JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013TEHRAN STOCK EXCHANGEHassan GhalibafCEOTSE tried to increase market transparencyand liquidity, diversify financialinstruments, improve surveillancemechanism and develop the investmentculture within the Iranian society.In 2011, the global value traded, with littledecrease (0.1), remained relatively stable.Market capitalization of the global Exchanges,with significant decrease of 13.6% reached thefigure less than it in 2009. Moreover, accordingto the main indices of the Exchanges beingmember of the World Federation of Exchanges,average return of the members had 11.9%decreases, as compared to the previous year.The main factors affecting the decrease arehigh volatility, global uncertainty created fromsovereign debt crisis. In this year, Exchangestried to diversify their financial instruments usingvarious bonds, exchange traded funds andother instruments.Despite of challenges related to implementingthe first phase of targeted subsidies law,fluctuations in the gold and foreign currencymarket and movement of liquidity toward thesetwo markets and challenges in the internationalrelations, TSE, against the general trend of theworld market, had a growth of operation indiceslast year. Moreover, TSE tried to increasemarket transparency and liquidity, diversifyfinancial instruments, improve surveillancemechanism and develop the investment culturewithin the Iranian society.In this period, market capitalization and valuetraded showed 33.4% and 8.2% growthrespectively. Also, block and retail trades had34% growth, as compared to the previous year,which shows liquidity increases in the market.Listed firms had 82% growth of capital increase,63% of which was from cash contributions andreceivables. Also, free floats reached from 19%to 23%. All the above mentioned factors indicatemarket transparency, integrity and liquidity.In order to meet the accountability principles,have a transparent interaction withstakeholders, and promote market integrityand transparency, some effective plans havebeen implemented in cooperation with otherresponsible institutions, including developmentof the calculation directives of corporategovernance index and presentation of it toSecurities and Exchange Organization (SEO),participation in mechanizing parts of membersoversight and inspection, and enforcementof discipline regulations of brokers. Otheractions taken by TSE are to revise and updateinformation rules, to introduce new tradingmechanism, to plan operation of closingdiscontinuous auctions and closing trades, andto plan securities lending mechanism.As a plan to attract foreign investors, someconferences have been held including FinanceOpportunities of Listed Firms and ListingEconomic Firms at TSE. During the year 2011six firms have been listed and offered in TSE.Also, 4 items of future contracts and 2 items ofparticipation certificates have been listed in theExchange. To develop and support derivativesmarket, enhance the trading system andfacilitate the market access, some actions havebeen taken, including proposing for mechanismregulations of credit finance to SEO, seekingfor option trading rules approval, launchingExchange Traded Funds at TSE and increasingthe number of underlying shares of futurecontracts.Also, some efforts have been made fordevelopment of market awareness andpromotion of financial literacy through targetedtraining courses, books, web-sites, seminarsand TV programs in order to help people tomake informed participation in the capitalmarket.HISTORY AND DEVELOPMENTTehran Stock Exchange (TSE) was foundedin 1967, by starting with only six listedcompanies. Since then, the Exchangehas experienced considerable changes inthe path of development. Today, six yearsafter its demutualization, which took placeon 6 December 2006, TSE has graduallydemonstrated its potentiality as a leadingExchange in the region and developed into anever growing marketplace, including more thanthree hundred and twenty listed companies witha market capitalization of above US$ 100 billion(December 2012).TSE is aiming at promoting the Iranian capitalmarket to respond to the socio-economicdevelopment requirements of the nation. TheExchange helps and stimulates industrial, aswell as economic growth and development ofthe country’s financial sector. TSE is preparingto maintain a strong and transparent marketin order to give opportunity to the investors toconvert their cash into securities at a fair andhonest price and vice versa, and is developingto become a highly liquid secondary market forsecurities to raise funds and win confidence fromall stakeholders. TSE is planning to operate asa world-class marketplace for Iranian securitiesand derivatives products. It strives to offer issuersaccess to a wide national marketplace.By servicing Iran’s substantial long-termdemand for capital and exchange servicesin accordance with international standardsand practices, it is believed that TSE has thepotential to become one of the preeminentExchanges in the Persian Gulf region andbeyond.Privatization, as a priority is both followed by theState and managed by TSE on the one hand, tofacilitate the economic reforms, and on the otherone, to improve and support the Iranian securitiesmarket. Moreover, financing through capitalmarket is felt as an obligation for the Iranianeconomy’s growth and in this fashion, shares oftwo banks, two petrochemical companies anda provider of electronic services were listed andpublically offered in the Exchange in 2011. Theoption contracts regulations have been sent tothe Iranian Securities and Exchange Organizationfor ratification.In 2012, TSE held a FEAS event in Tehran. Thesecond On-site Training Program was heldin Iran, 10-21 November 2012. The two-weekevent included different courses and visits at theIranian capital market’s entities.Tehran Stock Exchange was the main hostof the event, and was contributed by Iran’sSecurities and Exchange Organization, IranMercantile Exchange, Iran Farabourse, CentralSecurities Depository of Iran, as well as twoinvestment banks, and three brokerage firms.The program’s participants were managersand experts from Oman, Pakistan, Macedonia,Uzbekistan, Syria, Turkey and Kazakhstancapital markets.Five new companies, including two companiesfrom oil and gas sector, a shipping company,one insurance company, as well as a banking ITservice provider were listed at the Exchange in2012. Also, an investment firm was transferredfrom Iran Farabourse (SMEs market) to TSE inthe same year.FUTURE OUTLOOK• Expanding the country’s capital marketshare by increasing the number of listedcompanies and improving market liquidity• Developing new opportunities throughintroducing new financial tools• Continuous evaluation of rules andregulations in compliance with marketrequirements• Developing financial knowledge andimproving investment and shareholdingculture in Iran by educational programs andthrough mass media• Extending trading infrastructure• Enhancing market transparency throughupgrading market surveillance and relatedIT systems• Increasing international cooperation andparticipation in international associations• Focusing on development and enhancementof TSE competitive advantagesPAGE 81