Last week, the Iranian media reported the imminent replacement in the highest position of the Securities and Exchange Organization (SEO), the first such change in ten years.
Back in 2005, when Mahmoud Ahmadinejad took office as president, Hossein Abdeh Tabrizi, the then secretary-general of the Securities and Exchange Brokers Organization was replaced by Ali Salehabadi. The latter holds a unique record among his predecessors as he is the last chairman of the Securities and Exchange Brokers Organization and the first president of the organization’s substitute, SEO. Soon after his appointment, Salehabadi, who was entrusted with the task of establishing the Securities and Exchange Organization, granted the executive arms of the capital market independence from supervisory body.
Only a year later, he officially launched the SEO under the new Securities Act (Salehabadi himself was a member of the committee responsible for drafting the act). Two years later, he also moved SEO headquarters in order to further highlight the distinction between the SEO as a supervisory body and the Tehran Stock Exchange (TSE). In the following years, new executive bodies came into existence, namely the Iran Mercantile Exchange (IME), Farabourse and the Energy Exchange.
Salehabadi’s performance in the past decade indicates that he has played a key role in the development of the equity market in Iran.
But while many described as impressive the way he conducted the operations at SEO, the Imam Sadeq University graduate was also criticized for certain measures he took during his tenure that were sometimes interpreted as beyond the law. He, for instance, suspended the activities of Individual Shareholders Association as the only legal association for small shareholders. He even issued orders several times to close and reopen the ticker symbols for various companies at the stock market, and, according to his critics, he failed to develop brokerage industry as it could (all the applications for setting up new brokerages were rejected when Salehabadi was in office).
Salehabadi is also said to have personally contacted institutional investors, manipulating the capital market indices using some unprofessional methods.
Lights Gone Out
Although he cleverly contained the impact of the change in government in 2013 by replacing two deputies and several middle managers, the controversial measures Salehabadi took during his SEO chairmanship together with an unprecedented stock market plunge after 18 months of steady growth made the senior economic authorities to come to decision to find a new point man for the SEO.
After recording a spectacular performance last year, the TSE has shed almost 20,000 points, equal to 27 percent, of its value in the past few months. Now that Salehabadi has departed his post as the SEO top guy, everyone expects the new boss to introduce some changes to the organization’s structure and management, even though a quick end to the declining trend does not seem to be a reasonable expectation.
On Monday, it was finally announced that Salehabadi will be the new chairman of the Export Development Bank of Iran and Mohammad Fetanatfard, a board member of the Bank Melli will take his job as the new SEO chief.
Capital market players now have high hopes. Some of their expectations from the new SEO leadership include:
1. Leaving executive matters to the relevant authorities;
2. Reducing or eliminating intervention in stock market trades to the lowest rate possible;
3. Shortening the intervals between closing and reopening of ticker symbols;
4. Launching new market indicators to provide more precise calculations of the indices;
5. Reviving the legal association of small and individual shareholders;
6. Easing information flow in the market;
7. Permitting new applicants to set up brokerage firms;
8. Taking a firm stance against agiotage;
9. Introducing changes to the way the capital market is run to restore growth to the market;
Besides, market experts and traders expect the new SEO chief to work closely with the government to further regulate the stock trading procedures.
However, time will tell whether or not Fetanatfard would live up to these and other expectations and if the capital market would be capable of returning to its best trading days.
