Misplaced Pages

#242757

99-420: Iran's capital market has companies from a wide range of industries , including automotive , telecommunications , agriculture , petrochemical , mining, steel iron, copper , banking and insurance , banking and others. Many of the companies listed are state-owned firms that have been privatized . The concept of stock industrialization dates to 1936, when Bank Melli , together with Belgian experts, issued

198-413: A central bank able to engage in substantial open market operations . A variety of different players are active in the secondary markets. Individual investors account for a small proportion of trading, though their share has slightly increased; in the 20th century it was mostly only a few wealthy individuals who could afford an account with a broker, but accounts are now much cheaper and accessible over

297-532: A money market where short-term debt is bought and sold. Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Financial regulators like Securities and Exchange Board of India (SEBI), Bank of England (BoE) and the U.S. Securities and Exchange Commission (SEC) oversee capital markets to protect investors against fraud, among other duties. Transactions on capital markets are generally managed by entities within

396-519: A multilateral development bank would sometimes provide an additional layer of underwriting , resulting in risk being shared between the investment bank(s), the multilateral organization, and the end investors. However, since 1997 it has been increasingly common for governments of the larger nations to bypass investment banks by making their bonds directly available for purchase online. Many governments now sell most of their bonds by computerized auction. Typically, large volumes are put up for sale in one go;

495-451: A primary market or a secondary market . In a primary market, new stock or bond issues are sold to investors, often via a mechanism known as underwriting . The main entities seeking to raise long-term funds on the primary capital markets are governments (which may be municipal, local or national) and business enterprises (companies). Governments issue only bonds, whereas companies often issue both equity and bonds. The main entities purchasing

594-487: A dealer needs to manually intervene, this will often mean a larger fee. Traders in investment banks will often make deals on their bank's behalf, as well as executing trades for their clients. Investment banks will often have a division (or department) called "capital markets": staff in this division try to keep aware of the various opportunities in both the primary and secondary markets, and will advise major clients accordingly. Pension and sovereign wealth funds tend to have

693-638: 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). Since July 2010 the TSE is a member of the International Options Market Association. The symbol of the TSE is a highly stylized representation of an Achaemedian dynasty (550-330 BC) gun-metal relief artifact, which

792-448: A government may only hold a small number of auctions each year. Some governments will also sell a continuous stream of bonds through other channels. The biggest single seller of debt is the U.S. government; there are usually several transactions for such sales every second, which corresponds to the continuous updating of the U.S. real-time debt clock. When a company wants to raise money for long-term investment, one of its first decisions

891-572: A market capitalization of IRR 32,741.7 million were listed in TSE. The TSE has had an exceptional performance over the past 5 years. In general, the stock market in 2005/06 shed value as it is manifested by the decline of its major stock price indices. The TSE price index (TSPIX) at the end of 2005/06, declined by 21.9%, while the Financial Sector Index, and the Industrial Index, declined by, 38.8%, 19.4% respectively, and

990-464: A mostly domestic supply chain , turning locally produced raw materials into products targeting Iranian consumers. 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

1089-532: A narrow range of quantity, quality, and identity which is defined by the exchange and identical to all transactions of that product. This is necessary for there to be transparency in stock exchange-based equities trading. The OTC market does not have this limitation. Parties may agree on an unusual quantity, for example in OTC, market contracts are bilateral (i.e. the contract is only between two parties), and each party could have credit risk concerns with respect to

SECTION 10

#1732771768243

1188-483: A negative effect on the primary borrowers: for example, if a large proportion of investors try to sell their bonds, this can push up the yields for future issues from the same entity. An extreme example occurred shortly after Bill Clinton began his first term as President of the United States; Clinton was forced to abandon some of the spending increases he had promised in his election campaign due to pressure from

1287-665: A new all-time record high at 26,222 over a boost from the stocks of metal and shipping industries . 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. Overall, Tehran stock exchange posted

1386-635: 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. It 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

1485-580: A result of the eurozone crisis and the increasingly bearish outlook for the global economy. 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. 2013 : Following Iranian rial 's strong devaluation between 2012 and 2013 and

