Tehran Stock Exchange

Coordinates: 35°46′41″N 51°22′05″E / 35.778°N 51.368°E / 35.778; 51.368
Source: Wikipedia, the free encyclopedia.
Tehran Stock Exchange
بورس اوراق بهادار تهران
corporate participation certificates, futures[4][5]
No. of listings666 companies (December 2020)[6]
Market capUS$1.45 trillion (2023)[6]
Volume82,479 million (2009)[4]
IndicesTEPIX and TEDPIX (main)
Websitetse.ir
Note: TSE is self-regulated under SEO supervision. As of July 2010, no margin/lending is offered, except for futures.[4][5]

The Tehran Stock Exchange (TSE) (Persian: بورس اوراق بهادار تهران, romanized: Burs-e Owraq-e Bahadar-e Tehran) is Iran's largest stock exchange, which first opened in 1967.[1] The TSE is based in Tehran. As of May 2023, 666 companies with a combined market capitalization of US$1.45 trillion were listed on TSE.[6] TSE, which is a founding member of the Federation of Euro-Asian Stock Exchanges, has been one of the world's best performing stock exchanges in the years 2002 through 2013.[5][7][8][9] TSE is an emerging or "frontier" market.[10]

Iran's

banking and others. Many of the companies listed are state-owned firms that have been privatized
.

History

See also: Economic history of Iran
The former building of Tehran Stock Exchange at Hafez St, Tehran, Iran

The concept of stock industrialization dates to 1936, when Bank Melli, together with Belgian experts, issued a report detailing a plan for an operational stock exchange in Iran. However, the plan was not implemented prior to the outbreak of World War II, and did not gain traction until 1967, when the Government revisited the issue and ratified the Stock Exchange Act. Initially limited in size and scope, the Tehran Stock Exchange (the "TSE") began operations in 1967, trading only in corporate and government bonds. Iran's rapid economic expansion in the 1970s, coupled with a popular desire to participate in the country's economic growth through the financial markets, led to a demand for equity. The Government became actively engaged in the process, by granting shares to employees of large state-owned and family-owned enterprises. Market activity increased substantially, as both companies and high-net-worth individuals participated in the new-found wealth associated with the TSE.[1]

Everything came to a standstill after the

some banks and financial institutions attached to the government inject money into the stock market through a fund called the Market Development Fund which is aimed at market making and decreasing the fluctuations in the stock market.[14]

Other complementary markets have also been established alongside the equities market. In 2003, the Tehran Metal Exchange (now called the Iran Mercantile Exchange after its merger with the Agricultural Exchange in 2006) was launched. The Oil Bourse and the over-the-counter Farabourse were launched in 2008 followed in 2012 by the Energy/Electricity Bourse and the FOREX bourse.[11]

TEPIX: Tehran Stock Exchange's main index (2000–2014).
Main Indicators for TSE*[4]
2006 2007 2008 2009
Number of Listed Companies 417 415 346 337
Market Capitalization
(USD Millions)		 43,794 45,574 49,040 58,698
Total Value of Share Trading (USD Millions) 6,230 7,872 15,252 16,875
Daily Average Trading Value (USD Millions) 26.1 32.5 63.8 65.4
Total Number of Trade in Share (Millions) 15,839 23,401 37,975 82,479
No. of Transactions (in thousands) 1866 2107 1978 2646
No. of Trading Days 239 242 239 258
Share Turnover Velocity (%) 15.6 16.37 26.5 28.74
P/E ratio
 5.4 5.2 4.1 5.5
Dividend yield (%) 10.44 14.5 12.3 15.8
Market Capitalization/
GDP
(%)		 17.9 15.4 14.1 15.2

*Exchange rate: 1 US $=10,004 IRR (2009)

Industry affiliations

Since 1995, TSE has been a full member of the World Federation of Exchanges (the former Fédération Internationale des Bourses de Valeurs or FIBV), and is a founding member of Federation of Euro-Asian Stock Exchanges (FEAS).[3] Since July 2010 the TSE is a member of the International Options Market Association.[15]

The symbol of the TSE is a highly stylized representation of an

Lorestan province. The artifact features four men, hand in hand, indicating unity and cooperation. They are shown standing inside circles of the globe, which is in turn, according to ancient Iranian myth, supported on the backs of two cows, symbols of intelligence and prosperity.[16]

