Data is the lifeblood of modern markets. For better or worse, many investors tune into latest developments and base their trades on newest statistics, decisions and announcements by companies and governments. These days, the most recent earnings report can change sentiment in many investors, though some argue those decisions should be made with a longer time horizon in mind.
In Iran, even the idea of a free flow of information is new. Many in government circles still believe that putting a chokehold on information is the way to go. Control the information and you can restrain market reactions, they think.
That is all good, until they come to realize that investors shy away from markets that are manipulated. Any investor worth one's mettle demands a free flow of data.
The idea is starting to register with some public officials. While the Central Bank of Iran is far behind on the issue, the new head of the Securities and Exchange Organization is coming out of the dark ages. To increase market trading and acquire investor trust, he is moving Iranian exchanges toward more transparency.
The organization has mandated exchange-listed companies to release monthly sales and production data to the public this week. The directive includes companies listed on Tehran Stock Exchange and Iran Fara Bourse.
Companies will have three days from the end of every month to issue the required information on Codal, SEO's website for corporate information.
"It is imperative that delays or refusal to publish information will count as violations," SEO's directive reads.
The SEO had called for a voluntary release of such information earlier. Now, choice is off the table.
The required information for companies in each industry will be different. Manufacturers will have to publish their production and sales data while holding companies are to give a report on their investment portfolio.
How well will this directive be carried out remains to be seen.
Globally, companies release earnings data on a quarterly basis. The SEO is taking things further by asking for monthly data, which will take companies some time to get used to the new norm.
In time, as more information becomes available to the public in a timely manner, opportunities for insider trading, which is currently commonplace, will shrink. Only then can investors make decisions without the fear of being outdone by shady deals behind closed doors.
The trust generated from this initiative will help Iranian exchanges attract more capital.
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