A | B | C | D | E | F | G | H | CH | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
| بورس اوراق بهادار تهران | |
 | |
 | |
| Type | Stock exchange |
|---|---|
| Location | Tehran, Iran |
| Coordinates | 35°46′41″N 51°22′05″E / 35.778°N 51.368°E |
| Founded | February 4, 1967[1] |
| Owner | Public Joint Stock Company,[2] demutualized (not-listed and for-profit)[3] |
| Key people | Mahmoud Goudarzi (CEO)[3] |
| Currency | Iranian rial |
| Commodities | Shares & rights, corporate participation certificates, futures[4][5] |
| No. of listings | 666 companies (December 2020)[6] |
| Market cap | US$1.45 trillion (2023)[6] |
| Volume | 82,479 million (2009)[4] |
| Indices | TEPIX and TEDPIX (main) |
| Website | tse.ir |
| Note: TSE is self-regulated under SEO supervision. As of July 2010, no margin/lending is offered, except for futures.[4][5] | |
The Tehran Stock Exchange (TSE) (Persian: بورس اوراق بهادار تهران, romanized: Burs-e Owraq-e Bahadar-e Tehran) is Iran's largest stock exchange, which first opened in 1967.[1] The TSE is based in Tehran. As of May 2023[update], 666 companies with a combined market capitalization of US$1.45 trillion were listed on TSE.[6] TSE, which is a founding member of the Federation of Euro-Asian Stock Exchanges, has been one of the world's best performing stock exchanges in the years 2002 through 2013.[5][7][8][9] TSE is an emerging or "frontier" market.[10]
Iran's capital market has companies from a wide range of industries,[6] 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.
History
The concept of stock industrialization dates to 1936, when Bank Melli, together with Belgian experts, issued 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, and 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 the 1970s, coupled with 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 the TSE.[1]
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 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 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.[11] The market has experienced its share of highs and lows in the past years including topping the World Federation of Exchanges' list in terms of performance in 2004.[1] 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%).[12] In 2014, after reaching historic highs, TSE lost a quarter of its total market capitalization because of the collapse of the Iranian rial and the slump in oil prices.[13] 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.[14]
Other complementary markets have also been established alongside 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.[11]
| 2006 | 2007 | 2008 | 2009 | |
|---|---|---|---|---|
| Number of Listed Companies | 417 | 415 | 346 | 337 |
| Market Capitalization (USD Millions) | 43,794 | 45,574 | 49,040 | 58,698 |
| Total Value of Share Trading (USD Millions) | 6,230 | 7,872 | 15,252 | 16,875 |
| Daily Average Trading Value (USD Millions) | 26.1 | 32.5 | 63.8 | 65.4 |
| Total Number of Trade in Share (Millions) | 15,839 | 23,401 | 37,975 | 82,479 |
| No. of Transactions (in thousands) | 1866 | 2107 | 1978 | 2646 |
| No. of Trading Days | 239 | 242 | 239 | 258 |
| Share Turnover Velocity (%) | 15.6 | 16.37 | 26.5 | 28.74 |
| P/E ratio | 5.4 | 5.2 | 4.1 | 5.5 |
| Dividend yield (%) | 10.44 | 14.5 | 12.3 | 15.8 |
| Market Capitalization/GDP (%) | 17.9 | 15.4 | 14.1 | 15.2 |
*Exchange rate: 1 US $=10,004 IRR (2009)
Industry affiliations
Since 1995, TSE has been 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).[3] Since July 2010 the TSE is a member of the International Options Market Association.[15]
Logo
The symbol of the TSE is a highly stylized representation of an Achaemedian dynasty (550-330 BC) gun-metal relief artifact, which 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.[16]
Structure
- The Securities & Exchange Council is the highest authority and is responsible for all related policies, market strategies, and supervision of the market in Iran. The Chairman of the Council will be the Minister of Economics; other members are: Minister of Trades, Governor of the Central Bank of Iran, Managing Director of the Chamber of Commerce, Attorney General, Chairman of the Securities and Exchange Organization, representatives of the active market associations, three financial experts requested by the Economics Minister and approved by the Council of Ministers, and one representative for each commodity exchange.[17]
- The Securities and Exchange Organization (SEO) is responsible for administration and supervisory duties, governed by the Board of Directors. The SEO's Board of Directors are elected by the Securities and Exchange Council. SEO also actively promotes innovation in Islamic products and has formed a specific "Sharia committee" to assess the compatibility of new products with Islamic law. SEO is the sole regulatory entity for the regulation and development of the capital market in Iran.[18]
Corruption, inside trading, interference and control
The Iranian stocks went into free fall in July 2023 and lost more than 2 million units of value.[19] The Iranian Judicial chief demanded questioning from the president and a member of parliament called for firing the stock exchange organization's CEO.[20][21][22][23] Eghtesadnews called it death blow for stock exchange.[24] Etemad wrote the stock exchange lack transparency, government conflict of interest.[25] Supreme Council of stock exchange threatened to leak everything related to corporations even state corporations corruption.[26]
Operations
Under its new structure, TSE has online trading, an arbitration board, digital signature, investor protection, surveillance mechanisms as well as post-trade systems.[27] The TSE is open for trading five days a week from Saturday to Wednesday, excluding public holidays.[28] 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.[29] Settlement is T+3.[3] The TSE is solely an order-driven market and all transactions are executed in the manner and under the principles of open auction.[4]
Trading platform