Structure

See also:
Islamic banking

Corruption, inside trading, interference and control

The Iranian stocks went into free fall in July 2023 and lost more than 2 million units of value.[19] The Iranian Judicial chief demanded questioning from the president and a member of parliament called for firing the stock exchange organization's CEO.[20][21][22][23] Eghtesadnews called it death blow for stock exchange.[24] Etemad wrote the stock exchange lack transparency, government conflict of interest.[25] Supreme Council of stock exchange threatened to leak everything related to corporations even state corporations corruption.[26]

Operations

See also: Tehran Stock Exchange Services Company

Under its new structure, TSE has

online trading, an arbitration board, digital signature, investor protection, surveillance mechanisms as well as post-trade systems.[27] The TSE is open for trading five days a week from Saturday to Wednesday, excluding public holidays.[28] Trading takes place through the Automated Trade Execution System from 9am to 12 noon, which is integrated with a clearing, settlement, depository and registry system.[29] Settlement is T+3.[3] The TSE is solely an order-driven market and all transactions are executed in the manner and under the principles of open auction.[4]

Trading platform

See also: Communications in Iran

The Tehran Stock Exchange (TSE) has started an ambitious modernization program aimed at increasing

trading system which has been purchased from Atos Euronext Market Solutions (AEMS) in 2007.[30]

The new system makes it possible to purchase and sell stocks on the same day. The system has also made it possible for 2,000 brokerage stations to work simultaneously, while the number was just about 480 in the past. The rise in electronic dealing, non-stop input and updated data on orders, transactions and indices are among other features of the new system. The new system has made it possible to link the stock market to the international bourses. The bourse can now handle 700 transactions per second and 150,000 transactions per day.[31]

The trading system is an order driven system, which matches buying and selling orders of the

investors. Investors can place their orders with TSE accredited brokers, who enter these orders into the trading system.[32] Then, the system automatically matches buy and sell orders of a particular security based on the price and quantity requirements. The mechanism for which the price of equities is determined is as follows:[3]

  • The best price (price priority)
  • Time of order priority

Under the price priority rule, a selling (buying) order with the lowest (highest) price takes precedence. Under the time priority rule, an earlier order takes precedence over others at the same price. Thus, when the lowest sell and the highest buy orders match in price, the transaction is executed at the price. In short, the TSE market is a pure order-driven Market.[3]

The trading system also generates and displays details of current and historical trading activity, including prices, volumes traded and outstanding buy and sell orders. This ensures that investors have the required information to be able to take informed investment decisions.

The range of price movements is typically restricted to 3% daily either way from last closing (raised to 5% since May 2015).

Short selling is not permitted. There are no minimum trading lots.[3][4] According to the Iranian Commercial Law, companies are prohibited from share repurchases.[34] TSE Services Company (TSESC), who is in charge of the site, supplies computer services. TSESC is a member of Association of National Numbering Agencies (ANNA).[35][32]

Market segmentation

See also:
Iranian Oil Bourse, Iran Mercantile Exchange, and Energy bourse in Iran

Besides the Main and Secondary Market, there is a Corporate

commodity exchange hit $100 billion in December 2010.[36] In 2010, the Kish Stock Exchange was launched to facilitate foreign investment and monetary activities in Kish Island free trade zone.[37]

Minimum Listing Requirements[4]
Description Main Board Secondary Board Secondary Market
Minimum Capital (billion IRR) 200,000 100,000 30,000
Minimum Shareholders 1000 750 250
Free Float
(%)		 20 10 15
Minimum Term of Operation (Years) 3 – –
Profitability (Years) 3 2 1
Equity to Asset Ratio (%) 30 20 15
Market Makers Selective Selective Mandatory

TSE rate

See also:
Iran's Forex bourse
Middle-East and Europe.[38]

Since 1998 importers and exporters have also been permitted to trade foreign-exchange certificates on the TSE, creating a

rial known as the "TSE rate". In 2002 the "official rate" was abolished, and the TSE rate became the basis for the new unified foreign exchange regime.[39]

OTC market

See also:
Banking in Iran and Shetab Banking System

Since 2009, Iran has been developing an over-the-counter (OTC) market for bonds and equities (aka Iran Fara Bourse or Farabourse). Its shareholders include the Tehran Stock Exchange Corporation (20%), several banks, insurance companies and other financial institutions (60%), and private and institutional shareholders (20%).[40] As of July 2011, Farabourse has a total market capitalization of $20 billion and a monthly volume of $2 billion.[41]

