Iran Capital Market
Securities and Exchange Organization of Iran Content
DEFINITION OF FOREIGN INVESTORS AND INVESTMENT ...... 4
HOW TO ENTER THE MARKET ...... 5
MARKETS: AT A GLANCE ...... 7
TEHRAN STOCK EXCHANGE ...... 7
IRAN FARA BOURSE ...... 9
IRAN MERCANTILE EXCHANGE ...... 12
IRAN ENERGY EXCHANGE ...... 15
CENTRAL SECURITIES DEPOSITORY OF IRAN ...... 18
FINANCIAL INSTRUMENTS ...... 19
MARKET ATTRACTIVENESS ...... 20
INDUSTRIES & FINANCIAL INSTRUMENTS AND INSTITUTIONS ...... 20
TAX INCENTIVES ...... 23
MARKET PERFORMANCE ...... 24
INVESTORS PROTECTION ...... 25
RELEVANT RULES & REGULATIONS ...... 29
INTERNATIONAL MEMBERSHIP ...... 30
RELEVANT WEBSITES ...... 31
CONTACT ...... 32
2 Securities and Exchange Organization of Iran List of Abbreviations and Acronyms
ATS Automatic Trading System CD Certificate of Deposit CSDI Central Securities Depository of Iran ETC Exchange-traded Commodity Iran's Foreign Investment Promotion and FIPPA Protection Act GLCs Government-linked Companies IFB Iran Fara Bourse IME Iran Mercantile Exchange International Organization of Securities IOSCO Commissions IPO Initial public offering IPS Investor Portfolio System IRENEX Iran Energy Exchange KYC Know Your Customer Organization for Investment Economic and OIETA Technical Assistance of Iran SEO Securities and Exchange Organization SFP Structured Financial Products SGF Settlement Guarantee Fund TSE Tehran Stock Exchange
Securities and Exchange Organization of Iran 3 DEFINITION OF FOREIGN INVESTORS AND INVESTMENT
Foreign Investor be authorized to trade in “Non-Iranian natural and/ securities market on the ex- or juridical persons or Irani- change or on the OTC mar- ans using capital with foreign ket within the scope indi- origin, who have obtained cated in the trading license; the [required] investment li- The number of shares cense…” and “any legal entity owned by the total foreign that has been registered in a investors shall not exceed country other than Iran”. twenty (20%) percent of the total shares number of the Strategic Foreign Investor companies listed on the ex- “a foreign investor who in- change or on the OTC mar- tends to possess over ten ket or twenty percent (20%) percent (10%) of a company’s of the shares number of shares listed on the exchange any company listed on the [TSE] or on the OTC market exchange or on the OTC mar- [IFB] or that, upon possession ket; of the shares of a company The number of shares listed on the exchange or on owned by any foreign inves- the OTC market, fills a seat tor in any company listed on on that company’s board of the exchange or on the OTC directors”. market shall not exceed ten percent (10%) of the shares Foreign Capita number of such company; “All types of capital, includ- The strategic foreign in- ing cash or non cash that has vestors shall not be allowed been imported into the coun- to sell the original shares they try by foreign investors…”. have purchased for a peri- od of two years without the Rights and Facilities SEO’s approval; Foreign investments shall enjoy the same rights, protec- tions and facilities available to domestic investments in a non-discriminatory manner; Foreign investors shall
4 Securities and Exchange Organization of Iran HOW TO ENTER THE MARKET
1- Receiving the investment 2- Opening a bank account in license from the Securities Iran; and Exchange Organization 3- Referring to a brokerage of Iran by the applicant or a firm (listed on en.seo.ir); legal representative or lawyer 4-Filling out the relevant in Iran; forms and doing the required 1-1- To introduce a legal KYC; representative or lawyer, the 5- The brokerage firm will steps below must be taken: send the documents to CSDI 1-1-1- Appointing a legal and then trading account representative or lawyer will be issued and sent to with an official power of the brokerage firm through a attorney approved by a letter; notary public in the origin 6-Trading is possible directly country; via the Internet or by the 1-1-2-The approval of the brokerage firm; power of attorney by Iran 7- The portfolio can be embassy in the country in checked from the IPS App; question; 8- Even after liquidating the 1-1-3-Official translation portfolio and exiting from the of the power of attorney market, the trading accounts by an official translation will remain active for possible office in Iran. transaction in the future.
