The Securities and Exchange Organization is planning to launch foreign exchange futures contracts after a reference price for foreign currency is discovered in the soon-to-be launched regulated forex market.
In a talk with IRIB news, the SEO chief Shapour Mohammadi referred to an agreement with the Central Bank of Iran based on which forex futures will be traded within the capital market framework and spot forex trading at regulated forex market.
The High Council of Securities and Exchange - a high stock market decision-making body - gave the nod for launching the forex futures four years ago.
A forex future is an exchange-traded contract to buy or sell a specified amount of currency at a predetermined price on a set date in the future.
All forex futures have a specific termination date, at which point delivery of the currency must occur.
The SEO had earlier said if a proper spot market exists and a reference price is set, the capital market would be ready to launch the futures contract market for foreign currencies.
In the regulated market, prices in the closing hours of each trading day determine the next day’s price with a difference of not more than 5-10%.
The market will be launched with the participation of banks and certified exchange shops under CBI oversight. It is reported that deals within the regulated market will be processed according to an “order driven” mechanism.
It is expected that by setting up the regulated forex market, the SEO would be better placed to launch forex contracts since one of the functions of the regulated market would be discovering base prices in a competitive and transparent environment.
Mohammadi said the capital markets, including Tehran Stock Exchange and Iran Fara Bourse, contributed to the formation of regulated market, adding that the SEO provide the market with the relevant software and declare trading procedures.
The market was slated to start operation in mid-May. However, it has been delayed due to some technical issues.
Gold Futures
Regarding resuming trades in gold coins futures, the CEO pointed to the issue of lacking a reference price, arguing that a stabilized reference price is a necessary precondition for launching gold futures.
“If there is a reference price, capital market is ready to resume trading gold futures,” Mohammadi said.
After unprecedented volatility in the spot gold market last summer, following steep increases in currency rates, the Iran Mercantile Exchange suspended all trade in gold coin futures.
Commenting on the issue, the SEO head said trading gold futures were suspended temporarily but resumed later when gold prices in the spot market stabilized.
The head of IME Hamed Soltaninejad announced early in May that gold coin futures will resume in the near future. He said new gold coin futures have been compatible with the market rules and protect investors.
Gold futures are standardized, exchange-traded contracts in which the buyer agrees to take delivery, from the seller, a specific quantity of gold at a predetermined price on a future delivery date.
