FEAS Yearbook FEAS Yearbook 2010 | Page 150

ANNUAL REPORT JUNE 2010 FEDERATION OF EURO-ASIAN STOCK EXCHANGES TEHRAN STOCK EXCHANGE Despite the widespread financial crisis in the global market, TSE had the IPO of its largest ever listed company, Telecommunication Company of Iran (TCI) in August. Hassan Ghalibaf CEO Iranian capital market experienced a flourishing year 2009 in the 41st anniversary of Tehran Stock Exchange (TSE)’s operation, and the trend is expected to continue in 2010. Ratification of the securities market law in 2005 was a step to develop the Iranian capital market, and the subsequent measures supported the idea. Tehran Stock Exchange Corporation was established in 2006 as a demutualised exchange, aiming to set up a regulated, transparent, efficient and fair market, and to promote investment in securities and increase liquidity. During the previous years, as stated in the law, the country’s capital market has followed the establishing of structures for development and has attempted to provide the required cooperative grounds among all market’s participants to create value for direct and indirect stakeholders. In this fashion, TSE feels committed to grant fair mechanism and enough access for the members and participants to trade securities. Accordingly, escalating market’s liquidity was set as one of the main ambitions of TSE. HISTORY AND DEVELOPMENT Tehran Stock Exchange (TSE) was founded in 1967, by starting with only six listed companies. Since then, the Exchange has experienced considerable changes in the path of development. Today, three years after its demutualization, which took place on 6 December 2006, TSE has gradually demonstrated its potentiality as a leading Exchange in the region and developed into an ever-growing marketplace, including more than three hundred listed companies with a market capitalization of above US$ 60 billion. The mission is setting the agenda for the change in the Iranian securities markets. TSE must be more than a mere market facilitator and ought to be able to guide industries towards new horizons and greater opportunities, as it is actually doing through the strict regulations and listing standards. TSE is aiming at promoting the Iranian Capital Market to respond to the socio-economic development needs of the nation. The Exchange helps and stimulates industrial, as well as economic growth and development of the country's financial sector. TSE is preparing to maintain a strong and transparent market in order to give PAGE 146 Great efforts were made during 2009 to increase liquidity. As a result of some studies at the Exchange, price daily fluctuation range was increased for all listed shares and the bigger issuers’ base trading volume was cut. Also, final auction mechanism was proposed to discover the closing price, and single-price auction was introduced as a means to avoid market’s fluctuations. Besides, some executive solutions were suggested to the Exchange and Securities High Council, the premier body of the Iranian capital market for approval. Market making directive was reviewed and more incentives were added for more participation. Primary studies have been accomplished on diversification of trading products. Stock futures and options are expected to emerge shortly in the Exchange after the software selection is finalized. Moreover, launching stock ETFs, as well as gold-backed ETFs was fully surveyed and the proposed rulings were sent to SEO for approval, the market’s regulatory body. TSE has planned to keep on its growing trend to build the required foundations and change trading rules for more facilitated access to a transparent and fair market, and also will try to benefit the international bodies’ technical supports. TSE welcomed new issuers in 2009. Insurance companies and oil and gas extraction industry increased TSE’s sectors to 39 and turned the Exchange into one of the most diversified ones. IPOs of three big public banks and insurance companies increased our market capitalization to above US$ 58 billion at the end of 2009, a 20 percent rise comparing 2008. Trading value, with ten percent increase than 2008, reached the new record of plus US$ 16.8 billion last year. opportunity to the investors to convert their cash into securities at a fair and honest price and vice versa, and is developing to become a highly liquid secondary market for securities to raise funds and win confidence from all stakeholders. insurance companies were traded for the first time in the Exchange. For the coming year, introducing derivatives is in the agenda. FUTURE OUTLOOK TSE is planning to operate as a world-class marketplace for Iranian securities and derivatives products. It strives to offer issuers access to a wide national marketplace. It must make a contribution to Iran's status as an economy, which intends to open-up to international financial centers. By servicing Iran's substantial long-term demand for capital and exchange services in accordance with international standards and practices, it is believed that TSE has the potential to become one of the pre-eminent Exchanges in the Persian Gulf area. Privatization, as a priority is both followed by the State and managed by TSE on the one hand, to facilitate the economic reforms, and on the other one, to improve and support the Iranian securities market. In this fashion, among the floated companies since January 2009, shares of some state-owned banks and • Continuation of privatization plan and IPOs of state-owned companies • Increasing liquidity in securities market with a review on trading regulations • Launching derivatives market and introducing stock futures and options • Establishing Islamic bonds and products, based on market development act and tax exemption • Introducing new indices • Setting up required mechanisms for tracking frauds and claiming against breach of market law • Creating efficient corporate governance and investor relations frameworks • Facilitating and expanding market access by means of developing brokerage network, e-trading and DMA