Receiving the investment license from Organization for Investment Economic and Technical Assistance of Iran (OIETA) by the applicant or a legal representative or lawyer in Iran is optional but recommended;
Securities and Exchange Organization of Iran 5 Receiving the investment license from the Securities and Exchange Organization of Iran by the applicant or a legal representative or lawyer in Iran
Opening a bank account in Iran
Referring to a brokerage firm Applicant Investor Applicant
Filling out the relevant forms and doing the required KYC
The brokerage firm will send the documents to CSDI Firm Brokerage Brokerage
Trading is possible directly via the Internet or by the Trading account will be brokerage firm issued and sent to the brokerage firm through a letter The portfolio can be checked from the IPS App CSDI Even after liquidating the portfolio and exiting from the market, the trading accounts will remain active for possible transaction in the future
6 Securities and Exchange Organization of Iran MARKETS: AT A GLANCE
TEHRAN STOCK EXCHANGE
The TSE is Iran’s first 330 listed companies from Organization” used to be a and largest equity market. 40 diverse industries (as of mutual non-governmental Launched in February January 2020). The Market public organization whose 1967, TSE listed six Act, ratified in November board members were mainly companies initially and later 2005, restructured Iran appointed from brokerage on accompanied by other capital market, resulting in the firms; however, since financial instruments such as establishment of the Securities 2006, it has turned into a treasury bonds and certain and Exchange Organization as demutualized exchange, self- state-backed certificates. the supervisory body and the regulatory public joint-stock As of today, TSE is the pioneer TSE as the equity market. TSE corporation. market in Iran with more than previously known as “Brokers
Trading Model
Legal Structure Public Corporation (Self-listed) Status Self-regulatory (under SEO’s supervision) Trading Venue Tehran (+1500 trading access points nationwide) Trading Days Saturday to Wednesday Trading Hours 8:30 to 9:00 (Pre-opening) 9:00 (Opening based on Theoretical Opening Price) 9:00 to 12:30 (Continuous auction Trading System Automatic Trading System (ATS), Order-Driven Trading Mechanism Opening auction, Continuous trading Securities Equity Shares and right offerings, Sukuks, ETFs, Embedded Put option, option, Futures Order Priority Price, time Market Making / Liquidity Providing ETFs, Sukuk (Mandatory) Other Securities (Elective, unless listed since 2017) Daily Price Fluctuation Limit Shares (±5%), Right offerings (±10%), Bonds (±5%), Futures (±5%) Available Real-Time Data Prices (open, close, high, low), three best bids & asks, indices, Companies’ data Close Price Calculation Weighted average based on reference volume Foreign Investment Allowed Equity Trading Commission (buy+sell) %0.939 + %0.5 transaction trading tax payable by seller
Securities and Exchange Organization of Iran 7 Listing Process
First Market Requirements Second Market Main Board Secondary Board Registration with SEO √ √ √ Public Joint-Stock Co. √ √ √ No Accumulated Loss √ √ √ Positivity of Last Two Years’ Accumulated √ √ √ Operational Cash Flow Profitability of the √ √ √ Last Fiscal Year Audited Financial Statements for Last √ √ √ Fiscal Year Minimum Market Capitalization 28.5 14 6 (million USD) Minimum No. of 1000 750 250 Shareholders Minimum Free-Float 20 15 10 Shares (%) Minimum Activity 3 3 3 Record (Years) Minimum Profitability 3 2 1 Periods (Fiscal Years) Equity to Asset Ratio 30 20 15 (%)
Settlement
Settlement Time Equity, Derivatives, ETFs T+2 Fixed- Income Securities T+1
8 Securities and Exchange Organization of Iran IRAN FARA BOURSE
Iran Fara Bourse Securities of products and services to Exchange (IFB) was the market; Listing, IPOs and incorporated on November Trading in different sections 12, 2008, to be a gate for of Equity market as well majority of companies to as providing a platform for enter the capital market and Unlisted Securities Trading enhance their corporate (UTP). Also, In Structured governance and their Financial Products Market businesses by providing (SFP), various types of Sukuk, easier listing requirements. CDs, Mortgage Rights and Providing IPO and Funds are available. Trading services to the Additionally, IFB owns listed companies, IFB sets a market for Privatization a strategy to diversify of Government-linked the range of instruments Companies (GLCs), which to respond to every risk is a host for Mergers and appetite in the market and Acquisitions as well as every need for fund raising Intellectual Property listing. for the entire lifecycle of the And recently few derivatives companies, by securitizing instrument were added to assets and liabilities. the list of securities at IFB Nowadays, Iran Fara which will be deeper in near Bourse offers a wide range future.