Brokers

Trading takes place through licensed private

Keshavarzi, Agah and Nahayat Negar were the top 4 performers among TSE's brokerage firms. These firms executing 41% of the total value in on-line trading.[42]

Electronic trading and market data

See also: Internet in Iran and Financial data vendor

Starting March 2011, investors are able to trade in the Iranian stock market through the

sanctions are lifted.[45]

Trading fees

As of July 2010, trading fees include:

New products and services

See also:
Bond market in Iran

Presently, TSE trades mainly in

margin trading (except for futures) in contrast to the neighboring Dubai Financial Market.[13]

Futures

See also:
Derivatives market in Iran

In 2008, commodity Futures came onto the Iran Mercantile Exchange (IME).[46] In July 2010, TSE introduced six single-stock futures contracts based on Parsian Bank and Karafarin Bank, which will expire in two, four and six months.[5] Thirty-one of the 88 brokerages active in the TSE[47] are licensed to trade the futures contracts. The leverage for futures contracts is set at 1-to-10. TSE will only deal in the derivatives through electronic trading.[5] In the TSE's derivatives market, over 13,200 single stock futures contracts were traded in 2011 with a value of over 510 billion Rials.[48]

Outlook

TSE projects (as of 2009) Status (as of November 2016)
Continuation of privatization plan and IPOs of state-owned companies. Government's ownership in GDP down to 40% as of 2010 (from 80% in 2005). From 2005 until 2010, Iran privatized $63 billion worth of equity.[citation needed] More information: Privatization in Iran. As of 2015, initial public offerings (IPOs) will be conducted through the process of book-building instead of auction, for more transparency.[49]
Increasing liquidity in securities market with a review on trading regulations. New bylaw to facilitate foreign portfolio investment was ratified by the Council of Ministers in April 2010. Since then, as an incentive to investment in Iran, foreign investors in TSE are tax-exempt.[citation needed]
Launching
futures and options
. 		In July 2010, TSE introduced six single-stock
IKCO were first introduced in 2016.[52]
Establishing Islamic bonds and products
tax exemption
.
(OTC) Bond market in Iran
.
Enactment of anti-money laundering laws. See: Anti-money laundering laws in Iran.
Setting up required mechanisms for tracking frauds and claiming against breach of market law. TSE has an electronic system for tracing market abuse and insider trading.[17] Regulatory framework needs further strengthening and development.[13] See also: Iran Securities and Exchange Commission.[54]
Creating efficient corporate governance and investor relations frameworks. In 2006, the TSE introduced more stringent reporting and disclosure requirements for listed companies and enforcement measures for non-compliance.
Accounting standards in Iran
Facilitating and expanding market access by means of developing brokerage network, electronic trading and direct market access. E-trading is possible since July 2010 on trial basis and will be offered to the general public starting March 2011.
Tehran Stock Exchange Services Company (TSESC)
.
Economic Calendar and market data
.
English (free of charge).[4] Plans to offer TSE market data through Thomson Reuters and Bloomberg L.P.[45]
Promoting the
shareholding
culture in Iran. 		The Government is running financial literacy training programs in the society.[4] See also: "Justice Shares" in Iran.

Economic sectors

See also:
List of Iranian companies
As at 2008, about 30 firms, involved in 11 industries, hold close to 75 percent of shares in TSE. In September 2009, Telecommunication Company of Iran was privatized and became the largest company listed on TSE.

According to the

energy inefficiency, overstaffing, opaque auditing systems, obsolete marketing and distribution networks and high levels of debt.[27][65]

2007: There were 324 companies listed on the TSE with a total market capitalization (MC) of US$42,452 million. Close to 60% of the MC relates to listed companies from the following sectors:[66]

A total of 161 companies from these sectors are listed on the TSE, which translates to 49.7% of total companies listed. Largest stocks include:

2008: other companies in the top spots included:[67]

This indicates that the capital market in Tehran is heavily concentrated on four economic sectors with companies that make up nearly half of the total listed companies on the exchange. While 163 companies listed are spread out amongst 26 sectors, with the "Food and Beverages Sector" alone accounts to 32 companies at a market capitalization of US$897.5 million. Studies show that in 2008 about 30 firms, involved in 11 industries, hold close to 75% of shares in Tehran Stock Exchange.[68]

