Economy, Business And Markets

Forex Quoting Blocked Without Notice

Business & Markets Desk
Forex Quoting Blocked Without Notice
Forex Quoting Blocked Without Notice

The central bank has tightened its grip over the foreign exchange market by increasing supervision. But time and again the bank has distorted the market.

The bank has sorted out bureaux de change permits and raised its supervision over their activities using a new electronic system called SANA. Furthermore, the bank has created a bureaux de change association to both increase coordination between the bureaux and create more pricing transparency. The association publishes price quotes on an hourly basis, averaging trades that were registered in SANA foreign exchange data system. It will also set the opening and closing rates of each trading session.

 Failing to Uphold the Law

But the central bank is creating disruptions in the market. It stopped SANA without prior notice this week. The act contradicts the regulations for bureaux de change.

The Iranian Exchange Association was in charge of publishing the foreign exchange quotes for traders using information from the system, but stopped doing so due to the central bank’s actions, Banker reported.

According to Article 8 of the regulations, the association should calculate and publish the weighted average for bid and ask prices for bureaux de change on its website once an hour.

Article 11 also says the association should calculate and publish the weighted average for foreign exchange rates based on all transactions of the previous trading day, before 11:00 a.m. local time.

An additional note to the article mentions that all information of a foreign currency, including type, rate and trading volume will be provided for the association through SANA.

 SANA Data

Based on the same regulations, all transactions in excess of $10,000 must be simultaneously registered in the system. Bureaux de change have until the end of the day to clear the transaction.

Trades below $10,000 can be registered at the end of the day but the transaction must be done right away.

 The Second Time

This is the second time the central bank stops the data providing system, an informed official told Fars News Agency.

The halt was said to be due to technical issues and the system resumed activity after some days. It has stopped again without any prior notice, he said.

In an announcement, the central bank introduced at a temporary alternative for SANA.

 “Any future action is contingent on acquisition of required criteria by Iranian Exchange Association,” the bank said in a statement.

The hiatus came as a shock since the exchange association was publishing the price quotes without any delay. It had also attained all conditions required by the central bank.

Several months earlier, Valiollah Seif, central bank governor, said publishing prices by “unauthorized” websites and individuals will be stopped, but the central bank has twice failed to properly run its offered alternative.

Critics say the central bank should avoid disruptions in Iran’s most important market, else it risks losing its remaining credibility.