral structure of enterprises with state

ownership and by district as of 01.01.2020 according to table No. 4.

Table 4.

Information about enterprises with state ownership

in the Namangan region as of 01.01.2020.

Including by industry

Lay

ag

dow

ric

n

Kom ult

Prep Har pro

neg, Nefteg ur

with Infor d m SOC,

City and builds az, al

№ stat tech Pro mas touris Prom

regions and chemi an

e and m h m and zone

rende cal d

debt commu and syst pharm invest.

red indust fo

nes Fina em acist

servic ry od

nce and

es pr

elect

o

roni

m

cs

Namangan

1. 67 5 37 3 2 15 - 3 2

city

Kosonsoy

2. 4 3 1

region

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Mingbulaq

3. 6 4 1 1

region

Namangan

4. 7 5 2

region

Narin

5. 8 5 2 1

region

6. Pop region 12 9 1 1 1

Turakurgan

7. 11 8 1 1 1

region

Uychi

8. 5 4 1

region

Uchkurgan

9. 6 4 1 1

region

Chartaq

10. 9 5 1 3

region

Chust

11. 10 7 1 2

region

Yangikurga

12. 9 6 1 2

n region

Total 154 5 97 3 2 25 0 14 8

Analyzing the higher table on enterprises with state ownership in the Namangan

region as of 01.01.2020, it can be noted that of the total number of enterprises, the largest

indicator of enterprises with state ownership in the sectors is in the utilities, construction

and services - 97 enterprises (63%) , the next place is occupied by 25 enterprises (16.2%)

- social industries, tourism and pharmaceuticals, 14 enterprises (9%) - agriculture and the

food industry and scanty shares - 8, 5, 3, 2 units (5.2%, 3.2%, 1.9%, 1.3%) –industrial zones

and investment, information technology and communications, heavy industry and finance,

light industry, mechanical engineering and electronics, respectively[5]

CONCLUSION AND OFFERS

Analyzing the foregoing, the following conclusions can be drawn. The privatization

processes in the region are continuing, and there is a tendency to further sell the share of

state property, both directly to the buyer with a certain set value, and at zero cost, with the

condition of attracting the established volumes of investments and creating jobs at the

enterprise.

Meanwhile, further scale-up and attractiveness of the financial market of Namangan

region depend not only on the efficiency of the banking services market and the securities

market, but also on the pace and synchronization of the development of its segments and

the expansion of the use of new financial instruments. To use the reserves of growth in the

financial market of the region, it is necessary to consolidate the efforts of republican,

sectoral and regional government bodies, as well as business circles and the public of the

whole region.

As an analysis of foreign experience shows, the pace and quality of the formation of

regional financial markets, along with macroeconomic factors, are greatly influenced by

organizational, managerial and functional-technical factors related to the level of

development of investment and financial infrastructure. The most important of them,

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determining the level of infrastructure support for participants in regional financial

markets, include:

- informational transparency of issuers and consumers of financial resources;

- the degree of information transparency of various sectors of the financial market;

- the level of organization and equipment of trading and clearing and settlement

systems both on the exchange and over-the-counter markets;

- the availability and reliability of transactions with different types of financial

instruments by large and small consumers of financial resources;

- the level of development of the range and quality of services for the storage of

securities, accounting for property rights to them, as well as their re-registration;

- the quality and reliability of the organization of insurance of financial market

participants and various financial transactions;

- providing guarantees to protect the rights and legitimate interests of small and

medium investors.

Assessing precisely from these positions the current state of infrastructure services

for participants in the financial market of the Namangan region, it is necessary to recognize

the insufficiently high level of development of the investment and financial infrastructure

of this region. Therefore, it is necessary to solve the issue of opening a wide network of

leasing, factoring and managing investment companies, consulting, underwriting and

transfer agent firms, rating and real estate agencies, stock, insurance and legal centers, etc.

in the region. An important element of the formed regional investment and financial

infrastructure should be territorial stock centers, in the structure of which it is advisable

to open marketing departments of regional financial markets, with which you can monitor

the process of their institutional and functional development, monitor the flow of capital

between different sectors of the economy and direct investment of temporarily free funds

of the population in financial instruments of the most competitive issuers. Thus, work to

create a branched investment and financial infrastructure, designed not only to provide

technical assistance to its main participants in the issuance and circulation of financial

instruments, but also to insure commercial risks associated with them, should be the most

important direction of the institutional development of the regional financial market. The

presented analysis of the current state, existing problems and perspective directions of

development of the financial market of the Namangan region indicates the need to expand

the powers of local authorities in pursuing an active regional policy in the field of

institutional support for the formation of the financial market.

The first step towards the implementation of this complex task should be the

creation and legislative support of the State concept for the formation and development of

regional financial markets, which should subsequently form the basis of the State program

for reforming the regional economy of Uzbekistan. In terms of its scale and complexity, this

program should be adequate to the program of privatization and privatization of state

property, adopted in the early 90s of the last, twentieth, century. Another effective way to

increase the role of local authorities in resolving this issue should be to expand their

capabilities in providing financial support for the institutional formation of regional

financial markets. Given that many territorial authorities, due to financial constraints,

cannot yet fully rely on the local budgets of their regions, they need to be given the right to

use additional sources of revenue for local budgets for the needs of establishing a financial

market. In our opinion, the fundamental condition for pursuing an effective institutional

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policy for the development of regional financial markets is the creation, under the regional

khokimiyats of the republic, of specialized departments for the development of financial

markets and attracting investments with the provision of appropriate powers and levers

of influence on business entities.

