Aya Company

The core objectives of NAII are to increase and strengthen the effectiveness of investment institutions in Uzbekistan and to protect their rights and interests. There are several issues that obstruct growth, however. With this in mind, our current action plan includes:
- Lack of interest from large Uzbek companies in utilizing bonds as capital raising instruments due to their unfamiliarity with benefits of bonds
- Inactive position of government agencies in promoting corporate bond issues
- Insufficient understanding of these financial instruments among potential investors
- Lack of expertise among intermediaries (brokers, registrars and depositories)
- Limited involvement of commercial banks in underwriting and placing corporate bonds
- Legislation obstacles (investment funds are not investing in bonds due to double taxation)
- Inactive secondary market (because of few investors there is low liquidity in bond trading)
- Insufficient information about corporate bond market among general public

With these issues in mind, we at NAII strive to improve this situation, namely to:

- Increase critical awareness of existing issues in securities market and recent developments in international and domestic bond markets
- Attract new players to the securities market
- Increase support of government agencies responsible for securities market regulation and coordination
- Increase interaction of market players and bring them together for exchange of ideas
- Increase skills among intermediaries
- Increase potential issuers' interest in utilizing bonds as capital raising instruments
- Increase participation in the bond market by issuers, banks and investors

Recent Projects

International Corporate Bonds Conference in Tashkent: September 2003
NAII Website Update: Ongoing
NAII Fundraising Strategy Development: Ongoing
NAII Consultants Program: June - August 2003
International Capital Markets Training Seminars: June 14 - 18 2003
Conference on the Potential for Investment Banking in Uzbekistan: August 5, 2003
Working Paper on "Developing Investment Banking in Uzbekistan: June - August 2003
NAII Awards: Year End, Annual Basis
International Corporate Bonds Conference in Tashkent: September 2003
NAII is inthe process of organizing the 1st International Corporate Bond Conference in Tashkent in September 2003. NAII acts as conference co-organizer together with the International Issuance Syndicate (IIS), the most active player in the corporate bond market in Uzbekistan.
The conference will bring together leading industry experts from Russia, Kazakhstan, Ukraine and other nations, participants of the securities market in Uzbekistan (professional participants, issuers, investors), government regulators (Cabinet of Ministers, ministries and organizations), mass media. The 1st International Corporate Bond Conference will facilitate increase of critical awareness of existing issues, formulating policy recommendations, exchange of ideas and interaction of participants of the conference with each other.
NAII has also invited representatives of major international banks and investment institutions who would share with their expertise in developing capital markets in transition economies and raising capital for emerging market issuers. NAII has already received confirmation of attendance from Deutsche Bank Securities, EBRD, IMF, Chevron Texaco, UzBAT, Siemens AG, Creidt Suisse First Boston, JP Morgan Chase, ABN Amro Bank.
As Alisher Djumanov (Executive Director of NAII) said that the most active participants of corporate bond market - JV "Coscom", Business bank, Subsidiary Company "Pallada Vostok", "Carthill Assets Management Company" and Investment Company "Uzbekinvest Sarmoyalari" will prepare for the conference presentations on future trends and problems of development of the securities market. For more information on the International Corporate Bonds Conference, please see its web page.
NAII Website Update: Ongoing
The NAII website is currently undergoing a change in design and construction as well as the

introduction of new content. The improvements to NAII website include:

- A new, more user-friendly, web design
- Further information about NAII activities, past and future publications and the NAII members themselves.
- On-line registration forms for membership, event registration and feedback.
- Creation of a growing library with respect to capital markets (links to other useful sites, resources, direct access to publications from NAII and its members)
If you have any suggestions or requests for the website, please let us know.
NAII Fundraising Strategy Development: Ongoing
Greater funding is necessary in order to increase NAII's human capital and financial resources, to ensure the continuation of NAII's current activities as well as building institutional capacities that will allow NAII to expand its presence and scope in the Uzbek securities market.
Recommendations to improve NAII fundraising strategy include:
- Utilizing short-term volunteer consultants. In particular, the following organizations should be addressed to recruit volunteers: MBA and MPA programs, Citizens' Development Corps and International Executive Service Corps.
- Explore possibility of longer-term volunteers to maintain momentum. In the absence of a permanent staff, NAII may explore the possibility of longer-term volunteers to maintain the momentum of NAII initiatives and ensure consistency of an annual strategic plan. One possible source of volunteers is the MBA Enterprise Corps.
- Solicit grants for project-specific initiatives. Given the current political and economic situation in Uzbekistan, foundations and aid agencies are often limiting their scope or areas of investment. As a result, preparation is critical to success in grant proposals and priority should be given to identifying and developing projects which fall within both the donors' mandate and NAII's mission of securities market development, corporate governance, and advocacy.
NAII Consultants Program: June - August 2003
This summer, NAII brough three consultants to work with us and assist in our development. They were Kimberly Zenz from Georgetown University and John Canady and Jean-Jerome Khorada from Harvard University. Further information about the consultants is available on the NAII Team page.

