New Platforms Will Boost Share Market Supervision

EghtesadOnline: The Securities and Exchange Organization on Tuesday unveiled four new platforms to improve its oversight of stock market trade.

News ID: ۷۸۷۷۷۶

16 March 2022

Mehdi Parchini, head of the supervision department of the SEO, briefed senior economic officials on the function of the platforms during the unveiling ceremony.

“Bidar”, “Aramis”, “Nahan” and “Sana” are names of the newly designed smart platforms. “The platforms have been designed to improve transparency in the stock market and ensures regulations are upheld,” Parchini was quoted as saying by the SEO News Agency.

Bidar receives data on stock deals and sends transactions reports and supervisory warnings based on an analytical data base.

Nahan has instant access to transactions, extracts data and processes the supervisory warnings. Aramis makes detailed examination of data and processes the background of transactions. Finally, suspicious transactions are tracked and registered by Sana.

According to the official, the platforms will report to the regulator on common breach and fraud in stock trade, such as “pump and dump” and “poop and scoop”, among others.

Pump and dump is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements to sell the cheaply purchased stock at a higher price.

Poop and scoop occurs when a small group of informed people attempts to drive down a stock's price by spreading false information, rumors, and otherwise damaging information (poop) in order to then buy the stock at a lower price (scoop).

If successful, they can buy the stock at bargain prices, as the overall marketplace will have sold off the security, causing the price to fall dramatically.

Addressing the audience, Majid Eshqi, managing director of the SEO said supervision of the bourse is a major concern for authorities given the expansion of asset markets and complexity and diversity of financial instruments.

The Economy Minister Ehsan Khandouzi said launching the supervisory platforms was a step forward in fulfilling pledges to support struggling bourse and restoring investor confidence.

Khandouzi linked to historic stock market collapse in the summer of 2020 partly to lax supervision. “Spreading false information on the one hand and lack of timely intervention on the part of supervisory bodies on the other led to the  crisis in the bourse and undermined investor confidence.”

After historic gains in the first five months of fiscal 2020-21, Tehran’s share market went into a tailspin in mid-August that year.  The benchmark of Tehran Stock Exchange, TEDPIX, grew close to 300% before diving deep into the red.

Market observers blamed major shareholders and institutional traders for the unprecedented share sell-off and collapse the markets indictors.

They increased offers when share prices reached a peak and let the share prices plunge by refusing to inject a portion of their earnings from selling shares into the market or assign market makers.  Market makers, or liquidity providers operate as wholesalers buying and selling securities to balance the market.