The new bourse will be based in Kish Island Free Trade Zone off the Persian Gulf, Ahmad Jamali said. It will open with an initial capital of $30 million, according to IRIB news.
Domestic and foreign investors can participate in the new market. “At least 40% of the capital is planned to be sourced from foreign investors,” he was quoted as saying.
Jamali said the groundwork for setting up the exchange is in place and the Securities and Exchange Organization, the stock market regulator, has given the go-ahead.
The SEO earlier announced that it plans to extend the international frontiers of the capital market and help boost interaction with foreign investors.
Jamali pointed to the composition of shareholders of the bourse as a critical issue, saying that a special taskforce has been mandated to identify the potential domestic and foreign players.
“Shareholders would be assessed subject to their financial and technical eligibility,” he said, recalling that the High Council of Securities and Exchange, the top stock market policymaker, will decide on the composition of shareholders.
A number of domestic and foreign companies have applied to be listed on the international bourse. “Forty companies have sent applications and the taskforce is assessing their prerequisite,” he said, but did not name names.
The bourse will have the capacity to attract non-rial financial resources.
However, the practicability of such an enterprise is under question, given the tough US economic sanctions on Iran’s economy, namely on key banking, insurance and financial sectors.
Despite the major hurdles to foreign investment, Iranian economic officials have often announced their desire for foreign investment to help lift the economy.
US Antagonism
Gholmareza Ansari, the deputy foreign minister for economic affairs, earlier referred to problems associated with money transfer due to hostile US threats as the main obstacle to foreign investment in the planned share market, saying that ways to evade the penalties are being discussed with the Economy Ministry.
Foreigners hardly represent 0.1% of investors in Iran’s capital market, according to an earlier report by the Central Securities Depository of Iran. The number of trading codes issued for foreign legal and natural entity investors was 1,366 in the last fiscal year that ended in March.
The new exchange will be Iran’s fifth after the Tehran Stock Exchange, Iran Fara Bourse (the junior equity market), Energy Exchange and the Iran Mercantile Exchange.