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EghtesadOnline: Head of the Security and Exchange Organization, the sole regulator of the capital market, said 13% of the Iranian population (10.5 million trading codes) is active in the capital market.

In terms of transparency, Iran's capital market is among the five most transparent in the world, he said. 

Shapour Mohammadi told reporters on the sidelines of the first Algorithmic Trading Competition in Capital Market held in Tehran Wednesday that the number of listed companies now is over 600 in the Tehran Stock Exchange and the junior exchange Iran Fara Bourse.

"The number of financial firms will also reach 600 by the end of the calendar year in March," he said, adding that this “indeed is an achievement” compared with other countries, Financial Tribune reported.

He alluded to algorithmic trading mechanism now in use in the stock market and said it is among the most advanced methods used in global stock markets. 

"In the 40 years since the Islamic Revolution, important transformations took place in the capital market including the fact that Iran's ranking in the number of traders rose to 8th in the world and many new instruments were introduced," he added. 

"While before the revolution Abbas Abad bonds were issued and shares of few companies were floated, but now financial instruments used in the capital market include debt instruments like Islamic Treasury Bills, Murabah sukuk, Ijarah sukuk, Sukuk al-wakala, Istisna sukuk, single-stock future (SSF) call option, put option.” 

 

Impact of Sanctions  

He said due to the fact that "fundamental factors" of Iran's economy are known and the comparative advantage of Iranian companies are also recognized, the domestic capital market is moving ahead on its own path and sanctions will not have much impact.

“Fundamental elements of the capital market are not short-term issues and comparative advantage of Iran’s companies is not a short-term phenomenon. Stock investment is a long term issue to which investors pay attention. Our capital market enjoys fair stability.” 

About the launching of the planned regulated foreign exchange market, Mohammadi said the Central Bank of Iran has agreed to launch the cash currency trading and plans related to the provision of software and regulations are being finalized with help from the Iran Fara Bourse and Iran Mercantile Exchange. The  SEO is willing to provide guidance when needed. "The CBI has done well in this sphere and the currency market will be launched in the monetary market."

 

Confidentiality

Mohammadi said information about crude oil buyers on the stock market will remain strictly confidential and the SEO will deal will with violations. Bet he noted if information is leaked by a buyer or some other body, the SEO cannot and will not take issue.

About lack of trading on IRENEX on the last two sessions, Mohammadi said the lack of success has to do with the fact that offering oil on the stock market is a new phenomenon and any new type of trading requires time to evolve. 

"This could have to do with specifications, or the size of contracts, or the issue of rial and forex trading or the price. These are things that come up in first offerings because customers have to adapt themselves to the new terms while the opposite is also true, in that the seller understands what customers want and what they can afford," Mohammadi said. 

He added that when electricity was first offered on IRENEX for the first time similar issues emerged. 

"The long-term approach to offering crude oil on IRENEX will continue because it is our national wealth. Regardless of the sanctions we should continue offering oil, gas and electricity on IRENEX.”  

The fourth offering of crude oil at Iran Energy Exchange ended with no deals on Monday, marking the second session of no trade after Tehran started selling crude oil on the stock market in October. 

One million barrels of oil was on offer at a base price of $56.24 in cargoes of 35,000 barrels each. Buyers were required to buy at least one cargo and other conditions were the same as the previous round.

Head of Iran Energy Exchange Ali Hosseini told the Tribune on Wednesday that in the next offering of oil on the stock market (in two weeks), the National Iranian Oil Company will “adjust trading terms” to the demands of traders (who have not bought any oil in the last two offerings).

 

International Bourse

In response to a question by the Financial Tribune, Mohammadi said the planned international bourse in Free Trade Zones needs a bylaw for that must be discussed in the government's economic council. 

After that it has to be approved by the Securities and Exchange Council. Hemmati says establishment of the bourse will be welcomed by investors despite the new US sanctions.  

About foreign investment in Iran's capital market, Mohammadi admitted to the Tribune that the sanctions may have impacted the volume of cash brought by investors to the capital market. 

But "they are present in Iran's capital market and the number of trading codes is significant because investors often look at the long-term horizon and sanctions do not have much of an impact on them."

 

Iran capital market Population