Almost 97.7 million commodity-linked certificates of deposit (CD) were traded at the Iran Mercantile Exchange in the first nine months of current fiscal year (March 20-Dec. 21).
Value of CDs was reported at 67.59 trillion rials ($270 million) – up 174% compared to the corresponding period last year. In volume terms the trade was 124% higher on an annualized basis, according to the IME news agency imereport.ir.
With 60.46 trillion rials ($240m) the gold-based CD topped the list in value terms accounting for 89% of the trade in the three quarters. Investors exchanged 34.04 million gold CDs in the period or 35% of the total.
Saffron, aka red gold, was the next best traded CD in value terms. However, it was on the top in the number of deals. As per IME data ‘Negin Saffron’ was the best traded CD as the world’s most expensive spice recorded 58.9 million deals worth 5.76 trillion rials, accounting for 60% of volume and 9% of the value of the CDs. Negin Saffron is considered as the highest-quality of Iranian saffron.
The IME also hosted 3.66 million deals for another company ‘Poushal Saffron’ worth 266.8 billion rials. Investors at IME exchanged 817,779 CDs for pistachio worth 994 billion rials or 1% of the total in value and volume.
Likewise, 236, 863 CDs for cumin worth 100.49 billion and 12,375 CDs for raisin worth 4.6 trillion rials were logged.
Iran has four capital markets, namely IME, Tehran Stock Exchange, Iran Fara Bourse (junior equity market) and Iran Energy Exchange. IME is a commodities exchange based in Tehran. Founded in 2006, it deals in agricultural, industrial and petrochemical products in the spot and futures markets.
IME has strived in recent years to diversify and expand financing methods for farm products, including creating platforms for trading future contracts for saffron, cumin and pistachio.
It launched a futures contract for pistachio in 2019. IME's officials say the initiative is the first derivative market for pistachio trade in the world. They hope the market would emerge as a center for the reference price of the delicacy cherished all over the world. The mercantile exchange launched cumin and saffron futures contracts in 2018 to help domestic production of the two spices.
Commodity CD is a security indicating ownership of the holder on a particular amount of a commodity supported by standard warehouse receipt issued by the warehouses certified by the Securities and Exchange Organization, the Iranian capital market regulator.
Selling a CD in the primary market means selling the stored or deposited commodity by the owner, and buying it means buying of such commodity. CDs securitize a company’s product inventory and offer buyers easy ownership of goods without the usual hassles of storage and insurance.