1584-662: A source of finance. Two additional differences, this time favoring lending by banks, are that banks are more accessible for small and medium-sized companies, and that they have the ability to create money as they lend . In the 20th century, most company finance apart from share issues was raised by bank loans. But since about 1980 there has been an ongoing trend for disintermediation , where large and creditworthy companies have found they effectively have to pay out less interest if they borrow directly from capital markets rather than from banks. The tendency for companies to borrow from capital markets instead of banks has been especially strong in

1683-477: Is a bilateral contract in which two parties (or their brokers or bankers as intermediaries) agree on how a particular trade or agreement is to be settled in the future. It is usually from an investment bank to its clients directly. Forwards and swaps are prime examples of such contracts. It is mostly done online or by telephone. For derivatives , these agreements are usually governed by an International Swaps and Derivatives Association agreement. This segment of

1782-434: Is a win-win situation for all involved: investors are free to seek maximum returns, and countries can benefit from investments that will develop their industry and infrastructure. However, sometimes capital market transactions can have a net negative effect: for example, in a financial crisis , there can be a mass withdrawal of capital, leaving a nation without sufficient foreign-exchange reserves to pay for needed imports. On

1881-475: Is an exchange facility where the listed securities of small and mid-size companies can be traded efficiently and competitively. Any company, domestic or foreign, can list their products on the exchange for as long as they meet the listing criteria. The value of three markets of Securities and Stock Exchange, Over-the-Counter (OTC) stock exchange and commodity exchange hit $ 100 billion in December 2010. In 2010,

1980-526: Is concerned with long-term finance. In the widest sense, it consists of a series of channels through which the savings of individuals and institutions are made available for industrial and commercial enterprises and public authorities. This process of channeling savings into productive investments is crucial for economic growth and development. Moreover, capital markets provide opportunities for both individuals and institutions to diversify their investments, thereby managing risk and potentially enhancing returns over

2079-655: Is done directly between two parties, without the supervision of an exchange . It is contrasted with exchange trading, which occurs via exchanges. A stock exchange has the benefit of facilitating liquidity , providing transparency, and maintaining the current market price . In an OTC trade, the price is not necessarily publicly disclosed. OTC trading, as well as exchange trading, occurs with commodities , financial instruments (including stocks ), and derivatives of such products. Products traded on traditional stock exchanges, and other regulated bourse platforms, must be well standardized. This means that exchanged deliverables match

SECTION 20

#1732771768243

2178-464: 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. 2009: A comparison of

2277-627: Is issued by the Iran Securities and Exchange Organization (SEO) . 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. According to The Wall Street Journal in 2015, Western fund managers are already planning financial services companies in Tehran . In 1990,

2376-573: Is not permitted. There are no minimum trading lots. According to the Iranian Commercial Law, companies are prohibited from share repurchases . 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). Besides the Main and Secondary Market , there is a Corporate participation certificates Market ( corporate bonds ). Secondary Market

2475-544: Is often lengthy due to regulatory requirements. On the secondary markets, there is no limit to the number of times a security can be traded, and the process is usually very quick. Transactions on the secondary market do not directly raise finance, but they do make it easier for companies and governments to raise finance on the primary market, as investors know that if they want to get their money back quickly, they will usually be easily able to re-sell their securities. Sometimes, however, secondary capital market transactions can have

2574-714: Is open for trading five days a week from Saturday to Wednesday, excluding public holidays. 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. Settlement is T+3. The TSE is solely an order-driven market and all transactions are executed in the manner and under the principles of open auction. The Tehran Stock Exchange (TSE) has started an ambitious modernization program aimed at increasing market transparency and attracting more domestic and foreign investors. Concrete measures that have been taken in

2673-461: Is promoting the shareholding culture in Iran. By March 2010, 3.219 million shareholders had registered in the TSE, with investment firms having 562,375 shareholders, which makes it the "favorite industry" in the stock market. The number of registered shareholders in the TSE increased to 4.5 million in 2011, 7 million in 2014 and 9 million in 2016. As of 2014, about 300 foreign investors (including 25 Iranian citizens abroad ) comprise 0.5 percent of

2772-643: Is set at 1-to-10. TSE will only deal in the derivatives through electronic trading . 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. According to the Wall Street Journal in 2015, Iran is "full of well-run companies". Also true, there are companies in Iran which suffer problems such as mismanagement, energy inefficiency , overstaffing, opaque auditing systems, obsolete marketing and distribution networks and high levels of debt. 2007: There were 324 companies listed on

