Mofid Keeps Edge Over Rivals

EghtesadOnline: Mofid Brokerage is keeping its edge over other brokers using its dominance of online trading.

News ID: ۷۷۲۶۴۶

26 December 2016

Online trading is steadily gaining popularity in Iran, despite high transaction costs and system failures plaguing trading platforms.

Some 24% of all trading during the first three quarters of the current Iranian year (started March 20) was conducted online, amounting to 233 trillion rials ($5.82 billion at market exchange rate), 21.4% of which were handled by Tehran-based Mofid, Securities and Exchange News Agency reported.

The brokerage’s share of the 943 trillion rials ($23.57) worth of trading on Iranian exchanges during the period was far less, but still earned the broker the top spot. Mofid handled 6.35% of all trading, Financial Tribune reported.

Trade volume has recovered this year, but most of it is due to government bond issues. Only 225 trillion rials ($5.6 billion) worth of shares were traded during the same period last year.

However, most of the 108 active brokerages are struggling to turn a profit, as the top clique handles most of the trading. Little is left to small brokerages.

Also, state-controlled brokerages have an edge over private players in securities markets, receiving large traffic from government securities offerings and handling their parent companies’ transactions.

Attractive rates from banks and money markets, along with expectations of further rial devaluation, are keeping stock trading to a minimum. Investors have flocked to banks to save their money, leaving the stock exchanges with a thirst for trading. Due to the decline in trading, many brokers who started business on prospects of aggressive growth are on the brink of bankruptcy.

Even many large cap banks, along with some other companies, have been halted for months due to regulatory disputes and changing their dividend payouts. The Central Bank of Iran wants them to retain earnings and realize part of the losses they made due to poor lending practices in the past decade.

The shareholders are not happy about this and the Securities and Exchange Organization is taking their side in the dispute. The result so far has been dampened trading.

SEO officials fear realizing losses will send stocks into a prolonged rout, which is not good for their jobs.

Other top brokers following Mofid’s lead in online trading include: Farabi with a 4% market share, Agah with 3.5%, Mobin Sarmayeh with 3.4%, and Keshavarzi Bank’s brokerage with a 2.8% share.

Farabi, Agah and Mobin brokerages are gaining market share after tightening their grip on trading. They respectively handled 3.7%, 3.4% and 3.2% of online trading for the same period of last year.

However, these brokers have not been able to get large trades from institutional traders. So the top brokers in terms of total trading in the first three quarters after Mofid are an entirely bank-dominated bunch.

Parsian Bank’s brokerage dealt with 4.2% of all trading, while Pasargad Bank’s brokerage handled 3.6%. Amin Avid brokerage, a subsidiary of Iran’s largest investment bank Amin, came fourth with 3.2% of trading and Novin Investment Bank was fifth with a 3% market share.