A capital market analyst believes that the Security and Exchange Organization– Iran's capital market regulator– is on the right path in diversifying the market's financial instruments including the launching of options trading and futures.
"Gold coin futures have been among the most successful financial instruments in our capital market. This has to do with the fact that it was an innovative instrument among commodities that could hedge against financial risk," Shahin Cheraghi told the Financial Tribune, adding that the instrument has been rather successful due to its special character as a hedging instrument.
A major issue investors face in the capital market is about hedging. He believes that the commodity-based futures trading can be a good example in this area that can and should be tapped.
The gold market has gone through unusually volatile days during the past six months, with the benchmark Bahar Azadi gold coin registering a series of record highs. Gold coin has historically been a safe-haven asset for Iranians and gained more importance as the national currency tanked falling to lows unseen in Iranian history.
The launch of saffron futures in the Iran Mercantile Exchange is another successful example, he said.
SEO President Shapour Mohammadi said Monday that that it intends to introduce futures and warrant instruments -- contracts giving the option to buy underlying shares at a later date– before the yearend on March 20.
Mohammdi said sthe SEO in collaboration with the Central Insurance company of Iran plans to issue reinsurance finance instruments and as well as catastrophe bonds.
He referred to the commodities and goods trade on IME, saying that trading has been enriched further in recent years especially in the agro sector with the addition of wheat, corn and saffron futures.
Farhad Dejpasand, President Hassan Rouhani's nominee for Economy Ministry portfolio told lawmakers on Wednesday that if confirmed as minister, among his most important plans would be to "deepen the capital market and redirect liquidity toward the market.
Tehran Stock Exchange's main index, TEDPIX, has registered several record highs in the past weeks. During the month ending October 22, it had 17% return on investment, outperforming its rival markets including currency and gold.
International Bourse
Contrary to his optimism about the capital market's foray into innovative tools in general, Cheraghi took a dim view of plans to launch an international bourse in the free trade zones.
"The fact that we want to create an international bourse in the FTZs means turning a blind eye to the atmosphere of sanctions and ignoring the fact we have so far not tapped the potentials of FTZs like Qeshm and Kish islands compared with their global peers," he said.
Cheraghi, who is chairman of the Board at Mehrafarin Brokerage, said when US sanctions targeting the country's banking system come into effect on November 4, it will make no distinction between the mainland and the FTZs.
"Moreover we should first see whether or not any foreign banks have established a presence in the FTZs.”
According to Cheraghi, without proper banking channels, no international stock exchange would be able to operate both in the mainland and the FTZs.
Secretary of the High Council of Free Trade Zones and Special Economic Areas, Morteza Bank, said at an investment forum in Kish Island on Monday that establishment of an international bourse in the FTZ's is in its final stages to help "attract foreign investment and facilitate the presence of domestic businesses on the international stage."
FTZs were first authorized in 1993 in Kish Island, Qeshm Island and Chabahar Port. Later, Aras, Arvand, Maku and Anzali were added to the list.
