Investors at the Iran Mercantile Exchange traded almost 360 million commodity-based certificates of deposit worth 75 trillion rials ($241 million) in the first four months of current fiscal year (March 21-July 22).
Commodity CD is a security indicating ownership of the holder on a particular amount of a commodity supported by standard warehouse receipt issued by warehouses certified by the Securities and Exchange Organization (SEO), the capital market regulator.
Trade included 264.27 million CDs backed by cement worth 1.86 trillion rials ($6m), according to the SEO News Agency.
Cement was the top commodity in volume terms, accounting for 74% of the total traded CDs.
Gold-based CDs topped the value list. Close to 29.25 million CDs backed by gold coins worth 42.4 trillion rials ($136m) were exchanged in the four months, accounting for 57% of the value and 8% of volume of traded CDs.
In the same period, 57.53 million saffron-backed CDs worth 22.89 trillion rials changed hands, representing 16% and 31% of the total trade in volume and value terms, respectively.
Selling CDs in the primary market means selling the stored or deposited commodity by the owner, and buying it means buying such a commodity. CDs securitize a company’s product inventory and offer buyers easy ownership of goods without the usual hassles of storage and insurance.
The IME’s derivative market hosted 805,000 deals worth 48 trillion rials ($154m) in futures contracts in the four months.
Saffron was the top traded item, accounting for 76% of volume and 55% of value of traded futures. Traders exchanged 610,473 contracts worth 26.31 trillion rials ($86m).
The next traded futures were units of gold-backed funds at 180,691 contracts worth 21.23 trillion rials. Silver was third with 14,451 contracts worth 289.37 billion rials.
A futures contract is a standardized, legal agreement to buy or sell an asset at a predetermined price at a specified time in the future. At this specified date, the buyer must purchase the asset and the seller must sell at the agreed-upon price, regardless of the current market price and at the expiration date of the contract.
Underlying assets for futures contracts can be commodities – such as crude oil, commodities, farm products and other financial instruments.