Securities and Exchange Organization of Iran 9 First and Second Markets
As the main markets for the ones in the TSE, the first trading equity shares and and second markets in the their right offerings but IFB have fewer conditions enjoying more functions than and requirements for listing.
Requirements First Market Second Market Registration with SEO √ √ Public Joint-stock Co. √ √ No accumulated loss √ - Profitability of last fiscal √ - year Minimum Market Capi- talization 3.3 0.3 (million USD)
Minimum No. of Share- 200 - holders Minimum Free-Float 10 5 Shares (%) Minimum Activity Re- 2 1 cord (Years) Minimum Profitability 1 - Periods (Fiscal Years) Equity to Asset Ratio (%) 15 -
Base Market
Public limited companies and regulations have been whose shares are not listed registered; on any of the markets but, 2. Companies which are as all public companies have registered but do not meet to, are registered with the listing requirements, and SEO and are eligible to be 3. Companies which are traded on this market with delisted from the TSE or IFB. no restrictions. Registered Convenient private placement, companies are categorized transparent ownership into the following groups: transfer, fair shares pricing, 1. Public companies which and tax relief for companies do not tend to be listed are among the advantages of but according to the laws this market.
10 Securities and Exchange Organization of Iran Third Market
The IFB third market has intend to buy back a specific been designed for specific number of its outstanding types of transactions. Four shares. Companies which services are provided mainly chose the exit strategy or are to institutional investors in delisted from the TSE or IFB this market as follows: would opt for this market. Private Placement: A Underwriting: The market private/public limited acts as the primary destination company including state- for underwriting various owned and private which securities. is not listed on the capital Intellectual Property: The market and also not most recent market in Iran registered at the SEO can capital market to promote request to sell a percentage and support inventions, of its share in this market. researches and new ideas Stock Repurchase: A and direct them to industrial company which is listed investors and venture on the capital market may capitalists.
Modern Financial Instruments Market
All types of financial instruments; especially Islamic securities approved by the Securities and Exchange High Council, are eligible to be listed and traded on this market:
Certificate of Deposit (CD); Sukuk (Murabaha, Ijara, Musharaka); Housing Mortgage Right (HMR); and ETFs
Securities and Exchange Organization of Iran 11 IRAN MERCANTILE EXCHANGE
Established on 20 September on an annual basis worth in 2007 from the merger of the excess of 14 billion USD. IME Tehran Metal Exchange and caters to both the domestic the Iran Agricultural Exchange, and regional markets, bringing IME trades in agricultural, together a host of trade metal and mineral, oil and participants and market petrochemical products in makers from the capital the spot market and gold coin market community, trade and in the futures market. The industrial sectors, hedgers, Exchange handles over 26 retail and institutional million tons of commodities investors.
Trading Floor Local Export Venue Tehran Kish Island Industrial All listed Oil By-Products & Commodities commodities Petrochemicals Agricultural Markets Spot, Derivatives, Peripheral
12 Securities and Exchange Organization of Iran Markets
1) Physical Market: form of auctions in the spot options trading. IME provides The spot trading platform market trading platform futures and option contracts of the exchange which Export Pit: The export pit on saffron, cumin seed and host various standard base of the IME was launched in pistachios. commodities traded as the 2007. Commodities that are feedstock of the downstream offered on the export ring Financial market: industries. Commodities are are solely for the purpose of The financial market is based traded on the main market exporting to the outside the on financial instruments such of IME in the form of cash, borders of Iran and it is not as standard parallel SALAM, credit and SALAM contracts. possible to use and transfer Commodity Certificates Types of products are traded it within the country. The of Deposit, and ETCs. The in the agricultural sector, transactions in the export purpose of these tools in metal and mineral sector, ring are similar to the this market is to finance and oil and petrochemicals domestic ring and the export producers. Through various products. trading floor is located in instruments, it has been tried Side market: Runs the Kish Island. to encourage other investors, market for unconventional in addition to the commodity products and non-exchange 2) Derivatives market: sector activists, to participate or off-grade products in the Comprises of futures and in funding the producers.
Securities and Exchange Organization of Iran 13 Commodities
IME facilitates the trading IME’s Listed Commodities of commodities and products on Different Trading Floors through its markets.
