FEDERATION OF EURO-ASIAN STOCK EXCHANGES > YEARBOOK 2002/2003 > PAGE 73
TEHRAN STOCK EXCHANGE
LETTER FROM THE SECRETARY GENERAL AND CEO
This year, up until November 30, the average total return
of investment on TSE listed stocks stood at 54.7%, which
in comparison to an inflation rate of 14-15%, shows the
highest real rate of investment return in Iran’s economy.
In 2002, the Tehran Stock Exchange (TSE)
continued successfully the positive trend it
had started in recent years. This year, up
until November 30, the average total return
of investment on TSE listed stocks stood at
54.7%, which in comparison to an inflation
rate of 14-15%, shows the highest real rate
of investment return in Iran’s economy. Also,
the total turnover of the TSE, compared with
the previous year’s figures, increased by
100.8%. The TSE expects to perform a series
of development plans for market
administration, information disclosure,
efficiency and transparency, a regulation
system, and establishment of regional centers
in some provinces, the first of which started
operations in Mashhad, the second biggest
city in Iran, in June 2002. Other important
plans performed by the TSE in 2002 are as
follows:
setting regulations for investment in the
Exchange by foreigners, including real
persons, legal entities or mutual funds;
finishing studies and providing a Request for
Proposal (RFP) for upgrading the TSE trade
system software;
preparing the required regulations for
restricting insider trade and market
manipulation, and developing policies and
requirements for information disclosure;
dividing the trading floor into the main floor
(A and B) and the second floor, and
establishing new listing regulations for each
floor;
listing and developing a new trading system
for profit-sharing bonds with respect to the
policy of providing various financial
instruments.
S. Ahmad Mir-Motahari
Secretary General and CEO
HISTORY AND DEVELOPMENT
The idea of having a well-organized stock market
to speed up the process of industrialization of
the country dates back to the 1930s when Bank
Melli Iran studied the market. The outbreak of
WWII and subsequent economic and political
events delayed the establishment of the TSE
until 1967. The TSE opened in April 1968.
Initially, only government bonds and certain
state-backed certificates were traded. During
the 1970s, the demand for capital boosted the
demand for stock. At the same time, institutional
changes led to the expansion of stock market
activity. The restructuring of the economy
following the Islamic Revolution expanded public
sector control over the economy and reduced
the need for private capital. At the same time,
the abolishment of interest-bearing bonds
terminated their presence in the stock market. As a result, the TSE entered a period of
stagnation. This period ended in 1989 and since
then the TSE has expanded continuously. By the
end of December 2002, a total of 327 companies
with a market capitalization of US$ 14.3 billion
were listed on the TSE.
Development of administrative and clearing and
settlement mechanisms - the TSE will establish
a Central Depository System and develop a DVP
system. by the professional functions of broker
institutions and financial intermediaries within
the capital market.
FUTURE OUTLOOK
Plans for 2003 are as follows:
Selection and purchase of new trading system
software - the new trading system should begin
operations by the end of 2003 and will
additionally help establish the Central Depository
System.
Completion of basic research regarding
operations of an online trading system.
Provision for a new plan for re-classification of
brokers’ activities, revision of brokers’
registrations, and establishment of a new broker-
dealer system – a registration system, taking into
account the requirements of the TSE and an
increased number of brokers, will be developed
Introduction of a new regulatory framework for
the securities market. An upgrade to present
regulations to come closer to internationally
recognized standards for securities markets is
planned.