TEHRAN- The head of Iran’s Securities and Exchange Organization (SEO) said that Iran Mercantile Exchange (IME) has made the country's commodity market observable and transparent.

Addressing a ceremony to launch “futures” for the copper cathode deals at the IME, Majid Eshqi said, “Pricing is one of the problems that has always existed in this market and we still have this problem in some products.”

Futures contracts (more colloquially, futures) are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price.

In a bid for more risk management in the country’s capital market, Tehran Stock Exchange (TSE) officially launched futures contract during a ceremony held in December 2018 at the place of Central Securities Depository of Iran (CSDI), which is the sole registrar, central custodian and clearing house for the Iranian stock market.

Addressing that ceremony, TSE head at the time, Ali Sahraei, said, “Futures contract is one of the risk management tools (also called hedging tools) which is today becoming operational at the TSE.”

He said: “Jurisprudence Committee of the SEO [which oversees compliance of capital market instruments with sharia rules] has approved the regulations related to the futures and we hope that it will act as a highly-applied derivative for hedging in the capital market.”

“Today we launch futures for seven indexes mainly in vehicles, banking, base metals, minerals, refined products and petrochemicals sectors”, Sahraei further announced.

Addressing the same ceremony, the SEO head at the time, Shapour Mohammadi, said that futures are some very important instruments for the market balance, while they are also some strong hedging tools.

They provide investment opportunities for those who are seeking the amount of profit more than they can earn in the normal market deals, the official noted.

He further highlighted the significance of taking the advantage of new financial instruments to grab the opportunities for market arbitrage (purchasing and selling the same security at the same time in different markets to take advantage of a price difference between the two separate markets).

In October 2019, “futures” was launched for the pistachio deals at Iran Mercantile Exchange.

IME is one of the four major stock markets of Iran, the other three markets are Tehran Stock Exchange (TSE), Iran's over-the-counter (OTC) market known also as Iran Fara Bourse (IFB), and Iran Energy Exchange (IRENEX).

The value of trades at Iran Mercantile Exchange in the previous Iranian calendar year (ended on March 20) rose 108 percent compared to the preceding year.

During the past year, about 3.5 quadrillion rials (about $83.5 billion) worth of commodities were traded at the mentioned market.

In the past year, several new records were achieved in terms of the volume and value of transactions in the mentioned market’s various floors including the industrial, petroleum, and petrochemical floors.

MA/MA