Main Group Sub-Group Commodities Industrial & Steel, Copper, Iron Ore, Aluminum, Zinc and rare Mineral metals concentrate, gold bar Barley, Wheat, Maize, Sugar, Crude Vegetable Oil, Agricultural Frozen Chicken, and Meals, Saffron, Cumin seeds, Products Pistachios Petrochemical Polymers, PP, PE, LDPE, aromatics, SBR feed Spot Market Products stocks, MS, PS Lube Cut, Insulation, Base Oil, Bitumen, Vacuum Oil Products Bottom Various Products with Non-Continuous Offering: Side Market Steel, Scraps, Polymers, Zinc, Chemicals, Minerals, Feeds, Copper, Sulfate, Lime Futures Contracts Cumin seed, Saffron, pistachios Derivatives Market Options Contracts Gold Coins Certificates of Gold Coins, Maize, Barley, Pistachios, Saffron Financial Market Deposit Investment Funds Gold Coins
14 Securities and Exchange Organization of Iran IRAN ENERGY EXCHANGE
The Iran Energy Exchange to ‘The Development of required commodities by the was established in New Financial Instruments means of a transparent and accordance with the Act Law”, 10 percent of the tax fair mechanism in IRENEX. in July 2012. The geo- on income resulting from the Financing and managing economic situation of Islamic sales of commodities listed the risk of suppliers Republic of Iran and its rank and sold on commodity and buyers by financial as one of the world’s largest exchanges is relieved from instruments in IRENEX. oil and gas producers, plus its tax. Risk hedging and outstanding infrastructure in Immunity from the procurement for diverse time electrical power and other formalities of tenders and periods.Reducing trade costs energy resources has made auctions: According to for customers compared to the existence and expansion “The Development of New deals made regardless of the of an energy exchange Financial Instruments Law” exchange (including costs of inevitable in Iran. and clauses of yearly budget closing a contract, marketing As the Statute of the laws, selling and purchasing and etc.). IRENEX – as a self- of commodities listed on Reducing risks associated regulatory commodity commodity exchanges which with trades such as failure exchange- stipulates that all trade based on the rules to fulfill obligations by the energy carriers and energy and regulations of these counterparties and etc. based derivatives shall be exchanges, do not need Presence of standardized listed and traded on one of to hold auctions, tenders and defined contracts also the IRENEX markets. The and other formalities of guaranteeing the standard company’s mission is to sort, through ministries, and quality of commodities develop a market in which government, public and traded on the exchange. trades are done under executive organizations. Possessing a transparency, efficiency and Privilege of marketing and comprehensive regulatory liquidity. supply in the domestic and framework for listing, trade, Some significant and most international rings through registration, deposit and important benefits of listing the network of brokerage clearing and settlement of and trading on Iran Energy members and trading commodities and commodity Exchange are as follows: platforms of IRENEX. based securities. Tax exemption: According Possibility of providing
Securities and Exchange Organization of Iran 15 Market Structure
IRENEX consists of four of power, oil & gas and markets which are the other energy carriers. The physical, derivatives, other derivatives market has three marketable securities panels in which specific and subsidiary markets. contracts are traded. These In the physical market, contracts include: Parallel listed commodities, and Salam Contracts, Futures in the derivatives market, Contracts and Options commodity based securities Contracts. Also each panel are traded on the exchange. has two rings, domestic and Single-shipment and off- international. On the physical grade commodities can be market, trades are conducted traded on the subsidiary in the form of spot, credit, market. The physical market Salam or premium discovery itself has three panels contracts.
Physical Derivatives Electricity Electricity Oil Oil Boards Gas Gas Other energy Other energy carriers carriers
Spot Standard Parallel Salam Contracts Credit Futures Salam Options
Domestic Trading Floor Domestic International
Based on this, all energy applicant, all of which must carriers, provided that be approved by the Listings the supplier has a reliable Council or Supply Committee reputation in the listed of IRENEX as a “main” or commodity’s market, have “similar” commodity. the possibility of fair price On the physical market discovery considering the of IRENEX, based on the volume of supply and if number of suppliers on a the commodity has no certain symbol, the trades limitations regarding the are done in one of the legal pricing and monopoly following methods: Auction, of supply or demand. All-Electronic and Wholesale Furthermore, commitments Supply. stated in the Listing of Trades on the derivatives Commodity & Commodity- market are also done by the based Securities Instruction all-electronic method. must be presented by the
16 Securities and Exchange Organization of Iran Resources of IRENEX 70 brokerage companies with the license to trade on IRENEX. Over 20 oil & gas refineries as suppliers More than 10 chemical plants and several coke making and tar refining companies. More than 40 private and public power plants. 39 electricity distribution companies as buyers (all distribution companies). Over 20 electricity retailers licensed by the Energy Ministry. Listing and trade of more than 250 commodity-suppliers and contracts. All-electronic trading platform specially designed for physical and derivatives markets All-electronic platform for registration, deposit and settlement of trades.