2871-460: Is whether to do so by issuing bonds or shares. If it chooses shares, it avoids increasing its debt, and in some cases the new shareholders may also provide non-monetary help, such as expertise or useful contacts. On the other hand, a new issue of shares will dilute the ownership rights of the existing shareholders, and if they gain a controlling interest, the new shareholders may even replace senior managers. From an investor's point of view, shares offer

2970-451: The 88 brokerages active in the TSE 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 . As of 2013, Mofid , 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. Starting March 2011 , investors are able to trade in

3069-535: The Dividend Index gained 11.8%, mostly due to a reported US$ 100 billion capital flight from the country because of the international dispute surrounding the Iranian nuclear programme . 2007 : The market bottomed in June 2007 mainly because of the renewed privatization drive in the Iranian economy . 2008 : The TSE was not directly affected by the international financial turmoil in 2008 , but following

Tehran Stock Exchange - Misplaced Pages Continue

3168-483: The IMF . There is no universally recognized standard for measuring all of these figures, so other estimates may vary. A GDP column is included for comparison. A great deal of work goes into analysing capital markets and predicting their future movements. This includes academic study; work within the financial industry for the purposes of making money and reducing risk; and work by governments and multilateral institutions for

3267-542: The International Swaps and Derivatives Association examined OTC Derivative Bilateral Collateralization Practice as one way of mitigating risk. OTC derivatives are a significant part of the world of global finance. The OTC derivatives markets grew exponentially from 1980 through 2000. This expansion has been driven by interest rate products, foreign exchange instruments and credit default swaps. The notional outstanding of OTC derivatives markets rose throughout

3366-732: The Kish Stock Exchange was launched to facilitate foreign investment and monetary activities in Kish Island free trade zone . Since 1998, importers and exporters have also been permitted to trade foreign exchange certificates on the TSE, creating a floating value for the 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. 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

3465-573: The OTCQX stocks (traded through the OTC Market Group Inc). Other OTC stocks have no reporting requirements, for example Pink Sheets securities and "gray market" stocks. However, in 2021, the pink sheets market came under the spotlight of greater regulatory scrutiny. Some companies, with Wal-Mart as one of the largest, began trading as OTC stocks and eventually upgraded to a listing on fully regulated market. By 1969 Wal-Mart Stores Inc.

3564-447: The investors . Investors can place their orders with TSE accredited brokers , who enter these orders into the trading system. 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: Under the price priority rule, a selling (buying) order with the lowest (highest) price takes precedence. Under

3663-546: The top 100 Iranian companies and the Fortune 500 in 2009 indicated that the gross profit margins of the top 100 Iranian companies were almost double those of the Fortune 500. For Fortune 500 companies, the average gross profit margin was 6.9% and for the Iranian companies, it was 13%. 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

3762-418: The 1970s and 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

3861-597: 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 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. 2000–2004 : The performance of

3960-545: The EU's Capital Markets Union initiative. When a government wants to raise long-term finance it will often sell bonds in the capital markets. In the 20th and early 21st centuries, many governments would use investment banks to organize the sale of their bonds. The leading bank would underwrite the bonds, and would often head up a syndicate of brokers, some of whom might be based in other investment banks. The syndicate would then sell to various investors. For developing countries,

4059-442: The Fortune 500 had a gross profit margin of 11%. After mining, other industries with highest margins are base metals, and telecommunications. 2011: The best performing industries in 2011, in terms of total sales , were the banking and automotive sectors. The worst performers were home appliances and electronics. In terms of gross profit margin , mining , telecommunications , and oil and gas exploration & production were

Tehran Stock Exchange - Misplaced Pages Continue

4158-571: The Iranian stock market cap belongs to such companies. The Government of Iran directly holds 35 percent of the TSE, while securing another 40 percent through pension funds and investment companies such as the Social Security Investment Company , one of the largest institutional investors on the TSE. Bonyads also play a significant role in TSE trading. In 2016, TSE had 38,000 institutional investors. In 2005 fewer than 5 percent of Iranians owned stock. The Government

4257-514: The Iranian stock market through the Internet from anywhere in the world, or get all the necessary information before traveling to Iran. There are 87 online service providers which offer round-the-clock information and services about Iran and its stock market. As of September 2011, 40,000 shareholders are registered and conducting transactions online. In 2013, 83 brokerage firms (out of TSE's 93 firms) offered on-line transactions, accounting for 18% of