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 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.[30]
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 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.[31]
The trading system is an order driven system, which matches buying and selling orders of the investors. Investors can place their orders with TSE accredited brokers, who enter these orders into the trading system.[32] 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:[3]
- The best price (price priority)
- Time of order priority
Under the price priority rule, a selling (buying) order with the lowest (highest) price takes precedence. Under 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.[3]
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 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).[33] Restriction on Rights is 6%.[4] 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 is not permitted. There are no minimum trading lots.[3][4] According to the Iranian Commercial Law, companies are prohibited from share repurchases.[34] 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).[35][32]
Market segmentation
Besides the Main and Secondary Market, there is a Corporate participation certificates Market (corporate bonds). Secondary Market is an exchange facility where the listed securities of small and mid-size companies can be traded efficiently and competitively.[4] 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.[36] In 2010, the Kish Stock Exchange was launched to facilitate foreign investment and monetary activities in Kish Island free trade zone.[37]
| Description | Main Board | Secondary Board | Secondary Market |
|---|---|---|---|
| Minimum Capital (billion IRR) | 200,000 | 100,000 | 30,000 |
| Minimum Shareholders | 1000 | 750 | 250 |
| Free Float (%) | 20 | 10 | 15 |
| Minimum Term of Operation (Years) | 3 | – | – |
| Profitability (Years) | 3 | 2 | 1 |
| Equity to Asset Ratio (%) | 30 | 20 | 15 |
| Market Makers | Selective | Selective | Mandatory |
TSE rate
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.[39]
OTC market
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 the Tehran Stock Exchange Corporation (20%), several banks, insurance companies and other financial institutions (60%), and private and institutional shareholders (20%).[40] As of July 2011, Farabourse has a total market capitalization of $20 billion and a monthly volume of $2 billion.[41]
Brokers
Trading takes place through licensed private brokers registered with the Securities and Exchange Organization of Iran. Thirty-one of 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.[5] 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.[42]
Electronic trading and market data
Starting March 2011, investors are able to trade in the Iranian stock market through the Internet from anywhere in the world, or get all the necessary information before traveling to Iran.[43] There are 87 online service providers which offer round-the-clock information and services about Iran and its stock market.[citation needed] As of September 2011, 40,000 shareholders are registered and conducting transactions online.[44] In 2013, 83 brokerage firms (out of TSE's 93 firms) offered on-line transactions, accounting for 18% of the total trading value.[42] 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.[45]
Trading fees
As of July 2010, trading fees include:
- Equities and rights: 0.55% payable by the sellers and 0.5% the buyers.[4]
- Participation bonds: 0.1% of transaction value payable by both the buyer and seller with a maximum of 100 million IRR.[4]
New products and services
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.[27] The plan is to introduce other financial instruments in 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.[3] 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 the neighboring Dubai Financial Market.[13]
Futures
In 2008, commodity Futures came onto the Iran Mercantile Exchange (IME).[46] 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.[5] Thirty-one of the 88 brokerages active in the TSE[47] 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.[5] 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.[48]
Outlook
| TSE projects (as of 2009) | Status (as of November 2016) |
|---|---|
| Continuation of privatization plan and IPOs of state-owned companies. | Government's ownership in GDP down to 40% as of 2010 (from 80% in 2005). From 2005 until 2010, Iran privatized $63 billion worth of equity.[citation needed] More information: Privatization in Iran. As of 2015, initial public offerings (IPOs) will be conducted through the process of book-building instead of auction, for more transparency.[49] |
| Increasing liquidity in securities market with a review on trading regulations. | New bylaw to facilitate foreign portfolio investment was ratified by the Council of Ministers in April 2010. Since then, as an incentive to investment in Iran, foreign investors in TSE are tax-exempt.[citation needed] |
| Launching derivatives market and introducing stock futures and options. | In July 2010, TSE introduced six single-stock futures contracts, based on 2 companies which will expire in two, four and six months. Plan to increase coverage to 10 companies by March 2011.[5] Some ETFs are now available at Fara bourse. Futures on indices: originally expected by 2011.[17] TSE embedded a special type of equity put options for two mining companies and a petrochemical company in August 2012 whereas the emitter guarantees a return of 20% (e.g. as a hedge against inflation) for the payment of 1% of the stock value.[50] Gold option trading on the Iran Mercantile Exchange will be available in January 2017.[4][51] Call options for Mobarakeh Steel Company, National Iranian Copper Industries Company and IKCO were first introduced in 2016.[52] |
| Establishing Islamic bonds and products[18] such as Sukuk and Islamic Mortgage-Backed Securities (MBS), based on market development act and tax exemption. | Sukuk and options are the next instruments to be available.[17] Profit and awards accrued on participation papers are tax exempt.[53] See also: (OTC) Bond market in Iran. |