Listing procedures in IRENEX The listing of products and backed Securities Instruction other financial instruments application for admission takes place under the and listing together with the supervision of Iran Energy documents subject of the Exchange Listing Council and present “instruction” must be according to the Listing of submitted to the exchange Commodity & Commodity- by the admission advisor backed Securities Instruction. and be registered with the Based on Listing of exchange. Commodity & Commodity-
Securities and Exchange Organization of Iran 17 CENTRAL SECURITIES DEPOSITORY OF IRAN
Founded in 2005 as a public It takes over the registry, capital market and safekeeping joint stock company, Central clearing, and settlement investors’ financial properties. Securities Depository of Iran issues related to equity, Islamic Responsible for taking care (CSDI) is the sole registry securities (Sukuk), derivatives, of post-trade-related tasks, entity and custodian in the energy contracts, electricity, ranging from the deposit and Iranian capital market using mercantile products by means registration of securities to the hybrid registry system of a full-fashioned registry the clearing and settlement with a fully dematerialized system and multi-currency of the transactions carried book entry system. (USD, IRR, Euro) with a high out in the financial market, Enjoying a history of 45 years, netting efficiency of 85 it plays a significant role in the Iranian capital market percent. managing systemic risk. To this was demutualized in 2005 The prospects of CSDI are to purpose, CSDI has designed and as a result, CSDI was prepare the infrastructures and launched the service legally segregated from the indispensable for the of Settlement Guarantee rest of the capital market and efficiency, continuity, and Fund (SGF), along with other commenced to work as an growth of the economy of measures, towards managing independent and separate the markets under its cover. the risks related to the clearing entity. It is the central registrar CSDI provides thriving and house. and clearing house for all the secured financial investment Not only is IT a crucial element exchanges in Iran including infrastructures to contribute in CSDI roles, but also Tehran Stock Exchange (TSE), to the development of a developing the capital market Iran Fara Bourse (IFB), Iran fair and transparent capital infrastructures in the pre- and Mercantile Exchange (IME), market both nationwide and post- trade functions is not and Iran Energy Exchange worldwide by guaranteeing achievable unless through IT (IRENEX). security and efficiency in the solutions.
18 Securities and Exchange Organization of Iran FINANCIAL INSTRUMENTS
Tehran Stock Iran Fara Bourse Iran Mercantile Iran Energy Exchange Exchange Exchange
Equity SUKUK Industrial Electricity Futures Funds: ETFs, Options & Mineral, Oil ETCF, VCFs, Fund Sukuk Agricultural Gas of Fund, Private ETFs Products Other Energy Equity Funds, Petrochemical Carriers Crowdfunding Products Spot Mortgage Rights Oil Products Credit Islamic Treasury Futures Contracts Salam Bills Certificates of Standard Parallel Put Option Deposit Salam Call Option Investment Funds Futures Merger & Options Acquisition Underwriting & IPOs Intellectual Property Market Finstars
Securities and Exchange Organization of Iran 19 MARKET ATTRACTIVENESS
INDUSTRIES & FINANCIAL INSTRUMENTS AND INSTITUTIONS
Iran geographically is located Additionally, there is a in a region that benefits miscellaneous collection from a wide range of natural of financial instruments resources. This attribute gives and institutions that boost more attractiveness to the the chance of financing capital market in Iran. and satisfy investors with Iran capital market covers different levels of risk-taking. many of the active industries Here is information about in the country. So, it is a active industries, financial great chance for investors to institutions and issued sukuk diversify their portfolio. in 2019.