4356-417: The OTC market is occasionally referred to as the " Fourth Market ". Critics have labelled the OTC market as the "dark market" because prices are often unpublished and unregulated. Over-the-counter derivatives are especially important for hedging risk in that they can be used to create a "perfect hedge". With exchange traded contracts, standardization does not allow for as much flexibility to hedge risk because

4455-434: The TSE has had no correlation with major exchanges or emerging stock markets over the past few years and not even with the oil price . 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%. 2005–2006 : In December, 2005, 419 companies with

4554-451: 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: 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: This indicates that the capital market in Tehran

4653-478: The TSE. Everything came to a standstill after the Islamic Revolution leading in a prohibition against interest-based activities and nationalization of major banks and industrial giants. Mobilization of all resources towards the war effort during the 8-year Iran–Iraq War did not help matters. Following the end of the war, the 1988 Budget Act re-established activity on the TSE, and within eight years

4752-414: The TSE. This number increased to 746 in 2016. By comparison, foreigners own 60 percent of Turkish equities. In 2016, there were 127 foreign institutional traders in Iran's equity markets. As of 2009, 21 mutual funds managed by permitted brokerage firms and investment banks are investing in the TSE according to the investment funds regulation. Mutual funds are open ended and their operation permission

4851-567: The Tehran Stock Exchange Corporation (20%), several banks, insurance companies and other financial institutions (60%), and private and institutional shareholders (20%). As of July 2011, Farabourse has a total market capitalization of $ 20 billion and a monthly volume of $ 2 billion. Trading takes place through licensed private brokers registered with the Securities and Exchange Organization of Iran. Thirty-one of

4950-647: The United States, over-the-counter trading in stock is carried out by market makers using inter-dealer quotation services such as OTC Link (a service offered by OTC Markets Group ). Although exchange-listed stocks can be traded OTC on the third market , it is rarely the case. Usually OTC stocks are not listed nor traded on exchanges, and vice versa. Stocks quoted on the OTCBB must comply with certain limited U.S. Securities and Exchange Commission (SEC) reporting requirements. The SEC imposes more stringent financial and reporting requirements on other OTC stocks, specifically

5049-591: The United States. According to the Financial Times , capital markets overtook bank lending as the leading source of long-term finance in 2009, which reflects the risk aversion and bank regulation due to the 2007–2008 financial crisis . Compared to the United States, companies in the European Union have a greater reliance on bank lending for funding. Efforts to enable companies to raise more funding through capital markets are being coordinated through

SECTION 50

#1732771768243

5148-464: The ability to profit from OTC derivatives activities and financial markets participants benefitted from them. In 2000 the authors acknowledged that the growth in OTC transactions "in many ways made possible, the modernization of commercial and investment banking and the globalization of finance". However, in September, an IMF team led by Mathieson and Schinasi cautioned that "episodes of turbulence" in

5247-509: The best performing industries. Sales totals of the 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. 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. Other favoured companies are state-owned industrial companies that rely on

5346-405: The bond markets . In the 21st century, several governments have tried to lock in as much as possible of their borrowing into long-dated bonds, so they are less vulnerable to pressure from the markets. Following the 2007–2008 financial crisis , the introduction of quantitative easing further reduced the ability of private actors to push up the yields of government bonds, at least for countries with

5445-519: The bonds or stock on primary markets include pension funds , hedge funds , sovereign wealth funds , and less commonly wealthy individuals and investment banks trading on their own behalf. In the secondary market, existing securities are sold and bought among investors or traders, usually on an exchange , over-the-counter , or elsewhere. The existence of secondary markets increases the willingness of investors in primary markets, as they know they are likely to be able to swiftly cash out their investments if

5544-481: The collapse of the Iranian rial and the slump in oil prices . It was also decided in 2014 that 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. Other complementary markets have also been established alongside

5643-420: The contract is a one-size-fits-all instrument. With OTC derivatives, though, a firm can tailor the contract specifications to best suit its risk exposure. OTC derivatives can lead to significant risks. Especially counterparty risk has gained particular emphasis due to the credit crisis in 2007 . Counterparty risk is the risk that a counterparty in a derivatives transaction will default prior to expiration of

