Regulatory sandbox is a specialized legal framework that enables entities engaged in the development of new financial products and services to experiment with their implementation in a controlled environment, thereby mitigating the risk of breaching existing regulations.

The Advantages of the Regulatory sandbox for participants 

• Licenses obtained in approved foreign jurisdictions allow to operate in Uzbekistan without obtaining a local securities market license.
• Foreign broker-dealer (BD) can act as a broker-dealer in the capital market of Uzbekistan and open securities accounts.
• Foreign nominal holders (FNH) can open securities accounts and operate directly or through an agent.
• FNH, including custodian banks, are allowed to open accounts with the Central Bank in foreign and national currency, as well as securities accounts in the UzCSD and in the UZCE.
• FNHs are allowed to operate without acquiring a separate license or additional permits, creating a branch or a new legal entity, or participating in the authorized capital of a local legal entity.
• Non-resident legal entities selling (buying) securities at exchanges are allowed to open accounts with the national currency in the banks of Uzbekistan.
• On the corporate bond issue, circulation, and settlements, it is allowed to set the value of the bonds and make payments in foreign currency.
• FNHs are not considered beneficial owners of securities or funds accounted for in their accounts opened in the Republic of Uzbekistan.
• Transfer of securities from a foreign nominal account (or to a foreign nominal account) through the “Free of Payment transfer of securities” without changing the beneficial owner is not considered a sale of these securities and does not create a tax liability for any of the parties, including FNH.

Approved foreign jurisdictions for “Regulatory Sandbox”

Professionals in the approved foreign jurisdictions can apply for participation in the “Regulatory Sandbox”.
 

Prohibited:

• operations of broker-dealers and FNHs who do not have the appropriate licenses or permits from approved foreign jurisdictions.
• other operations, except for the operations of a broker-dealer, provided by the legislation of the Republic of Uzbekistan, and the operations of the FNH.

The reasons for revocation of the status of a participant in the “Regulatory sandbox”:

• Application of a participant to renounce their status as a participant in the sandbox.
• Providing false information in documents submitted for registration as a participant in the sandbox.
• Recognition of the sandbox participant as insolvent, as well as the revocation of their license or corresponding permit in the approved foreign jurisdiction and the jurisdiction of their registration.
• Obtaining information from law enforcement and other competent authorities of the Republic of Uzbekistan and foreign countries about the participation or suspicion of participation of officials and founders of the applicant in economic crimes, as well as crimes related to money laundering, terrorism, the proliferation of weapons of mass destruction, and their financing, organized crime, drug trafficking, corruption, and IT.

Source