Industries- Percentage
27% 22%
3% 14% 3% 3% 7% 5% 4% 6% 6%
Manufacture of chemical products Manufacture of basic metals Mining of metal ores Manufacture of coke, refined petroleum products and nuclear fuel Banking and financial institutions Multidisciplinary industrial activities Pharmaceutical products Automotive and manufacturing parts Post and telecommunications Electricity, gas, steam and steam supply others
20 Securities and Exchange Organization of Iran Goverment-Issued Sukuk
19% 3% 13% 65% Salam Islamic Treasury Notes(ITN) Manfaah Mushrakah
Corporate- Issued Sukuk
13% 13% 29% Salam Murabaha Asset-backed Securities Mortgage-backed Securities Manfaah 0% Musharakah Ijarah
2% 6%
37%
Banks and Municipality- Issued Sukuk
100% Musharakah
Securities and Exchange Organization of Iran 21 Companies & Financial Institutions 2018 2019 Funds 213 215 Brokerage firms 108 108 Investment banks 9 9 Financial advisers 17 17 Portfolio managers 14 20 Data processing companies 5 5 Investment companies 107 109 Holding Companies 83 83 Rating Agencies 1 3 Total 557 569
Companies & Financial Institutions
250 200 150 100 50 0 Funds Companies Rating agencies Rating Data processing processing Data Brokerage Firms Brokerage financial advisers Portfoli managers Portfoli Investment banks Investment holiding Companies Investment Companies Investment 2018 2019
22 Securities and Exchange Organization of Iran TAX INCENTIVES
Tax exemptions are among for Development of New law, the proceeds gained from those factors that has a Financial Institutions and selling assets to the SPV so as considerable effect on Instruments”, the income of to provide financial resources investors decision making issuance and redemption of through the public offering process. A list of Iran’s capital funds’ units will be exempted of securities shall be exempt market tax exemptions is from paying income and from tax and no tax and presented below. value-added taxes to increase charges whatsoever shall be their attractiveness. levied on the transfer of such 1. Tax exemption on profit securities. (loss) of shares and share 5. admissibility of share rights: In most financial dividend and transaction fees: 7. Exemption of income tax markets, investors have to according to note 2 of article 7 for listed and OTC companies: pay taxes on capital gains; of the “Law for Development according to article 6 of the while this does not apply to of New Financial Institutions “Law for Development of the Iranian capital market and Instruments”, The profit New Financial Institutions under article 143 of the and fees paid or allocated for and Instruments”, ten percent “Direct Taxation Act”. securities as referred to in note (10%) of the income tax of (1) of this article, excluding the companies whose shares 2. Tax exemption on share the dividend and shares of have been listed for trading dividends: according to companies, and the profit on the domestic or foreign note 4 of article 105 of the gained on investment units exchanges and five percent “Direct Taxation Act”, the of funds, on the condition of (5%) of the income tax of income from investments is registering these securities the companies whose shares tax-exempt. While in many with the Organization, shall have been listed for trading on countries, investors must pay be regarded as parts of the domestic or foreign OTC dividend tax separately. acceptable expenses for markets shall be exempted 3. Tax exemption on mutual assessment of taxable income with the approval of the SEO. funds proceeds: according of such securities issuer. Tax exemption for goods to note 1 of article 133 of 8. Tax exemption of SPVs: sold on commodity exchanges: the “Direct Taxation Act”, this 6. according to article 11 of according to article 6 of the exemption creates a great the “Law for Development of “Law for Development of attraction for mutual funds New Financial Institutions and New Financial Institutions and directly benefits their Instruments”, the SPV shall be and Instruments”, ten percent investors. With this article exempt from payment of any of the income tax gained from in place, the return of these tax whatsoever and transfer the sale of the commodities funds increases and more tax, charges and income listed on the commodity resources are attracted to tax for that category of the exchanges shall be exempted them. assets for which the funds are subject to the approval of the 4. Tax exemption on the raised through the issuance of SEO. transaction of units: according securities for public offering. to article 7 of the “Law Moreover, in article 12 of this
Securities and Exchange Organization of Iran 23 MARKET PERFORMANCE
The commitment of listed the best places to collect public companies to providing and savings and inject into the disclosing quarterly, semi- production system. TSE New annual and annual financial Index and IFX had a growth statements and other of 133.58% and 119.37% essential updated reports has respectively in December made the TSE and IFB more 2019 in comparison with transparent and easier to December 2018. The trend of monitor. Moreover, the TSE indices changes is presented and IFB as equity markets are below.