2009: A comparison of the

gross profit margin was 6.9% and for the Iranian companies, it was 13%.[69] The sector with the highest profit margin among the top 100 Iranian companies in 2009 is mining, with a margin of 58%. The mining companies in the Fortune 500 had a gross profit margin of 11%. After mining, other industries with highest margins are base metals, and telecommunications.[69]

2011: The best performing industries in 2011, in terms of

top 100 Iranian companies on the list ranged from $12.8 billion or the top ranking company, Iran Khodro, to $318 million for the 100th company.[69]

2012: Companies showing the most profit, are mostly in pharmaceutical, petrochemical and steel businesses. The sharp decline of the Rial in 2012 has made exports more competitive.[citation needed] Other favoured companies are state-owned industrial companies that rely on a mostly domestic supply chain, turning locally produced raw materials into products targeting Iranian consumers.[64]

Top 10 Companies by Market Capitalization[70][71]
Name Market Cap. (May 2012)
(million $)		 % of Total MC (May 2012) Name Market Cap. (June 2014)
(million $)		 % of Total MC (June 2014)
1. Telecommunication Company of Iran 9,702 9.31
Khalij Fars Petrochemical Company
 14,434 11.00
2. National Iranian Copper Industries Company 6,572 6.31 Mobarakeh Steel Company 5,576 4.25
3. Mobarakeh Steel Company 6,164 5.91 Bandar Abbas Oil Refining Company 5,227 3.98
4. Ghadir Investment Company 3,942 3.78 Tamin Petro 4,715 3.59
5.
Bank Pasargad
 3,573 3.43 Telecommunication Company of Iran 4,573 3.49
6. Gol Gohar Iron Ore Company 3,194 3.06 Ghadir Investment Company 4,530 3.45
7. Khouzestan Steel Company 3,064 2.94
Iran Mobile Telecommunications
 4,447 3.39
8. Omid Investment Corporation 2,908 2.79 Gol Gohar Iron Ore Company 4,433 3.38
9.
Pardis Petrochemical Company
 2,773 2.66 Esfahan Oil Refining Company 4,398 3.35
10. Bank Mellat 2,737 2.63 Parsian Oil and Gas Development 4,260 3.25
Total 44,629 42.82 Total 56,593 43.13

2015: Fluctuations in global prices of

commodities and the official exchange rate of the Iranian currency have a big impact on the profitability of companies which produce global commodities that are either exported or sold on the free market domestically. More than half the weight of the Iranian stock market cap belongs to such companies.[72]

Market participants

See also:
Civil Servants Pension Organization

The

Social Security Investment Company, one of the largest institutional investors on the TSE. Bonyads also play a significant role in TSE trading.[39] In 2016, TSE had 38,000 institutional investors.[73]

In 2005 fewer than 5 percent of Iranians owned stock.

investment firms having 562,375 shareholders, which makes it the "favorite industry" in the stock market.[75] The number of registered shareholders in the TSE increased to 4.5 million in 2011,[44] 7 million in 2014 and 9 million in 2016.[73][76]

As of 2014, about 300 foreign investors (including 25

Iranian citizens abroad) comprise 0.5 percent of the TSE. This number increased to 746 in 2016.[73] By comparison, foreigners own 60 percent of Turkish equities.[citation needed] In 2016, there were 127 foreign institutional traders in Iran's equity markets.[77]

Funds management

See also:
Venture capital in Iran

As of 2009, 21

investment banks are investing in the TSE according to the investment funds regulation. Mutual funds are open ended and their operation permission is issued by the Iran Securities and Exchange Organization (SEO).[4] Since then, 41 funds have been established, four of which are fixed income funds and the remainder of which are equity funds. As of August 2010, total assets under management within the Iranian fund management industry amount to approximately $230 million with great potential for development.[46] According to The Wall Street Journal in 2015, Western fund managers are already planning financial services companies in Tehran.[13]

Indices

See also: MSCI World
  • TSE All-Share Price Index (TEPIX)
  • TSE Dividend & Price "total return" Index (TEDPIX)
  • TSE All-Share FF adjusted (TEFIX)
  • TSE TEFIX-30 - Blue chip index
  • TSE Cash Dividend Index (TEDIX)
  • TSE-50 - (Top 50 most active companies)
  • Each industry (sector) Index
  • Industrial Index
  • Financial Index
  • Each Company Index (based on Price & Volume)

In 1990, the All-Shares Price

Index (TEPIX) was introduced to the market as the main indicator of share price movements. TEPIX is a weighted market value of all share prices appearing on the TSE Board[78]
and is measured every two minutes. In addition to the TEPIX, daily price indices of shares of each company, each sector, and the "Top Fifty" most active companies (TSE-50) are computed.