The objectives for the NAII Consultants included:

- Provide NAII with foreign expertise from US universities thus demonstrating NAII's international dimension and credibility
- Bring international best practices in Uzbekistan through training and information sessions
- Fortify NAII's institutional role as a bridge between the private and public sectors to promote efficient reforms in the securities market sector.
- Publicize NAII's activities in the media and the banking community
- Increase the awareness of the banking community on the potential opportunities of securities market development in Uzbekistan
The main projects accomplished by NAII Consultants include:
- Capital market training seminars
- Conference on the potential for investment banking in Uzbekistan before the National Banking Association of Uzbekistan
- Media relations
- Reinforcing NAII fundraising strategy, developing NAII relations with donors institutions
- Developing NAII website
- Working Paper on "Developing Investment Banking in Uzbekistan"
International Capital Markets Training Seminars: June 14 - 18 2003
The capital market training seminars were taught in the hotel "Grand Mir" on a daily basis, during the week of July 14th to 18th. The purpose of the training seminars was to familiarize Uzbek banking specialists with capital markets. The training was comprised of five modules, each of which was dedicated to cover a specific topic of capital markets. The five core topics

covered were

- Module I. Fundamentals of Capital Markets (financial instruments, players & markets)
- Module II. Introduction to Investment Banking (definition, function, activities in financial markets, case-studies)
- Module III. International Capital Markets (history, international stock exchanges, international bond markets, issuers, investors, case-studies)
- Module IV. Regional Capital Markets (Case studies on Kazakhstan, Russia and Ukraine)
- Module V. Uzbek Capital Markets (current status, perspectives, interactive case study: simulation of a bond issuance by the students)
The instruction strove to be as practical and interactive as possible. Each session included several case studies, while the final session was almost entirely dedicated to a group exercise during which all students were divided into several groups representing the various actors of a bond issuance (e.g. issuer, investors, investment bank), and conducted a simulation thereof.
The training seminars were honored by the presence of high-ranking members from financial regulatory bodies and financial institutions, including Mr. Unusmatovthe Deputy Chairman of the State Management Committee and General Director of the Center for Coordination and Control of Financial Markets, Mr. Guliamov, the Deputy Chairman of the Central Bank, Mr. Djumabekov, Representative of the Banking Association of Uzbekistan, and Mr. Nuritdinov, Deputy General Director of the Center for Coordination and Control of Ginancial Markets. In addition, more than 40 students attended the training seminars. They represented major banks of the country including Aviabank, Pakhtabank, Business Bank, All Jamol Bank, Zamin Bank, ABN Amro Bank, Trast Bank, Ravnak Bank, Turonbank, Acaka and Galabank.
Conference on the Potential for Investment Banking in Uzbekistan: August 5, 2003
NAII speakers presented at this conference, which took place in the auditorium of the National Banking Association of Uzbekistan before more than a hundred and fifty persons. NAII speakers included Advisory Board member and SEAF Central Asia Fund Director Mr. Donald Nicholson, Executive Director and Carthill Asset Management Investment Banking Managing Director Alisher Djumanov, and NAII Consultants Kimberly Zenz, John Canady and Jean-Jerome Khorada.

Topics covered include:

- Origins and definition of investment banking
- Presentation of the main activities of investment banking (corporate finance, syndication, sales & trading, research)
- Potential revenue streams for Uzbek banks
- Case studies (Russia and Ukraine)
- Opportunities for investment banking in Uzbekistan
This conference can be considered a milestone in NAII activities from the standpoint of the number of people who attended, the media coverage and the impact on the audience (following the conference, several participants showed a strong interest in learning more about investment banking and developing concrete projects).
In addition, this conference reinforced NAII as a key actor in bringing together the banking community and regulatory agencies. Among them, the conference was attended by representatives from the Central Bank as well as the Center for Coordination and Control of Financial Markets.
Working Paper on "Developing Investment Banking in Uzbekistan: June - August 2003
NAII Consultants Kimberly Zenz, John Canaday and Jean-Jerome Khorada prepared a working paper that provides an overview of investment banking activity and analyzes the potential for the further development of investment banking within Uzbekistan in the existing regulatory, financial, economic and political environment.
The methodology of the paper was to build upon the successful process of Investment Banking development in other CIS transitional economies (e.g. Russia, Ukraine and Kazakhstan) to identify the major stages of this process that can be replicated in Uzbekistan.
The interviews, training seminars and conferences with specialists from the Uzbek banking sector in which NAII Consultants participated in Tashkent made them aware of the existing disparities amongst Uzbek bank with respect to Investment Banking development. While some commercial banks have already set-up specific business units to diversify their activities and engage in Investment Banking, others remain sector-based (servicing only a specific industry) and limit activities to loan provision. In this context, this paper (and its proposed action plan focusing on major steps for Investment Banking development) should be more valuable for commercial banks having no experience in Investment Banking than for those who have already developed an Investment Banking practice.

The paper covers the following topics:

- Investment banking overview
- Investment banking potential in Uzbekistan
- Action plan for Uzbek commercial banks
NAII Awards: Year End, Annual Basis
It is crucial to recognize achievements of securities market participants for development of the securities market. Although the securities market has existed for over 10 years in Uzbekistan none of the market participants and/or professionals have been publicly recognized. NAII initiated in cooperation with the International Issuance Syndicate, State Property Committee, and Center for Coordination and Control of Securities Market NAII annual awards at the end of 2002. Eligable for awards are the various outstanding securities market participants, professionals and other parties involved in the activity of securities market in Uzbekistan (awards were given even to media representatives who actively covered events in the securities market) in recognition of their invaluable achievements and contribution to the securities market development in Uzbekistan. This event is widely covered by media and ensures increase of awareness about the securities market in Uzbekistan.