TSE NEW INDEX
400,000.00
300,000.00
200,000.00
100,000.00 Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
2018 2019
IFX
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
2018 2019
24 Securities and Exchange Organization of Iran INVESTORS PROTECTION
A. INVESTOR EDUCATION
Leading the investment flows 2. Making promotional clips 5. Close cooperation with and liquidity into the capital and games: On a regular basis, other relevant entities: the market where the businesses the SEO, through SIDSCO, SEO has been working jointly can finance and boost the has some promotional with the Ministry of Education production is considered a clips, advertisement, and to include financial subjects major need for economic games created based on the in school curricula so that development. So one of the emerging needs of the capital students get more familiar main steps is inviting investors market participants aiming at with the topics of investment. to the capital market, but they educating current investors may hesitate since they suffer and investors-to-be. The SEO from lack of information has made sure these clips, 6. MBA and DBA of Capital about market environment advertisement, and games are Market: The main goal of and investment mechanism. extensively seen, broadcast, Capital Market’s MBA and and played through different DBA courses is training The SEO looks at investor platforms. qualitative and skilled education as a road toward workforce which are held in a successful market and as 3. Conducting financial- 2 terms. Additionally, there a consequence a flourishing related competitions for are scholarships for applicants economy. different ages: there are who needs financial different forms of competition Regarding the importance of assistance. held and organized for enhancing financial literacy, different ages by SIDSCO, the the SEO has undertaken most important of which is many programs and executed 7. Capital Market Qualification Stars League of Stock Market. lots of educational plans. Exams: The SEO in order to Some of the initiatives in this 4. Organizing and holding determine the professional regard are presented here. domestic and international competence standards for events: SIDSCO organizes employment in capital market 1. Publishing books: there are and holds different domestic financial institutions, holds plethora of books shedding and international exhibitions, and supervises Capital Market light on the basics of fairs, seminars and gatherings Qualification Exams that lots investment, and introduction for the public. One of the of applicants take part in, on financial instruments and outstanding events the SEO, every year. institutions. The complete list through SIDSCO, holds of the books published in this annually is International realm is accessible on Exhibition of Bank, Exchange http://www.boursepub.ir. and Insurance (FINEX).
Securities and Exchange Organization of Iran 25 Also, here is information about SEO’s educational activities in form of figures.
Number of Motion Graphics
Number of Uploaded Clips in BourseMedia Number of Online Competitions on SAHMANEH Website
Number of Schools Having Stock Exchange Courses Number of Workshops
0 50 100 150 200 250 300 350
2019 2018
16 14 12 10 8 6 4 2 0 2019 2018 Number of Children Investment Culture Events Number of Schools having Participanting in Fintech Events
26 Securities and Exchange Organization of Iran B. INVESTOR PROTECTION
Secure Environment factors: education, market what the SEO makes efforts efficiency and applicable to achieve. The SEO is responsible for regulations and instructions. providing an environment The following table presents Knowledgeable investors in which the investors feel some of the systems which in an efficient market with protected and safe. These guarantee investor protection practical rules and regulations preconditions could be & education in the market. will feel protected and this is summarized into three main
Title Address Function Comprehensive Database of All Listed Codal System codal.ir Companies Capital Market Regulations cmr.seo.ir Presenting Capital Market Regulations System SEO Comprehensive icmc.seo.ir Professional Certifications Affaires Education System Comprehensive Virtual irvex.ir Investment Rehearsal Exchange for Investors Financial Literacy investor.seo.ir To Enhance the Level of Financial Literacy Enhancement
Enhancing Transparency mis-information, the SEO Financial Instruments and and Creating a Fair Market established the Office for Institutions and Listing New Whistleblowers. The SEO attempts to create Companies a transparent and fair market Also, the SEO in order to For deepening the market, by continuously enacting enhance disclosure and the SEO plans to introduce and revising bylaws and transparency with the more novel and newer instructions and also by ultimate objective to provide Shariah-compliant financial inspection of the entire an effective market for instruments and also issue market participants. This the investors has recently licenses for establishing new environment wins the departmentalized the Issuers financial institutions. investors’ trust and adds more Affairs into four offices. The It is worth noting that several depth to the market. The newly-established offices new approvals have already investors’ trust in the capital are Office of Supervision been made by the SEO in this market is on the top of the on Chemical Group, Office regard. Wakala, Mudarabah, SEO’s priorities and will get of Supervision on Financial Reinsurance Sukuk and also even stronger in the future by and Services Sector Issuers, credit rating agencies services the SEO’s commitment and Office of Supervision on for Sukuk issuance are among novel measures. Industry and Mine Group recent promising events and Office of Supervision on In line with IOSCO’s that make the market more Trusted Auditors and Financial standards and also to diversified and offer more Reporting. enhance transparency and investment opportunities for prevent mis-buying, mis- Deeping and Widening the investors. selling and dissemination of Market by Introducing New The SEO is working hard in
Securities and Exchange Organization of Iran 27 this realm to introduce more investment. Additionally, one centers, virtual space and investment products and of the prominent problems, also applying new financial entities. unanimously agreed, is that instruments and institutions the people are not that which are low risk but more Having a Bigger Share in familiar with capital market practical. National Economy rules and mechanism, but the Expanding International The stock market’s effect on SEO has been working round Relations and Strengthening the gross domestic product the clock to enhance and the SEO’s Status in (GDP) is undeniable. A boost the level of financial International Settings flourished market can boost literacy of current and the GDP and accordingly potential investors and pave More active participation in the national economy. But the way for more industries international associations, the main challenge is how to and companies to participate Linking Iran’s capital market increase capital market’s share in the capital market. to target markets, in GDP. Although, funds emergence Promoting Iran’s capital Supporting new businesses in the market decreased market in international and startups are best ideas the risk of investment settings, for making the future of significantly, but the SEO the economy. Also, inviting has many ongoing plans for Protecting foreign investors new industries to the capital improving investment culture in Iran’s capital market. market will boost the diversity and knowledge by means and improve the chance of of publications, educational
28 Securities and Exchange Organization of Iran RELEVANT RULES & REGULATIONS
The regulatory and legal amendments and revisions. infrastructure of the Iranian Below the main regulations capital market encompasses related to foreign investment the entire sectors and has been depicted. All these activities of the market and rules and regulations are has always been subject accessible on to continuous and precise https://en.seo.ir/.
