The second meeting of the mercantile exchanges of the CIS and Eastern European countries in the form of Interexchange Electronic Union (IEU) is to be held in Tehran today, which can be considered a turning point in the history of Iran's capital market, IME's public relations and foreign affairs office reported.
Various officials will give a speech during the inauguration ceremony, including Grigor Vardikian, head of the IEU, Ali Salehabadi, CEO of the Securities and Exchange Organization, and Hossein Panahian, director of the Iran Mercantile Exchange (IME).
As the report said, the event will focus on finding effective ways of applying financial instruments to the international trade, reinvigorating international commerce, and finding new markets with reference to the mercantile exchanges. Moreover, strengthening the international contracts, boosting trade between the IEU members, and benchmarking the importance of the electronic trade to explore global business interactions will be discussed at the conference.
Observing the union's future sketches and strategies as well as a brief report of the union's activities in 2014 is also reportedly said to be on the agenda.
The Interexchange Electronic Union (IEU) is the union of legal entities of exchange structures, which acts in a virtual electronic field and serves as a non-commercial organization. IEU also acts in the interexchange commodity market of the interested countries with the exchange voluntary membership and is created without restriction of activity term.
IEU is an international organization, which unites seven commodity exchanges of five countries: Armenia (YERCOMEX), Belarus (BUCE), Kazakhstan (ICEX "Kazakhstan”, CEX "Kaspiy”), Kyrgyzstan (KUCEX), Ukraine (UCEX, "Agrarian Commodity Exchange” Cabinet of Ministers of Ukraine), and two commodity distribution systems from Armenia (Clearing House UCDLE) and Belarus.
Iran is about to become a formal member of the IEU, in a bid to improve its commercial interactions with the CIS and East European countries. This is expected to enhance the Iranian capital market by increasing the level of trade and bringing more transparency to the market.
The membership of the IME in this international union provides a smooth and safe channel for local manufacturers and traders to upgrade their businesses, so that any company or trader offers any type of commodities in one of the IEU member countries, Iranian customers can directly embark on grabbing the opportunity to buy that commodity, Hossein Panahian told the Financial Tribune in an exclusive interview.
He addressed the differences that exist in various mercantile exchanges in the world, adding that "the IME precisely analyzed the functionality of mercantile exchanges around the world, as it was very crucial before linking to the global unions."
Panahian emphasized that financial instruments are key elements in mercantile exchanges across the globe. "In London Mercantile Exchange, for instance, contracts are mostly traded not the physical commodities," he said, adding that future contracts play a significant role in mercantile exchange trading, where hedgers and speculators try to earn through price fluctuations. The IME is quite different, Panahian added, as physical commodities are mostly being traded here.
He went on to say that the idea started right after the IME signed a MoU with the Belarusian Universal Commodity Exchange (BUCE). The main reason behind the move, according to Panahian, was the similarities between the two commodity exchanges. "Moreover, the BUCE was a formal member of the IEU."
IME To Go Global
The IME aims to enter the international market of mercantile exchanges, and, considering the bilateral interaction with the BUCE, "we came to this conclusion that being a member of this union would be a significant platform for the IME to go global," Panahian added. Meanwhile, the union members are the closest to the IME compared to other commodity exchanges.
Panahian emphasized that various steps should be taken to achieve this goal, including improvement of money transaction, customs, international regulations and required infrastructures.
"We have already prepared regulations for export purposes as it has been the tradition on the export trading floor, although the whole procedure of trades was not beyond the country's borders," Panahian said, adding that for other trading floors, the IME should adjust its regulations to the international ones. "It is the beginning of a long way for the IME to go global."
Fortunately, Iranian businesses conduct large volumes of trade with several CIS countries, and being a member of the IEU will boost the current trade level, the IME chief said.
The IEU already offers a wide range of commodities on its daily trades. Panahian said that, considering the high demand for various products in the markets of IEU members, being an IEU member could be considered a significant platform for local manufacturers and traders to increase their production and exports, eventually bolstering the capital market.
Intro: Iran is about to become a formal member of the IEU, and improve its commercial interactions with the CIS and East European countries, which is expected to enhance the capital market by boosting the level of trade and transparency
