Uzbek Commodity Exchange sums up results for 2019

Uzbek Commodity Exchange sums up results for 2019

BAKU, Azerbaijan, Dec. 29

By Fakhri Vakilov-Trend:

In the expiring year, the exchange industry of Uzbekistan has undergone important changes and a lot of work has been done, Trend reports referring to the Uzbek Commodity Exchange (UZEX).

In March 2019, trading in precious metals began at UZEX for the first time.

Furthermore, in 2019, UZEX jointly with Uzbekistan’s Ministry of Transport launched a new electronic portal for logistics mytransport.uz. Today, the portal users, including participants in exchange trading and electronic commerce, can find the best offer from licensed carriers for the delivery of goods in the electronic system.

In addition, in accordance with the resolution of Uzbekistan’s Cabinet of Ministers dated July 30, 2019 “On changing prices and tariffs for fuel and energy resources”, the retail price for RON-91 automobile gasoline began to be determined freely from August 15, 2019 - through exchange trading, based on market conditions, supply and demand.

The reason why the price of RON- 91 gasoline at gas stations is 60 cents, and on the exchange - 66 cents is that the price is set for tons of gasoline at the exchange and for liters at gas stations. According to data from various sources, one ton of gasoline averages about 1293-1350 liters. In addition, gas stations selling RON-91 gasoline now have the right to buy it at the stock exchange and independently set prices based on their costs.

Prices formed during exchange trading tend not only to increase, but also to decrease. For example, from the beginning of the new order to the end of 2019, the stock market for gasoline showed a downward trend. Exchange prices fell by an average of 4.6 percent, from a maximum of $685.9 to $654.2 per ton.

Furthermore, in accordance with the resolution of the Cabinet of Ministers of October 14, 2019 “On measures for the full implementation of market mechanisms in the delivery system of grain, flour and bread”, from October 15, 2019 wheat and flour of a certain category are also sold without restrictions exclusively through the exchange.

Over the past period, the cost of grade I wheat flour decreased from a maximum value of $271 to $ 43.7 per ton. The decline in stock quotes was about 10 percent.

The use of the exchange mechanism in commodity markets can lower prices. Exchange trading in fact has shown that openness and transparency are better than any closed and limited system.

Based on this, in accordance with the decree of Uzbekistan’s President Shavkat Mirziyoyev dated October 8, 2019 “On measures to improve the efficiency of commodity exchanges and further improve the mechanisms of exchange trading”, the list of highly liquid and monopolistic types of products, raw materials and materials sold exclusively through exchange trading has expanded monopolistic enterprises and legal entities with a state share.

The new list additionally includes such products as technical oils, heating oil, wheat flour, compound feeds, heating oil, liquefied gas, laundry soap, oil solvent, oil paraffin, oil bitumen and copper sulfate.

During the year, work continued to expand the external relations of the exchange with international exchanges and foreign partners. In February 2019, UZEX became a full member of the Association of Futures Markets (AFM). Joining this organization has opened up new opportunities for the further development of exchange trading, the study of futures trading, as well as the establishment of new business ties with members of the association

Within the framework of the first meeting of the joint commission at the level of the heads of government of Russia and Uzbekistan, an agreement on cooperation was signed between the joint stock company St. Petersburg International Commodity and Raw Materials Exchange and UZEX. Memorandums were signed between UZEX and Uzbek Trust Bank PSC from one side and Russian commercial banks Transcapitalbank PJSC and Asia-Invest Bank JSCB from the other. The international trading network of UZEX has expanded due to the opening of new trading floors in China, Russia, Kyrgyzstan and Kazakhstan.

As a result, for 11 months of 2019, the volume of goods sold through the exchange for export amounted to $126.1 million, which is 10 percent higher than the figure for the same period last year.

On Dec. 5, 2019, the president of Uzbekistan issued an order “On measures to further improve the public procurement system and the widespread involvement of business entities in the public procurement process” to ensure further development of the public procurement system.

The decree establishes the procedure according to which, starting from January 1, 2020, customers of strategic importance are granted the right to carry out public procurement by regions among domestic manufacturers using the additional page of an electronic store.

From now on, local entrepreneurs will have the opportunity to participate more actively in public procurement in their region, and customers of strategic importance will save more time and money by reducing the distance between the supplier and the customer.

In general, over the 11 months of this year, UZEX concluded agreements totaling $4.1 billion, which is 37 percent more than for the same period in 2018 (an increase of this indicator is expected by the end of 2019).

The growth in the volume of electronic trading was achieved not only due to the expansion of the range of goods sold through the exchange, but also due to the active participation of representatives of the business community in electronic trading. In particular, the total volume of transactions concluded with the participation of small businesses and private entrepreneurship reached $ 1.9 billion, with an increase of 32 percent compared to 11 months of 2018. This indicates their interest in open, transparent and free bidding.

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Follow author on Twitter:@vakilovfaxri

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