The Securities and Exchange Organization, Iran's stock market regulator, said it has penalized 21 CEOs of listed companies for not abiding by SEO regulations and warnings have been sent to many more, head of the SEO legal department said.
He said the managers violated rules that oblige listed companies to designate market makers and facilitate liquidity of shares.
"The eligibility of 21 CEOs for managerial posts were suspended for six months," Jafar Jamali was quoted as saying by the Securities and Exchange News Agency (SENA).
"Mangers also face pecuniary fines," Jamali said, adding that 157 other CEOs have received written warning" ro play by the rules.
Those unwilling to uphold the law could find themselves in court "if their noncompliance is perceived as those akin to economic saboteurs.”
After historic gains from the beginning of the current fiscal year (March) Tehran’s share market has taken a drubbing since mid-August that continued until last week. The benchmark of Tehran Stock Exchange, TEDPIX rocketed to 300% growth before diving deep into the red.
Market observers blame major shareholders and institutional traders for the unprecedented share selloff and collapse of markets indictors. Big stakeholders increased offers when prices reached a peak and let it plunge by refusing to inject a portion of the earnings into the market or assign market makers.
Market makers, or liquidity providers operate as wholesalers buying and selling securities to balance the market—the prices they set reflect market supply and demand.
They help the market function. If investors want to sell a particular security, they are there to buy. Similarly, if they want to buy a stock, they are at hand to have that stock available to sell to investors.
Iran’s market regulator has instructed listed companies to designate market makers or face suspension.
"All listed companies are obliged to designate market makers and if they do not they can be delisted or their managers disqualified" the SEO managing director, Hassan Qalibaf-Asl, has warned.
Regulations governing the operation of market makers are now in place and they have been asked to participate actively, Qalibaf-Asl said. "Stock market rules stipulate that listed companies must have at least one market maker."
He said market making is used by 298 ticker symbols, which accounts for almost half of the total listed companies at the TSE and Iran Fara Bourse.
"Market makers will improve the liquidity of shares and control market volatility. They will help lift supply and demand and aid securities circulate between buyers and sellers."
