A Guide to Tehran Stock Exchange (TSE) Promising Destination for Investment TSE at a Glance Trading Days Saturday to Wednesday Hours 9:00 to 12:30 (preopening: 8:30 to 9:00) System Automated, order - base Mechanism Auction, continuous trading Market Maker Mandatory in all markets Shares & rights, participation certificates, sukuk, bank certificate of Exchange-traded securities deposit, stock futures and option contracts Currency Iranian Rial Diversified Market Prices (minimum, maximum, last and closing), indices, companies' On-line information information, trading volume and quotes Exciting Opportunities Depository, Clearing and Settlement Depository and settlement Central securities depository of Iran (CSDI) T+2 (shares and other share based securities) – T+1 (participation Period certificates, sukuk, fixed income) Settlement in brokerage level and nonphysical settlement in Settlement customer level Clearing Multilateral netting Taxes Dividend Tax exempt Capital gain Tax exempt 0.5% of trading value (Since July 2018, transaction tax has been Transfers (seller) reduced to 0.1% temporarily) Trading Commissions (Shares & Rights) Buyer (%) Seller (%) Securities & Exchange Organization (SEO) 0.03 0.03 TSE 0.032 0.032 Broker 0.38 0.38 Central Securities Depository of Iran 0.012 0.018 (CSDI) Tehran Securities Exchange Technology 0.01 0.015 Management Co. Total 0.464 0.475 Structure and Regulations Legal Joint stock Regulations Self-regulated under SEO supervision Volatility Share ±5%, right ±10%, debt ±5% and ETF without volatility Closing pricing Weighted average with base volume Foreign investment Yes (According to foreign investment bylaw) 2 TSE A Guide to TSE 3 History TSE was established in February 1967. During its first year of activity, only six securities (2 companies equities and 4 other instruments) were listed in TSE. Then Government bonds and certain state-based certificates were traded in the market. With half a century of experience, today TSE has evolved into an exciting and growing marketplace where individual and institutional investors trade securities of about 326 companies with over USD 95 billion market capitalization (July 2018). Tehran Stock Exchange celebrated its 50th anniversary in 2018. Five decades of activity in Iran’s economy has turned TSE a pillar of development in the country. Listed companies are among 40 different sectors, and recently several new entities and instruments have been introduced in the capital market of Iran, for more than 10 million registered shareholders, both as individual and institutional. 4 TSE A Guide to TSE 5 Timeline 1966 1967 1975 1992 1995 2002 2003 2005 2006 2007 2010 2012 2013 2014 2015 2016 2017 2018 Ratification Inauguration Progress due Joining Joining Market Authorizing New Demutualiza- Launching Approving Launching Trading Launching Improving The first Launching • • • • •Upgrading • of the to international Federation development: listed structure; tion of TSE the the a localized hours the first ETF liquidity infrastruc- IPO through Index Basket establishment Federation of Euro- companies privatization regulations derivatives extension; through tures; book building Futures Ratification Launching Ratification law of • of Stock Asian Stock • to issue debt • of state- governing product – lowering mechanism; of the law for trading floors of new Launching the stock Exchanges Exchanges; securities owned the foreign embedded • base •Debt market development in provinces; securities online Commence- exchange (WFE); full founding companies investment put option volume; extension; • of producing market law trading ment of on- member member Principal in the firms’ shares • access for Extending •Inauguration line access steps for exchanges • ownership; futures daily price of options to options disclosure of and OTC contracts market; markets; limits market; • Ratification information, of the law for training and TSE self- •Launching • •Upgrading tax incentives development futures listed the trading for the TSE of financial market (single system listed products stock futures) companies and online trading 6 TSE A Guide to TSE 7 Legal Structure The new Securities Act which is more TSE has been demutualized i.e. the membership comprehensive and advanced than the previous organization entity was turned into a public joint TSE Family /5 December 2018 one was passed on 16 November 2005 by the stock company. Iranian parliament to support investors’ rights and The Council is the highest authority and is TSE aimed at organizing, preserving and developing a responsible for all related policies, market transparent, fair and effective market. strategies, and supervision of the market. TSE is conducted and supervised by a seven-member board of directors that sets strategy and