Speaker:
Hossein Fahimi, Former CEO of Central Securities Depository of Iran
The legal structure in our county, Iran, is the Supreme Council of the Stock Exchange, which is the legislative and supervisory body of the country's capital market institutions. After the Supreme Council, the first institution after that is the Securities and Stock Exchange Organization (SEO). The rest of the organizations operate under the supervision of this organization. After SEO there is a series of self-commitment organizations that lead the market. It means that the securities market is operating in an organized market.

In our country, there are 4 stock exchange companies that is Tehran Stock Exchange Company, Iran Fara Bourse Company, Iran Mercantile Exchange Company and Iran Energy Exchange Company operating in the market in the form of self-commitment organizations. Besides these, the Central Securities Depository of Iran, which provides a series of services to shareholders before and after each transaction is a requirement of every stock exchange.

Of course in some countries there is a depository company for each market, but in our country there is a Central Securities Depository of Iran that supports the activities of all four companies.

This company provides services that are needed before the transaction, such as checking the permits and correctness of the documents, and after the transaction, it is also responsible for settling the funds.

Therefore, many transaction control issues are applied through Central Securities Depository of Iran. All legal services related to transactions are done through the depository company. This refers to pre-transaction services. For example, monitoring the prohibited persons in terms of trading or all enforcement of orders are referred to this company. After that, we come to other legal entities that are under the supervision of the SEO that is stock market issuers.

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There are a number of issuers whose shares are listed in the Tehran Stock Exchange and Iran Fara Bourse Company. It means that if a company wants its shares to be traded must be listed in one of the stock exchanges in compliance with the rules. Or if a company wants to sell its products in the Mercantile exchange must list its commodities in the mercantile exchange and the Energy exchange. Therefore, we call them issuers, because they play the critical role in the Iranian stock market. After issuers, financial institutions have an important place. The financial institutions mainly either serve the public or provide a mix of services and capital.

One of the most important of these institutions are brokerages. According to the legal definition, a broker is someone who buys and sells shares under another name. Of course, in our stock market, it is true that the broker buys a share for a person, but in fact, he buys a share in his own name.

In other words, brokerages collect all the orders of their customers, for example, stock A, and buys all of this amount of stock, and then allocates the purchased stock among the customers based on the amount of the order. Therefore, in our stock market, brokers play an essential role, because nobody can buy, hold or sell a financial instrument, share or commodity without a broker.

Apart from brokers as financial institutions, service and capital companies are as financiers and these companies offer a mixture of the entire financial instruments to individuals. Other financial institutions include investment companies, holding companies, portfolio management companies and those which are active in the capital market.

The number of these entities is determined based on the nature of the companies, which is 11 types and no entity other than these exists unless the Stock Exchange Council declares that a company is a new financial entity. It means that no company is a financial institution, unless it is explicitly mentioned in the law or approved by the Stock Exchange Council. Like the Central Securities Depository of Iran, which is recognized as a financial institution by the decision of the Supreme Council of the Stock Exchange.