5742-476: The counter-parties involved is in a foreign country. Whereas domestic regulatory authorities try to ensure that capital market participants trade fairly with each other, and sometimes to ensure institutions like banks do not take excessive risks, capital controls aim to ensure that the macroeconomic effects of the capital markets do not have a negative impact. Most advanced nations like to use capital controls sparingly if at all, as in theory allowing markets freedom

5841-432: The end of 2012 totalled US$ 346.4 trillion . The Bank for International Settlements statistics on OTC derivatives markets showed that "notional amounts outstanding totalled $ 693 trillion at the end of June 2013... The gross market value of OTC derivatives – that is, the cost of replacing all outstanding contracts at current market prices – declined between end-2012 and end-June 2013, from $ 25 trillion to $ 20 trillion." In

5940-757: 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 . * Exchange rate : 1 US $ =10,004 IRR (2009) Since 1995, TSE has been

6039-399: The exception of large, established foreign firms". Reputable companies located outside the U.S., he notes, sometimes sell stock over-the-counter to gain access to American markets while avoiding the expense of keeping two sets of audited paperwork to be listed on multiple stock exchanges (one in their homeland or to international standards, and one for American standards). An over-the-counter

SECTION 60

#1732771768243

6138-562: The exchange saw its numbers rise to 249 companies listed. The Government fully embraced economic reforms and a privatization initiative in 1989 with a surge of activity in share activity of many state-owned companies through the defined targets in the first " Five-Year Economic Reform " where the Government together with the Parliament defined the economic prospects of the country for the coming five years. Attention to promotion of

6237-522: The financial sector or the treasury departments of governments and corporations, but some can be accessed directly by the public. As an example, in the United States, any American citizen with an internet connection can create an account with TreasuryDirect and use it to buy bonds in the primary market. However, sales to individuals form only a small fraction of the total volume of bonds sold. Various private companies provide browser-based platforms that allow individuals to buy shares and sometimes even bonds in

6336-404: The form of shares/equities, and loans that are not expected to be fully paid back for at least a year. Funds borrowed from money markets are typically used for general operating expenses, to provide liquid assets for brief periods. For example, a company may have inbound payments from customers that have not yet cleared, but need immediate cash to pay its employees. But when a company borrows from

6435-480: 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. 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. 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

6534-424: The global spike in oil and metal prices, government support for industries and oil sectors as well as the growth of stock market liquidity flow contributed to the boom. Experts commented that the growth was also partly due to a government decision to sell off 20 percent of its equity in two major automakers . Given the relative low market valuation of TSE stocks in 2010, the upward trend was expected to continue over

6633-443: The internet. There are now numerous small traders who can buy and sell on the secondary markets using platforms provided by brokers which are accessible via web browsers. When such an individual trades on the capital markets, it will often involve a two-stage transaction. First they place an order with their broker, then the broker executes the trade. If the trade can be done on an exchange, the process will often be fully automated. If

6732-629: The largest holdings, though they tend to buy only the highest grade (safest) types of bonds and shares, and some of them do not trade all that frequently. According to a 2012 Financial Times article, hedge funds are increasingly making most of the short-term trades in large sections of the capital market (like the UK and US stock exchanges), which is making it harder for them to maintain their historically high returns, as they are increasingly finding themselves trading with each other rather than with less sophisticated investors. There are several ways to invest in

6831-712: The long run, rather than being a bubble . TEPIX reached a new record on September 18, 2010, when it hit 18,658, up from 11,295 at the start of the year. As of December 2010, the TSE index rose about 64 percent since the start of 2010. 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. 2011 : On February 1, 2011, TEPIX and total market value reached an all-time high of 21,349 and US$ 100 billion respectively. An alleged $ 200 million investments by Iranian expats also contributed to this increase. On April 9, 2011, TSE's main index (TEPIX) hit

6930-543: The long term. Normal bank lending is not usually classed as a capital market transaction, even when loans are extended for a period longer than a year. First, these bank loans are not securitized (i.e. they are not packaged into a resaleable security like a share or bond that can be traded on the markets). Second, lending by banks is more heavily regulated than capital market lending. Third, bank depositors tend to be more risk-averse than capital market investors. These three differences all act to limit institutional lending as

