Fitch Revises UZEX Outlook to ‘Positive’; Rating Affirmed at ‘B’

Tashkent, Uzbekistan (UzDaily.com) — Fitch Ratings has revised the Outlook on the Long-Term Issuer Default Rating (IDR) of the Uzbek Republican Commodity and Raw Materials Exchange (UZEX) from “Stable” to “Positive,” while affirming its long-term foreign- and local-currency ratings at “B”.

The decision reflects the strengthening operating environment following Uzbekistan’s sovereign rating upgrade to “BB”/Stable in June, as well as improvements in the credit profiles of the exchange’s counterparties.

The agency notes that UZEX’s ratings remain constrained by the high concentration of its liquid assets in affiliated Trustbank, where around 80% of the exchange’s funds were placed as of end-2024.

Potential risks associated with this concentration remain a key limiting factor in the assessment. In the event of a bank default, UZEX would face a threat of failing to meet its obligations.

At the same time, Fitch highlights the exchange’s strong profitability and the resilience of its business model. Its commission-driven operations do not require borrowing, which reduces insolvency risks.

As of end-2024, trading and clearing fees accounted for 61% of revenue, while interest income from placed liquidity covered more than 70% of operating expenses.

The exchange maintains a dominant position in the market, accounting for roughly 90% of commodity trading in Uzbekistan, while government reforms continue to direct more categories of goods and public procurement to exchange trading.

However, compared with the banking sector, UZEX’s franchise remains relatively small and concentrated.

Fitch points to a basic level of risk management, citing primitive approaches to counterparty risk — in particular, a fixed margin requirement of 10% that does not take into account the credit quality of clients.

Nevertheless, the control mechanisms have provided adequate protection, as evidenced by the absence of significant losses in clearing operations.

Government support is not incorporated into the ratings: although the exchange plays an important role in commodity trading, its systemic significance remains limited for now.

Fitch also notes that certain assessment components — profitability, capitalization, liquidity and funding — remain below implied levels due to limited revenue diversification and the high concentration of assets.