More IPOs, ETFs  and Derivatives
Economy, Business And Markets

More IPOs, ETFs and Derivatives

Tehran Stock Exchange will expand its repertoire of companies, bonds, exchange-traded funds and probably introduce derivatives on stock portfolios in the upcoming Iranian year (starting March 20), said the company’s chief executive, Hassan Qalibaf-Asl, on Tuesday.
According to Bourse Press, 10 new companies will join TSE and offer shares to the public, while an additional five will move their listing to the exchange in the new year. Furthermore, 10 new ETFs are in the pipeline, along with 20 new bond issues.
TSE grew from 2,810 trillion rials ($81.9 billion at market exchange rate) at the start of the year to 3,380 trillion rials ($98.4 billion) today. All of that growth came since January when western sanctions against Tehran were lifted in return for Tehran limiting the scope of its nuclear program. Stocks were hovering near two-year lows before the lifting of sanctions.
The shift in Iran’s fortunes has increased foreign participation in TSE. Of the 550 trading codes ever issued for foreigners, 200 were issued this year. But their participation remains limited.
Stock trading by foreigners reached a menial 280 billion rials ($81.6 million) in the past two and a half months.
TSE also saw growth in bond trading that more than doubled this year to 37 trillion rials ($1 billion) from 15 trillion rials ($437 million) a year before, a 147% increase, according to the chief executive.
Qalibaf-Asl also pointed out some other trends in the equity exchange, during his press conference on Tuesday.
A 9% increase in online trading to 210 trillion rials ($6.1 billion) and non-institutional traders’ 45% share of all transactions this year caught attention. These two have led to better floatation in the exchange.
Now 21.9% of shares on the market were traded, marking a 230-basis-point increase from last year’s average of 19.6%.

Mellat Leasing Company, a subsidiary of Bank Mellat, will be offered to the public for the first time in the next Iranian year.
The Initial Public Offering of the company was planned for the current year’s end, but Bank Mellat decided to postpone it to the new year, said the chief executive.
The exchange is adding one industry, investment banking, to its existing 37, with the IPO of Omid Investment Bank in the upcoming year. Right now, financial services on TSE are organized into insurance, financial intermediaries, investment companies, banks and credit institutions.
Automaker Modiran Khodro and Iranian Petrochemical Holdings are also preparing their IPOs, due next year along with some six other companies the executive did not name.
Also, Minoo Industrial Company, a food processor, will return to TSE. Minoo had moved its listing to Iran Fara Bourse over-the-counter market after failing to meet TSE regulations.

  Fundamental Changes
There will be some changes to the way the market operates. TSE is working on new trading software that will be used after TSE’s regulatory committee and board of directors approve it.
Trading regulations are also being eased.
“We plan to remove base volume next year,” said Qalibaf-Asl.
Base volume is the minimum number of shares of a company that have to be traded in a single day, for the shares to close at a different price from the day’s open.
Currently, 0.08% of a company’s shares are considered its base volume. The measure was introduced in 2003 to counter volatility and price manipulation.
Last but not least, Qalibaf said the company is looking to offer futures and options contracts on equity portfolios with a similar structure to derivatives it plans to offer at TSE.
“Stock portfolio futures will become tradable with the permission of the Sharia committee and if their regulations are written and signed off by the board,” said the executive.

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