By Mahnaz Abdi

Institutionalization seriously pursued in Iran’s stock market

February 8, 2020 - 12:19

TEHRAN- Stock market in Iran has been developing more and more in recent years and the space of its expansion has been outstandingly huge over the past months as it’s been attracting many investors luring them away from the parallel markets of gold, forex, and real estate.

Different factors have contributed to the recent advances in the stock market, some initiated by the market itself and some triggered by the external elements.

Of the internal improving factors, it could be referred to applying new financial instruments in the four major stock markets of the country including Tehran Stock Exchange (TSE), Iran’s over-the-counter (OTC) market known as Iran Fara Bourse (IFB), Iran Mercantile Exchange (IME), and Iran Energy Exchange (IRENEX).

And among the external factors, instability in the previously mentioned parallel markets can be named as the most important one.

While those factors have played significant role in the recent expansion and high performance of the stock market in Iran, promoting the culture of investment making in this market has been vigorously provoking the investors.

And while the stock market is maturing rapidly in the country, Iran’s Securities and Exchange Organization (SEO) is seriously pursuing institutionalization of investment making in this market.

It is in fact a prioritized program of the organization, as several times emphasized by its officials.

Stressing the significance of institutionalization in the stock market, SEO Head Shapour Mohammadi says the organization is considering itself committed to make more and more strides in this field.

“We have various programs in this due, among them holding different exhibitions and competitions can be mentioned”, the official has recently stated while underscoring the organization’s fruitful relation with the media to materialize this target.

Also, Ali Sahraei, the head of Tehran Stock Exchange (TSE), says that this exchange market has managed to attract a huge number of investors over the past ten years through creating necessary infrastructure while proper institutionalization.

“As the major stock market in the country, TSE has a national and regional approach toward promoting the financial knowledge of the people for leading the liquidity toward economic development of the country and in this due it considers institutionalization in the stock market one of its social responsibilities”, the official said on Thursday.

“Promoting the culture of investment making in the stock market is seriously followed up and evaluated at TSE, and we are now witnessing the prominent results of institutionalization and offering various trainings to the investors at this market since the four past years”, Sahraei further highlighted.

So, institutionalization, now a principal strategy in the Iranian stock market, is on the agenda and several events are contributing to this objective, some of them have been previously initiated and some initiatives are new. Three major contributing events in this due come as follows.

FINEX 

While Iran’s International Exhibition of Exchange, Bank and Insurance (known as FINEX) plays an important role in elevating the financial status of the country, holding this exhibition is also one of the major measures to promote culture of investment making in the stock market.

During the last edition of the exhibition (FINEX 2019), which was held in April, 2019, SEO head said this exhibition’s performance is unique in terms of institutionalization in the stock market.

“We hold FINEX every year as an important event playing some great part in institutionalization, and in this year’s edition of the exhibit we are specifically following up the issue of training and transferring knowledge to the investors,” Shapour Mohammadi reiterated.

“Through this financial exhibition the people can also indirectly learn how to trade stock with making lower risks”, he further noted.

 League of Stock Market Stars

Aiming at promotion of stock science and development of entrepreneurship in the country, Securities and Exchange Organization held the first round of League of Stock Market Stars (a one-month competition between 10 teams from renowned universities of Tehran) in 2017.

The second round of the league was participated by 34 teams from 34 universities of the country competing in a two-month contest in 2018.

And the third round, held in 2019, was attended by 60 teams from Iranian universities and five teams from the universities of some other countries.

This competition is targeted at familiarizing the society with the stock market and to test the practical knowledge of business and finance students, in a bid to elevate the financial knowledge in the society.

It is a great help to institutionalize investment making in the stock market, according to the SEO head.

Algorithmic Trading Competition

Algorithmic Trading Competition is another event helping promotion of investment making culture in the Iranian stock market.

Securities Information Dissemination and Services Company (SIDSCO) has so far held two rounds of the competition which is aimed at helping the country’s stock market attain the global standards, more contribution of domestic elites in the information technology and financial sectors to this market, and elevating knowledge of those active in the stock market.

In the second round of the competition, which kicked off in mid-January and will wrap up at the end of the current Iranian calendar month of Bahman (February 19), 27 teams are competing in three categories of fixed income securities, stocks, and problem solving challenge.

Promotion of new concepts of the stock market in the society and introduction of software capabilities and modern instruments are the other objectives of the competition.

 Institutionalization a necessity to preserve current development

It seems that stock market is now lagging the parallel markets of foreign currency, gold, and real estate behind in the country.

TEDPIX, the main index of Tehran Stock Exchange, closed at an all-time high of 302,103 points at the end of the first half of the current Iranian calendar year (September 22, 2019), and it has been experiencing more record highs in the second half as well.

The index also witnessed its highest ever weekly rise in the Iranian calendar week ended on January 17, as it rose 45,638 points to 399.445.

The other stock markets of the country are also seeing major advances while attracting more investors.

According to the TSE head, as there is downturn in the other markets of the country the stock market is being highly welcomed by the investors during the present Iranian year.

Sahraei also believes that as some markets like real estate market requires large amount of investment that many people cannot afford, stock market is a good option for the micro investors or for those who want to make short-term investment making.

So, from many aspects, it could be said that the stock market has come to the fore, spurring more and more investors. 

Obviously, to preserve its development trend, and even accelerate it, this market is required to take necessary steps, among them “Institutionalization” comes under the spotlight. Promoting culture and knowledge of investment making is in fact a driving factor in this market.

And as the capital market experts opine, now that many investors are being attracted to the stock market, through laying the necessary ground for more training and institutionalizing, a bright future can be expected for this market.

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