1. Securities Market Act of The Islamic Republic of Iran 2. The Law for Development of New Financial Instruments and Institutions 3. The Anti-Money Laundering Act 4. The Executive Bylaw of The Securities Market Act 5. Executive Bylaw of the Anti-Money Laundering Act 6. The Bylaw Governing Foreign Investment in the Exchanges and OTC Markets 7. The Rules Governing Issuance of Securities Transactions License to Foreign Investors 8. Iran's Foreign Investment Promotion and Protection Act (FIPPA) 9 Executive Directive of Regulations Governing Foreign Investment in Iranian Exchanges and OTC Markets
Securities and Exchange Organization of Iran 29 INTERNATIONAL MEMBERSHIP
International Organization of Securities Commissions (IOSCO) is the international body that brings together the world’s securities regulators and is recognized as the global standard setter for the securities sector. IOSCO develops, implements and promotes adherence to internationally recognized standards for securities regulation. The SEO became an associate member of IOSCO in 2016. Then it became an ordinary member of IOSCO in 2018. The SEO is a member of AMERC, GEM, Listing Group Task Force, Fintech Network Task Force and Sustainability Finance Task Force in IOSCO.
The Islamic Financial Services Board (IFSB) serves as an international standard-setting body of regulatory and supervisory agencies that have vested interest in ensuring the soundness and stability of the Islamic financial services industry, which is defined broadly to include banking, capital market and insurance. The SEO became a member of IFSB in 2011.
The Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Cooperation (COMCEC) is the main multilateral economic and commercial cooperation platform of the Islamic world. COMCEC serves as a central Forum to address the common development problems of the Islamic Community and provide solutions to them. The SEO became a member of COMCEC in 2012.
IFIE is a global organization that supports the building of stronger resources for strategies and programs implementing financial education, financial capability and investor education goals within and across jurisdictions and within and across organizations. IFIE hasa diverse worldwide membership of securities regulators, SROs, central banks, financial education program deliverers, exchanges, networks of associations and individuals engaged in education and service to individual investors and seeks to use those global networks to create impact on the ground including through a regional chapter program which includes IFIE Chapters in Americas and Asia, and Chapters being built in Africa and Europe. The SEO became a member of IFIE in 2018.
The purpose of the World Federation of Exchanges is to contribute to the development, support and promotion of organized and regulated securities and derivatives markets, in order to meet the needs of the world’s capital markets in the best interests of their users. The TSE, the IFB, and the IME of Iran are members of the World Federation of Exchanges.
30 Securities and Exchange Organization of Iran RELEVANT WEBSITES
https://en.seo.ir/
https://tse.ir/en/
https://www.ifb.ir/
http://en.ime.co.ir/
http://en.irenex.ir/
https://en.csdiran.com/
Securities and Exchange Organization of Iran 31 CONTACT
Tel: (+98-21) 88679578 Email: [email protected] Linkedin: https://www.linkedin.com/company/securities-and- exchange-organization-of-iran-seo- Address: Securities and Exchange Organization, No. 13, Mollasadra Ave, Tehran, Iran, Zip Code: 1991915814
32 Securities and Exchange Organization of Iran