Iran Fara Bourse to Launch OTC Market

EghtesadOnline: Iran Fara Bourse, Tehran's junior equity exchange, is to set up an over-the-counter market for listing companies not eligible for listing on the IFB prime market, an official with the Securities and Exchange Organization (SEO) said.

News ID: ۷۸۵۸۵۳

30 January 2021

According to Maryam Safarian, head of the SEO research center, rules governing listing of companies and trading securities at the OTC market have been approved.

OTC market is principally designed for companies unable to meet the statutory requirements of the official securities market.

"Companies that are not eligible to list with the first and second IFB markets can be listed at the OTC market within the set framework, which is easier compared to the rules of the two markets," Safarian was quoted as saying by the Securities and Exchange News Agency.

The OTC market is designed to replace the current SME market of the IFB, she said. The latter apparently was a failure as only a handful of companies are listed therein.

There are restrictions regarding the eligibility of investors trading at the market. "Given the nature of listed companies in this market, only natural and legal investors with sufficient financial literacy and experience in stock trade, are allowed to operate," she said.

Listing Startups

According to market observers, one of the main reasons for establishing such a market is to facilitate listing of startups at the bourse.

Startups have been facing major hurdles in entering the stock market. One key problem is that their assets cannot be identified and assessed precisely, according to the IFB boss.

Unlike other listed companies that own tangible assets, startups are largely intellectual property and brand names, which apparently cannot be assessed under normal valuation procedures.

However, it appears that startups are gradually overcoming the hurdles. "In terms of meeting IFB listing norms, startups have made improvement in the past three years," Amir Hamouni, the CEO of IFB said earlier.

Many companies have met requirements related to financial performance and disclosure of business information "but [asset] valuation is still a key stumbling block.”

ICT Minister Mohammad Javad Azari Jahromi earlier classified IT companies in two categories: those in the telecom sector and startups, saying that the former is already listed like the Iran Telecommunication Company and the Mobile Telecommunication Company of Iran.

Alireza Daliri, an official with the Vice Presidency for Science and Technology, said earlier that five startups and knowledge-based companies are in the process of listing.

The Rouhani administration has often publicly said it supports the startups given their gradually increasing role in the economy. Support for tech firms are aimed, among other things, at curbing Iran's dependence on oil export and developing the technology ecosystem.

The stock market regulator in tandem with various administration bodies have attempted to cut the red taps for companies wanting to list.

Earlier, the government had said it would offer tax breaks to companies joining the share market.