Overview of Turnover[79]
No. Shares Traded
(million)		 Daily Average Turnover
(million $)
July-09 20,256 100.7
Aug-09 5,747 53.9
Sep-09 3,202 35.8
Oct-09 4,669 56.7
Nov-09 26,675 436.3
Dec-09 1,547 19.8
Jan-10 3,228 30.5
Feb-10 4,315 57.6
Mar-10 2,229 28.9
Apr-10 5,294 67.1
May-10 21,563 125.9
June-10 17,837 112.7
116,562 (total) 93.83 (average)

Performance

See also: Economy of Iran
equity index in 2010.[5]

2000–2004: The performance of the TSE has had no

oil price.[81] While the overall indices of the world's five major exchanges – New York City, London, Paris, Frankfurt and Tokyo plunged by 40 to 70% between March 2001 and April 2003, the TSE index (Tepix) bucked the trend by going up nearly 80%.[7]

2005–2006: In December, 2005, 419 companies with a market capitalization of

Iranian nuclear programme.[66]

2007: The market bottomed in June 2007 mainly because of the renewed

Iranian economy.[82][83][84]

2008: The TSE was not directly affected by the

international financial turmoil in 2008, but following the global reduction in prices of copper and steel, the bourse index dropped by 12.5 percent, as most of the companies listed on the exchange are producers of such commodities.[68][85] TSE experienced an 11% growth at the end of 2008 and ranked second in the world in terms of increase in the volume of trade after Luxembourg's Bourse.[86]

2009: The TSE sank about 40% in value between August 2008 and March 2009, influenced by falling

oil prices and declining markets in other parts of the world. As of August 1, 2009 it has recovered by more than 10%.[citation needed] During Iranian year 2009/10, the value of capital market was around $20 billion. Some 3 million trade exchanges were made, pushing up the index to 12,500 units from the previous 8,000 units.[citation needed
]

2010: In the first month of

Iranian 2010 (March 20 – April 21, 2010), the index hit the 14,000 unit mark, up from the previous 12,500, showing 12 percent growth. The value of one month's trading transactions exceeded $1 billion against the previous year's corresponding period of $95 million.[citation needed] Tehran Stock Exchange bourse index from June 2009 to 2010 grew 55 percent and the value of TSE's total market capitalization went up about 33 percent, to over $71 billion.[87]

On August 2, 2010, the TSE main index (TEPIX) reached a record level of 16,056 points, despite US-sponsored

valuation of TSE stocks in 2010, the upward trend was expected to continue over the long run, rather than being a bubble.[citation needed] TEPIX reached a new record on September 18, 2010, when it hit 18,658, up from 11,295 at the start of the year.[citation needed] As of December 2010, the TSE index rose about 64 percent since the start of 2010.[88] The Tehran Stock Exchange has been ranked as the best bourse index in Europe, Africa and Middle East in 2010 in terms of performance of the main index.[citation needed
]

2011: On February 1, 2011, TEPIX and

Iranian expats also contributed to this increase.[90]

On April 9, 2011, TSE's main index (TEPIX) hit a new all-time record high at 26,222 over a boost from the stocks of metal and shipping industries.[80][91] According to the World Federation of Exchanges (WFE), TSE had the best performance among WFE member exchanges from May 2010 to May 2011. With a staggering 79% growth rate in its main index, the TSE ranked 1st in WFE's "Broad Stock Index Performance" category followed by the Colombo and Lima Stock Exchanges with 75.1% and 48.9% rates respectively.[44]

Overall, Tehran stock exchange posted the second highest gains in global markets in 2011 (TEPIX up 29.6%). Meanwhile, the German's DAX (DAX INDEX) lost 16.5% due and the FTSE 100(UKX INDEX) performed poorly, down 6.7%. Stock markets of emerging economies, like Brazil's Brazil Bovespa Index (IBOV INDEX), shed 18.4%.