7029-481: The near future. The introduction of project-based participation certificates that bear a fixed annual return during the period of the project and promise the final settlement of the profit at the date of its completion, has diversified the market. As of 2015, TSE does not offer much complicated Islamic finance instruments such as derivatives (except ETFs and a few put options ), nor does it allow short sales or margin trading (except for futures) in contrast to

7128-443: The need arises. A second important division falls between the stock markets (for equity securities, also known as shares, where investors acquire ownership of companies) and the bond markets (where investors become creditors). The money markets are used to raise short-term finance; including loans that are expected to be paid back as early as overnight. In contrast, the "capital markets" are used to raise long-term finance, in

7227-460: The neighboring Dubai Financial Market . In 2008, commodity Futures came onto the Iran Mercantile Exchange (IME). 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. Thirty-one of the 88 brokerages active in the TSE are licensed to trade the futures contracts. The leverage for futures contracts

7326-456: 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. The trading system is an order driven system, which matches buying and selling orders of

7425-408: The opportunity. Companies can avoid paying fees to investment banks by using a direct public offering , though this is not a common practice as it incurs other legal costs and can take up considerable management time. Most capital market transactions take place on the secondary market. On the primary market, each security can be sold only once, and the process to create batches of new shares or bonds

7524-404: The other hand, if too much capital is flowing into a country, it can increase inflation and the value of the nation's currency, making its exports uncompetitive. Countries like India employ capital controls to ensure that their citizens' money is invested at home rather than abroad. Over-the-counter (finance) Over-the-counter ( OTC ) or off-exchange trading or pink sheet trading

7623-437: The other party. The OTC derivative market is significant in some asset classes: interest rate , foreign exchange , stocks , and commodities . In 2008, approximately 16% of all U.S. stock trades were "off-exchange trading"; by April 2014, that number increased to about 40%. Although the notional amount outstanding of OTC derivatives in late 2012 had declined 3.3% over the previous year, the volume of cleared transactions at

7722-399: The past years including topping the World Federation of Exchanges ' list in terms of performance in 2004. As of May 2014, TSE has had three bear market in its history: August 1996 – July 1998 (−32%); December 2004 – July 2006 (−34%); and during the financial crisis of 2007–2008 (−38%). In 2014, after reaching historic highs, TSE lost a quarter of its total market capitalization because of

7821-552: The period and totalled approximately US$ 601 trillion at December 31, 2010. In their 2000 paper by Schinasi et al. published by the International Monetary Fund in 2001, the authors observed that the increase in OTC derivatives transactions would have been impossible "without the dramatic advances in information and computer technologies" that occurred from 1980 to 2000. During that time, major internationally active financial institutions significantly increased

7920-471: The planning and operations of the stock exchange such as the settlement system, geographical expansion, new exchange laws in order to attract local and foreign capital. The TSE has installed the new trading system which has been purchased from Atos Euronext Market Solutions (AEMS) in 2007. 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

8019-525: The potential for higher returns and capital gains if the company does well. Conversely, bonds are safer if the company does poorly, as they are less prone to severe falls in price, and in the event of bankruptcy, bond owners may be paid something, while shareholders will receive nothing. When a company raises finance from the primary market, the process is more likely to involve face-to-face meetings than other capital market transactions. Whether they choose to issue bonds or shares, companies will typically enlist

8118-539: The president and a member of parliament called for firing the stock exchange organization's CEO. Eghtesadnews called it death blow for stock exchange. Etemad wrote the stock exchange lack transparency, government conflict of interest. Supreme Council of stock exchange threatened to leak everything related to corporations even state corporations corruption. Under its new structure, TSE has online trading , an arbitration board, digital signature , investor protection, surveillance mechanisms as well as post-trade systems. The TSE

8217-445: The presidential elections , many Iranian investors started to move their assets from gold into domestic equities. TEPIX hit 68,461 on October 9 (soaring over 50,000 points). TEPIX reached 71,471 on October 14, 2013. Consequently, TSE's main index grew 130% in 2013. Capital market A capital market is a financial market in which long-term debt (over a year) or equity -backed securities are bought and sold, in contrast to

8316-453: The previous year's corresponding period of $ 95 million. 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. On August 2, 2010, the TSE main index (TEPIX) reached a record level of 16,056 points, despite US-sponsored sanctions against Iran . Thus, TEDPIX became the world's second-best performing equity index . Factors such as