operating Under the new Act, the Securities & Exchange SEO will be responsible for administration and policy. These individuals, elected for a term of two years by shareholders’ General Assembly appoint High Council and the Securities and Exchange supervisory duties, governed by the Board of the Chief Executive Officer. The CEO’s term of office is for a renewable two-year tenure. Organization (SEO) were introduced and created Directors. The SEO’s Board of Directors will be as regulators of the Iranian capital market and elected by the Council. Organization Chart General Iranian Capital Market Compensation Assembly Committee Board of Strategic & Risk Securities & Exchange High Advisors Management Council Directors Committee Board of Internal Directors Auditing Secretariat Auditing Committee Tehran Stock Exchange Securities & Exchange Central Securities Depository Technology Management Co. Organization (SEO) of Iran (CSDI) (TSETMC) Advisors CEO CEO Office Security Tehran Stock Exchange Iranian Mercantile Iran Farabourse Iran Energy Exchange Public Relations (TSE) Exchange (IME) (IFB) (IRENEX) & International Legal &Contracts Affairs Construction Development Financial Institutions Management Investment Investment Brokers Asset managers Mutual funds Data vendors banks companies Issuers and Development Logistics Deputy Market Deputy Members Deputy Deputy Research & Finance Issuers Operations Development Securities & Exchange Brokers Iranian Institutional Investors Association Association Administration Statistics & Listing Organizational Information Excellence Information Market Technology & Members Investment Systems Surveillance Development 8 TSE A Guide to TSE 9 Mission Launching a fair, efficient and transparent market equipped with diversified instruments and easy access to create added value for the stakeholders. Vision The region’s leading Exchange and country’s economic growth driver Goals Roles of TSE Increasing the number of listed companies, improving market liquidity TSE’s primary roles are: Establishing, organizing and managing of the Enhancing TSE brand and promoting the Stock Exchange in order to trade listed securities transparency as the company’s image Listing of securities Further development of technology Prescribing membership requirements for infrastructures to enhance market surveillance members and supervising their performance, and Developing financial knowledge and improving regulating their activities investment and shareholding culture in Iran by Overseeing the transactions of the Exchange educational programs and use of mass media to listed securities reduce investment risks and increase transparency Monitoring the performance of issuers of the Developing channels of knowledge-sharing listed securities with other exchanges Processing and disseminating the information regarding the securities orders and transactions Derivatives market expansion by introducing of securities new options contracts Introducing new kinds of ETFs Introducing new kinds of project funds Increasing the volume of floating stocks Expansion of debt securities by introducing Islamic treasury bills and participation certificates 10 TSE A Guide to TSE 11 Market Segmentation Main market First market Equity Subsidiary market Second market Participation Ijarah papers Capital and Shareholders Debt Sukuk Istisna The capital stock of the Company is equal to the Class two: Financial institutions other than sum of IRR 1.5 trillion, which is composed of 1.5 brokerage firms who shall receive the activity Certificate of Murabaha billion registered common shares at IRR 1000 license from the SEO. deposit each. Shareholders of the Company shall be Class three: All persons other than class one or classified as follows: two above. Class one: Persons who have received the The maximum percentage of shares belonging TSE license for brokerage activities in compliance with to each class of shareholders defined above will the Stock Exchange Establishment Law [1966] or Equity be determined by the SEO. At the moment, no those who shall receive the license for broker/ individual shareholder of any class can hold more dealer activities in compliance with the Securities than 2.5 percent of the Exchange’s total number Act [2005] and shall be accepted as the members Real estate of shares. The maximum ownership percentages of the TSE. are 40, 40, and 20 percent respectively for each ETF class. Fixed income Owners of TSE (May 2018) Balanced Shareholders No. of shareholders No. of shares Percent Brokers 80 509,469,986 33.96 Financial institutes 95 589,139,986 39.28 Individual investors 6,721 401,390,028 26.76 Options Total 6,896 1,500,000,000 100 Paid in capital (Rials) 1,500,000,000,000 Embedded Derivatives Market capitalization (Rials) 4,938,000,000,000