The share market regulator is working on a plan of action to minimize the impact of big shareholders performance on retail trade in the bourse, the CEO of Tehran Stock Exchange said.
"The blueprint should help curtail the sway of big stockholders" on the stock market, Ali Sahra'ee wrote in a note in his Twitter account, the Securities and Exchange News Agency reported.
Sahra'ee said the draft plan was finalized at the TSE's board meeting on Sunday and will come into effect soon. "In the plan the frequency of deals in retail and block trade will be monitored regularly.”
The move is seemingly in line with a series of the measures taken by the regulator in the past five months to curb steep volatility in the share market.
The focus will be on the performance of institutional traders and main shareholders who are often involved in and blamed for disrupting the performance of the bourse resulting in huge losses for retail investors.
A prolonged downturn and chaos in the market has drawn the ire of millions of retail investors who in the recent past were encouraged by the government to put their money in shares, which made historic gains in the first five months of the current fiscal year when the TSE benchmark jumped more than 300%.
News outlets last week quoted Mahmoud Goudarzi, TSE deputy for market affairs, as saying that a plan is in the making to control the "market impact" of deals by big stakeholders.
"What we need to know is how retail and big shareholders are involved in a particular stock. At times deals by big shareholders impact the performance of retail traders," he said.
In financial market jargon, market impact is the effect that a market participant has when he/she buys or sells an asset. It is the extent to which the buying or selling moves the price against the buyer or seller, i.e. upward when buying and downward when selling.
"Market Impact seeks to set a threshold for deals of a particular ticker based on the ticker's trade background. After the threshold is set, investors are not allowed to trade higher than the threshold at the regular trading session," Goudarzi said, noting that "investors should trade in blocs above the threshold".
