The Tehran Stock Exchange has sent 20 proposals to the parliament on ways to develop the capital market. A deputy TSE director says the recommendations can be included in the government's plan of action to exit recession.
"We think that what we have put forward can help the government in its plans for financing big businesses and enterprises via the capital market," Abbas Karimi told SENA on Tuesday.
TSE's proposals call, among other things, for transparency in trading and also in listing of market variables. "We hope that our package will be approved by the lawmakers along with the government's plan of action to exit recession."
The government sells certain products, like iron ore, to the private sector using a mandatory pricing mechanism. "This is something that spoils the market's predictability factor," Karimi added, saying that TSE has put forth the idea of formulating 10-year frameworks for the companies so that traders at the capital market find it possible to predict changes in prices and other variables. The proposal, he said, also includes providing loans and tax breaks to encourage the manufacturing activity. "We suggest that companies that have been recently listed on the TSE receive financial aid in a way that allays their working capital concerns. In the meantime, our proposed tax incentives are aimed at creating new enterprises and developing existing companies."
Karimi said that TSE's main proposals to the parliament include creation of new executive and supervisory bodies, new investment funds, private pension funds and insurance reserve funds at TSE. "The package calls for developing new strategies to redefine and help with market stability and risk management. We think there's also a need for an official foreign exchange market," he said.
TSE says that, if approved, the measures will help develop the capital market, and thus, speed up economic activities nationwide.
Earlier this year, the government published its plan of action to exit recession. One main part of the package focuses on the capital market's role in financing the big enterprises across the country. If the government expects the capital market to be able to provide finances for businesses, it should help increase the level of transparency both inside and outside the market, Karimi asserted.
"All across the world, big companies are interested in having their stocks traded at stock markets because they know that, this way, they reserve one of the linchpins of their long-term financial security. But here, despite all the incentives offered to lure big investors to enter the market, many are still reluctant to get in. Why? Because there are variables outside the market that make them hesitant about wanting to do any trades at the stock market," Karimi clarified.
He said that one discouraging fact is the lack of tax equity here, adding that. "There are indeed some sort of tax exemptions offered to the companies listed on TSE, but the question is, is there any such thing like tax fairness outside the market?"