eurozone crisis and the increasingly bearish outlook for the global economy.[93]

2012: TSE's overall index hit a new record high in October 2012 surpassing 31,000 points. Export-oriented companies have been favoured because of the imposition of an oil embargo by the international community and the consequent sharp decline in the value of the Iranian rial over 2012.[94]

2013: Following

the presidential elections, many Iranian investors started to move their assets from gold into domestic equities.[95] TEPIX hit 68,461 on October 9 (soaring over 50,000 points). TEPIX reached 71,471 on October 14, 2013.[96][97] Consequently, TSE's main index grew 130% in 2013.[45]

2014: As of September 2014, the TSE trades at price-to-earnings multiple of 6 times, with a 17 percent dividend yield. By comparison, the MSCI Frontier Markets index trades at price-to-earnings multiple of 12.4 times, with a 3.7 percent dividend yield.[98]

2015: The Iranian state is the biggest player in the economy, and the annual budget strongly influences the outlook of local industries and the stock market. The 2015 budget is not expected to bring much growth for many of the domestic industries.[72]

2016: As of June 2016, TSE had an average P/E of 7 against 13.8 for MSCI Emerging Markets. TEDPIX annualized 10-year performance in US$ was 10.1% (against 3.9% for MSCI Emerging Markets for the same period.)[99]

2018: in June 2018, the TEPIX index reached an all-time-high of 102,000.[100] It is expected that listed export-oriented companies (~50% of TSE capitalization) will be advantaged following the steep devaluation of the Iranian rial in 2018.[101]

2019: FY 2019 has been a "golden year" according to financial economists. TEDPIX, one of the 2 main indexes, reached an all-time-high of 512,000 points.[102] According to the same experts, several factors contributed to this, namely better regulation, increased knowledge of the stock market and wider access by the general population and the lackluster status of competing sectors such as gold or real estate.[102]

Growth potential

See also:
Iranian Economic Reform Plan
Iran's nominal GDP & projections by the World Bank and the Economist (1999-2015 est.)

Iran is the last, large untapped

international sanctions and inflation.[107][108]

Market valuation

See also: Inflation and monetary policy in Iran

In 2007, the market, with a capitalization of $37 billion, was trading at a fraction of the

price-to-earnings rate in Iran's market stands at around six while it is 15 in regional markets.[citation needed] With the removal of obstacles to foreign investment Iran could potentially have a 2,000–3,000 billion US dollar stock exchange market.[citation needed] Due to the price gains the average dividend yield has fallen from 16 per cent in 2009 to 13 per cent in 2010.[110] Iran devalued its currency in July 2013.[111] Iran has a large young, educated labor force.[98] As of 2014, Iran's wage costs are lower than Vietnam’s (i.e. cheap).[98]

According to

frontier market peers because of misperception and sanctions (2015).[112]

Privatization

Main article: Privatization in Iran

In recent years, the role of the private sector has been further on the increase. Furthermore, an

Iranian Constitution in 2004 has allowed 80% of state assets to be privatized, 40% of which will be conducted through the "Justice Shares" scheme and the rest through the Bourse Organization. The government will keep the title of the remaining 20%.[113][114]

Under the privatization plan, 47 oil and gas companies (including PetroIran and North Drilling Company) worth an estimated $90 billion are to be privatized on the Tehran Stock Exchange by 2014.[115]

Foreign investors can bid in Iranian privatization tenders, but need permission from the Economy Ministry on a case-by-case basis.[116] The government has reduced the bureaucratic channels and issues investment permits for foreign nationals in less than seven days.[citation needed] Iran has announced it will begin to allow foreign firms to purchase Iranian state-run companies, with the possibility of obtaining full ownership.[citation needed]

Iranian expatriates

See also:
Iranian citizens abroad

There are differing estimates of the total capital held by Iranian expatriates. One estimate places the number at $1.3 trillion US dollars.