| Enactment of anti-money laundering laws. | See: Anti-money laundering laws in Iran. |
| Setting up required mechanisms for tracking frauds and claiming against breach of market law. | TSE has an electronic system for tracing market abuse and insider trading.[17] Regulatory framework needs further strengthening and development.[13] See also: Iran Securities and Exchange Commission.[54] |
| Creating efficient corporate governance and investor relations frameworks. | In 2006, the TSE introduced more stringent reporting and disclosure requirements for listed companies and enforcement measures for non-compliance.[55] Six-month corporate earnings announcements are mandatorily audited prior to publishing and seen as being a reliable source of information by investors.[56] Starting April 2014, all companies have to report their short term investments at fair value instead of cost.[57] KPMG and PriceWaterhouseCoopers have suspended their operations in Iran because of international sanctions.[58] Lack of corporate research.[13] First Frontier[59] in London has tied up with an Iranian investment banking firm, the Agah Group,[60] to provide research on the country's leading companies.[citation needed] See also: Accounting standards in Iran |
| Facilitating and expanding market access by means of developing brokerage network, electronic trading and direct market access. | E-trading is possible since July 2010 on trial basis and will be offered to the general public starting March 2011.[43][61] Mobile Phone-Based Trading planned later in 2011.[43] There are 87 online service providers which offer round-the-clock information and services about Iran and its stock market.[citation needed] Lack of global custodians.[13] See also: Tehran Stock Exchange Services Company (TSESC). |
| Economic Calendar and market data. | Real-time data available: Bid/Ask Prices, Indices, Companies Announcements, Trading Volume and Value through the TSE website[62] and a system named "CODAL",[63] including some corporate reports in English (free of charge).[4] Plans to offer TSE market data through Thomson Reuters and Bloomberg L.P.[45] |
| Promoting the shareholding culture in Iran. | The Government is running financial literacy training programs in the society.[4] See also: "Justice Shares" in Iran. |
Economic sectors
According to the Wall Street Journal in 2015, Iran is "full of well-run companies".[64] 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.[27][65]
2007: There were 324 companies listed on 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:[66]
- Basic Metals,
- Motor Vehicles and Trailers,
- Chemicals and By-Products,
- Non-Metallic Minerals Products.
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:
- Mobarakeh Steel Co. with MC of US$3,218 million, which translates to 7.6% of MC,
- National Iranian Copper Industries Company (Persian: Sanaye Mese Iran) at 6.8% of MC,
- SAIPA at 5.3% of MC.
2008: other companies in the top spots included:[67]
- Gol Gohar Iron Ore Company ($2.1 billion MC),
- Chadormalu Mining and Industrial Company ($2 billion),
- Kharg Petrochemical Company (over $1 billion),
- Ghadir petrochemical companies (over $1 billion),
- Khouzestan Steel Company (over $1 billion),
- Power Plant Projects Management Company (MAPNA) (over $1 billion),
- Retirement Investment Firm (over $1 billion),
- Iran Khodro (over $1 billion),
- Metal and Mine Investment Companies (over $1 billion).
This indicates that the capital market in Tehran 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.[68]
2009: A comparison of 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%.[69] 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 the Fortune 500 had a gross profit margin of 11%. After mining, other industries with highest margins are base metals, and telecommunications.[69]
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 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.[69]
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.[citation needed] Other favoured companies are state-owned industrial companies that rely on a mostly domestic supply chain, turning locally produced raw materials into products targeting Iranian consumers.[64]
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 the Iranian stock market cap belongs to such companies.[72]
Market participants
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.[39] In 2016, TSE had 38,000 institutional investors.[73]
In 2005 fewer than 5 percent of Iranians owned stock.[74] The Government 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.[75] The number of registered shareholders in the TSE increased to 4.5 million in 2011,[44] 7 million in 2014 and 9 million in 2016.[73][76]
As of 2014, about 300 foreign investors (including 25 Iranian citizens abroad) comprise 0.5 percent of the TSE. This number increased to 746 in 2016.[73] By comparison, foreigners own 60 percent of Turkish equities.[citation needed] In 2016, there were 127 foreign institutional traders in Iran's equity markets.[77]
Funds management
As of 2009, 21 mutual funds managed by permitted brokerage firms[47] and investment banks are investing in the TSE according to the investment funds regulation. Mutual funds are open ended and their operation permission is issued by the Iran Securities and Exchange Organization (SEO).[4] 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.[46] According to The Wall Street Journal in 2015, Western fund managers are already planning financial services companies in Tehran.[13]
Indices
- TSE All-Share Price Index (TEPIX)
- TSE Dividend & Price "total return" Index (TEDPIX)
- TSE All-Share FF adjusted (TEFIX)
- TSE TEFIX-30 - Blue chip index
- TSE Cash Dividend Index (TEDIX)
- TSE-50 - (Top 50 most active companies)
- Each industry (sector) Index
- Industrial Index
- Financial Index
- Each Company Index (based on Price & Volume)
In 1990, 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[78] 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.