The Securities and Exchange Organization plans to tap the Capital Market Stabilization Fund to support retail investors.
According to Mohsen Khodabakhsh, SEO's deputy for supervision on exchanges, the plan will cover t 4.5 million retail investors who entered Iran's stock market during the current fiscal year that started in March 2020.
Retail investors whose value of share portfolio is below 100 million rials will be eligible from the supportive plan, Securities and Exchange News Agency reported.
Elaborating on procedures, Khodabakhsh said put options contracts equivalent to the value of stock portfolios of retail investors will be issued. The options will mature in May 2022.
A put option is a contract giving the owner the right, but not the obligation, to sell or sell short a specified amount of an underlying security at a predetermined price within a specified timeframe. This predetermined price that buyer of the put option can sell at is called the strike price.
Drawing on financial resources provided by CMSF, SEO guarantees that retail investors will benefit from at least 25% return from their current portfolio on condition that they don’t sell the "insured shares" by the time the put options mature.
CMSF was created in 2017 to help resolve the credit crunch in the bourse. It has a mandate to support the market and safeguard the interest of investors.
Following historic gains in the first few months of the current fiscal year, Tehran’s share market went into a tailspin from mid-August.
Ever since, the stock market regulator took several supportive measures to prop up the bearish market, but apparently to no avail.
