Brokerage companies in Iran’s capital market processed less deals in the last Iranian month to May 21 amid low liquidity of stocks.
Stock brokers processed shares worth 1,380 trillion rials ($6.2 billion) last month -- down 25% compared to the month earlier when shares worth 1,850 trillion rials ($8.4b) were processed.
Online trade accounted for 843 trillion rials or 60% the total processed deals, according to way2pay.ir, a website covering developments in the payment industry. The contribution of market makers too was meager at 5.27 trillion rials.
Brokerages processed deals in shares, bonds, derivative contracts and exchange-traded funds. The deals in bonds were worth 20 trillion rials, futures and other derivatives 4.68 trillion rials and ETF units 185 trillion rials.
Like stocks, ETF units are traded on exchanges and can be bought and sold via brokers or online trading platforms.
Decline in processed deals is linked in part to large scale capital outflow by retail investors disheartened and disappointed that the share market, battered since last summer, will require much more time to get back on its feet.
The drop is linked also to the low liquidity of shares and lack of buyers due to limits set on daily price spread set by the regulator.
Ostensibly trying to protect retail investors and bolster the bourse, the SEO temporarily set daily price spread at -2% to +6% before restoring it to the previous ±5% this month. The ill-advised move undermined the liquidity of shares.
While there are 111 brokerage firms operating in the stock market, it is dominated by a handful of brokers such as Mofid Securities Company and Agah Brokerage.
Mofid handled 20% of deals worth 267 trillion rials last month and nearly 90% were processed via online platforms.
Agah handled deals worth 110 trillion rials or 4% of the total followed by Pasargad Bank Brokerage Company with 93 trillion rials.