Iranian expatriates based in the US continue to make substantial investments in Iran.[121]

Foreign portfolio investment

See also: Foreign direct investment in Iran and Kish Stock Exchange
oil price.[81][122]

So far, the Tedpix index has been driven by domestic investors, including wealthy Iranians, public sector pension funds and the investment arms of state-owned banks. For the index to prosper in the long run, more foreign investors need to make significant share purchases.

sanctions.[98] On 10 November 2018 Gottfried Leibbrandt, chief executive of SWIFT said in Belgium that some banks in Iran would be disconnected from this financial messaging service.[125]

The new by-law on foreign portfolio investment was approved by the government in June 2005, but ratified by the Council of Ministers in April, 2010. Under this new bylaw, foreign investors can participate in the TSE for the first time. Initially, however, some limitations had been imposed on foreign investors:

  • Foreign investors may own a maximum of 10 percent of each listed company.
  • Foreign investors may not withdraw their main capital and capital gain for the first three years of their investment. Repatriation is possible, after one year under the current regulations.

With the new law, Iran has increased the ceiling on foreign participation to 20% and foreign investors can now invest in the capital market, trade shares (including OTC) and:

  1. For small-scale (foreign) investors, take out their money at any time;[citation needed]
  2. For large-scale investors which possess 10 percent of the agency's value or 10 percent of the management position, can take their capital out of the country after two years upon receiving permission from the government.[126]
  3. This new law does not explicitly protect against control and manipulation through foreign pool of money (e.g. through funds located offshore or foreign agents based in Iran.)[127]

FOREX

See also: Iranian rial

Since April 2010, foreign investors have been able to open

Iranian banks and exchange their currencies to rials and vice versa. Foreigners who want to trade in Iran must get a license,[128] which the exchange says will take seven days on its website.[129]/[5]

Non-commercial risks

The Central Bank of Iran is also in charge of providing the investors with the necessary foreign exchange, which is also transferable.[citation needed] Moreover, under the law, foreign investors are protected and insured against possible losses and damages caused by future political turmoil or regional conflicts.

Dual listing

Iran is to target foreign investment in its energy sector by creating an umbrella group of nearly 50 state-run firms and listing its shares on four international stock exchanges.[130]

Offshore funds

See also:
Offshore banking

As of 2014,

Renaissance Capital and London-based Sturgeon Capital have also shown interest in investing in the TSE.[134]

U.S. sanctions

See also:
Iranian American

U.S. Treasury Department's Office of Foreign Assets Control (OFAC) in order to invest in the TSE.[135] Analysts expect TSE to be among the biggest early beneficiaries if the sanctions are lifted.[136]

Taxes

See also: Taxation in Iran

As of July 2010, taxes on TSE transactions are as follows:

  • Cash dividend: No tax (22.5% at source from Company).[4]
  • Share transfers: The Tax Amendment has changed the regulations regarding calculation of tax on transfer of shares and their rights in Iranian corporate entities.
    • In the case of shares listed on the Tehran Stock Exchange (TSE) the tax on transfer of such shares and other rights is 0.5 per cent of the sales price.[39]
    • In the case of transfer of the shares and their rights to other corporate entities (i.e. those not listed on the TSE) a flat rate of four per cent of value of the shares and rights transferred applies. No other taxes will be charged. The Amendment has removed the requirement to value the shares in this category.[39]

Exemptions

See also

Further reading

  • Ownership Structure and Firm Performance: An empirical study on listed firms of Tehran Stock Exchange; Based on Industry Classification. Ali Tahbaz Hendi (LAP LAMBERT Academic Publishing). December 2012.
    ISBN 978-3843380416
    .
  • Short-term Prediction of Tehran Stock Exchange Price Index (TEPIX): Using Artificial Neural Network (ANN)

References

  1. ^ a b c d TSE: History Archived 2010-08-24 at the Wayback Machine. Retrieved August 5, 2010.
  2. ^ TSE Legal structure Archived 2016-03-22 at the Wayback Machine Retrieved Dec 18, 2013
  3. ^ a b c d e f g h i j "Federation of Euro-Asian Stock Exchanges". FEAS. Archived from the original on 2011-07-17. Retrieved 2010-07-29.
  4. ^ a b c d e f g h i j k l m n o p q Tehran Stock Exchange: FACT BOOK Archived 2010-08-24 at the Wayback Machine. Retrieved July 31, 2010.
  5. ^ a b c d e f g h i j "Tehran Exchange Trades Futures to Attract Investors". BusinessWeek. 2009-12-08. Archived from the original on May 14, 2011. Retrieved 2010-07-29.
  6. ^ a b c d "Tehran Stock Exchange Monthly Report". TSE. Archived from the original on 2012-06-14. Retrieved 2012-06-12.
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