The issues of improving the efficiency of the use of financial instruments also remain

relevant at the current stage of the development of the national economy, as one of the

prospects for the development of the national financial market should be its entry into the

international arena. According to the Russian Export Center (REC), the securities market

is an industry that is not yet integrated into foreign markets, and, in particular, the Russian

capital market, but could become a new direction for cooperation between entrepreneurs

of both countries [6].

The main tasks of the institutional units created in the structure of local authorities

should be:

- development of strategic programs for the development of various segments of the

financial market, as well as the necessary infrastructure for them;

- improving the mechanism for attracting domestic and foreign investments for the

needs of regional development;

- making proposals to higher authorities on the development of regulatory

documents stimulating the development of regional financial markets;

- implementation of operational activities on modern institutional and functional

support of the process of formation of financial markets in the regions. [7]

Active inclusion of institutional units in the process of establishing regional financial

markets will increase the pace and improve the quality of economic and social

transformations being carried out in the regions of Uzbekistan. As international practice

shows, trust in the regional financial market, investment inflows for the development of

the territory, ensuring transparency of financial transactions, as well as protecting the

rights and interests of all market participants are achieved through effective regulation of

various aspects of financial activity and constant monitoring of its subjects. Thus, in total,

1,113 cases were considered on bankruptcy issues in the region by regional economic

courts: out of 375 enterprises declared bankrupt in 2018 and did not complete bankruptcy

proceedings in 2019, 738 enterprises declared bankrupt on January 1, 2020. Out of 375

enterprises - 374 were removed from the state register, 1 enterprise continues bankruptcy

proceedings. Out of 738 enterprises, 252 completed bankruptcy proceedings and were

removed from the state register. During the reporting period, a total of 626 enterprises

were removed from the state register. Of these, 33 enterprises by court decision continue

their activities as a result of financial recovery. Currently, bankruptcy proceedings are

ongoing in 487 enterprises. Of the 28 claims submitted to the judicial authorities in 2019:

5- satisfied, 6- rejected, 8- relatively satisfied, 5- completed, 2- not approved, 2- considered.

As a defendant, 20 claims were submitted, of which 2 were fully satisfied, 14 were rejected,

3 were not considered, and 1 process was completed.

The most common violations in common practice are the lack of information about

issuers and securities, or its untimely publication, untimely provision of reports or

information to state supervisory authorities; incorrect maintenance of the register of

shareholders; untimely or incomplete payment of dividends, as well as failure to publish

in the media announcements on holding general meetings of shareholders and the annual

report of the company; holding them without a quorum; lack of work plans for the

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development and reconstruction of enterprises. In many joint-stock companies, the

income received is poorly monitored in the part intended for reservation due to the

accumulation of dividends on the state share of shares and their subsequent use for their

intended purpose. The heads of individual joint-stock companies do not ensure compliance

with the requirements of the legislation on auditing, monitoring the movement of shares

and payment of dividends, are passive in the implementation of the second and subsequent

share issues. From this it follows that one of the most important areas of increasing the

effectiveness of control, coordination and supervision of financial market participants is

the improvement of the regulatory framework governing the activities and relations of its

participants. Correct and timely regulation of financial activities with the help of flexible

legislation that can create fair rules for the game on the stock space and monitor their

compliance with all market participants is a prerequisite for the sustainable development

of any regional financial market.

In the Namangan region at the end of the 90s of the XX century there was a tendency

to move from direct state regulation of financial activities to a form of regulation that

involves the transfer of some of its functions to the participants in this market, united in

self-regulatory organizations of professional participants in the financial market (SRO).

The first such organization was the Namangan regional branch of the Association of Banks

of Uzbekistan, opened in 1998, followed by another self-regulatory organization, the

National Association of Investment Institutions (NAII), in 2000, uniting all investment

institutions operating in the regional stock market.

The purpose of the SRO was to assist its members in the implementation of their

professional activities, to protect their legal rights and to represent their interests in the

legislative and executive authorities. The effective functioning of self-regulatory

organizations in each of the areas of professional activity in the regional financial market

should make it possible to develop detailed requirements and standards for their

participation in the market, provide tighter control over their possible violations, and

therefore create the conditions for competent regulation of the activities of professional

participants in the financial market. [8]

Timely formation in the region of a two-tier system of regulation of the financial

market, based on a combination of state regulation and self-regulation, will achieve

optimal market management and ensure the necessary level of protection of the rights and

interests of all its participants. In addition to this effect, due to the effective interaction of

the state with self-regulatory organizations, prices will decrease every year due to a

reduction in the time and financial resources of professional market participants in

connection with the timely implementation of regulatory requirements. [9]

The successful implementation of the indicated directions of the institutional

development of the financial market of the Namangan region will undoubtedly affect the

quality of work of its main participants, will contribute to the implementation of consistent

reforms in the sphere of money circulation and credit, ensuring the creation of a

developed, competitive and stable financial and credit environment conducive to the

development of investment processes and economic growth, strengthening the

competitiveness of business entities and increasing living standards listening to the

population of the region.

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.https://ejmcm.com/?_action=article&keywords=Bustonov+Mansurjon+Mardonakulovich

)European Journal of Molecular & Clinical Medicine - Articles List

ejmcm,ejmcm.com,ejmcm.org,Scopus,Publication,Medical Journal,Fast Publication,Fast Track

Publication,Open Access Journal,Elsevier Journal,Free Scopus Journal.

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