8415-421: The primary capital markets, often the purpose is to invest in additional physical capital goods , which will be used to help increase its income. It can take many months or years before the investment generates sufficient return to pay back its cost, and hence the finance is long term. Together, money markets and capital markets form the financial markets , as the term is narrowly understood. The capital market

8514-399: The private sector and new interest in the TSE brought life back to the market. However, lack of regulation and out-of-date legal framework led to crisis in the market leading to certain "meltdowns". Over the 1996 to 2000 period an automated trading system was introduced, and a number of important regulatory mechanisms were strengthened. The market has experienced its share of highs and lows in

8613-444: The purposes of regulation and understanding the impact of capital markets on the wider economy. Methods range from the gut instincts of experienced traders, to various forms of stochastic calculus and algorithms such as Stratonovich-Kalman-Bucy filtering algorithm. Capital controls are measures imposed by a state's government aimed at managing capital account transactions – in other words, capital market transactions where one of

8712-453: 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). Restriction on Rights is 6%. This can be changed in specific situation by the Board of the TSE in case of unusual price movements resulting in an extremely high or low P/E ratio . Short selling

8811-549: 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%. Equally, MENA stock markets had a poor year in 2011, reflecting both the political turbulence across the region and the battering suffered by most global markets as

8910-468: The secondary market without directly buying shares or bonds. A common method is to invest in mutual funds or exchange-traded funds . It is also possible to buy and sell derivatives that are based on the secondary market; one of the most common type of these is contracts for difference – these can provide rapid profits, but can also cause buyers to lose more money than they originally invested. All figures given are in billions of US$ and are sourced to

9009-410: The secondary markets. There are many thousands of such systems, most serving only small parts of the overall capital markets. Entities hosting the systems include investment banks, stock exchanges and government departments. Physically, the systems are hosted all over the world, though they tend to be concentrated in financial centres like London, New York, and Hong Kong. A capital market can be either

9108-464: The services of an investment bank to mediate between themselves and the market. A team from the investment bank often meets with the company's senior managers to ensure their plans are sound. The bank then acts as an underwriter , and will arrange for a network of brokers to sell the bonds or shares to investors. This second stage is usually done mostly through computerized systems, though brokers will often phone up their favored clients to advise them of

9207-492: The share of their earnings from derivatives activities. These institutions manage portfolios of derivatives involving tens of thousands of positions and aggregate global turnover over $ 1 trillion. At that time prior to the financial crisis of 2008, the OTC market was an informal network of bilateral counter-party relationships and dynamic, time-varying credit exposures whose size and distribution tied to important asset markets. International financial institutions increasingly nurtured

9306-464: 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 . 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

9405-430: The total trading value. In 2014, Iran's TSE was in talks to share its trading data with Thomson Reuters (and Bloomberg L.P. in 2015) once the sanctions are lifted. As of July 2010, trading fees include: Presently, TSE trades mainly in securities offered by listed companies. As of 2015, equities and corporate bonds (e.g. Sukuk ) are being traded at TSE. The plan is to introduce other financial instruments in

9504-476: The trade and will not make the current and future payments required by the contract. There are many ways to limit counterparty risk. One of them focuses on controlling credit exposure with diversification , netting , collateralisation and hedging . Central counterparty clearing of OTC trades has become more common in recent years, with regulators placing pressure on the OTC markets to clear and display trades openly. In their market review published in 2010,

9603-504: The world. As of August 1, 2009 it has recovered by more than 10%. 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. 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

9702-553: Was found in 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. The Iranian stocks went into free fall in July 2023 and lost more than 2 million units of value. The Iranian Judicial chief demanded questioning from

9801-620: Was incorporated. In 1972, with stores in five states, including Arkansas, Kansas, Louisiana, Oklahoma and Missouri, Wal-Mart began trading as over-the-counter (OTC) stocks. By 1972 Walmart had earned over US$ 1 billion in sales — the fastest company to ever accomplish this. In 1972 Wal-Mart was listed on the New York Stock Exchange (NYSE) under the ticker symbol WMT. In Kiplinger in 2017, Dan Burrows wrote that American OTC markets are rife with penny stock fraud and other risks, and should generally be avoided by investors "with

#242757