The Iranian Association of Islamic Finance held the fifth pre-session of its 10th annual conference on the 13th of January.
The Iranian Association of Islamic Finance held the fifth pre-session of its 10th Islamic Finance Conference on "Designing Instruments and New Islamic Finance Products in Line with Production Leap".
The speakers of the meeting were Amir Hamouni, a member of the board of directors of Mapna Group and a member of the board of directors of the Iranian Association of Islamic Finance, Alireza Tavakoli Kashi, a capital market expert and a faculty member of the Iranian Association of Islamic Finance, Aref Aliqalipour, CEO of Novin Capital Investment Consulting Company, and Vahid Roshanqalb, the director of supervision department on the primary market at the Securities and Exchange Organization of Iran.
Referring to the new financial tools that have been presented in the Iranian capital market in recent years, Vahid Roshan qalb said one of those tools is project joint stock companies. The necessary approvals for the development of this tool have also been obtained. Regarding debt instruments, both sukuk and crowdfunding platforms have been offered in the capital market in recent years.
Regarding the project joint stock companies, he said by using this tool, projects that have not been completed and have the necessary conditions for being listed in the capital market and can be financed through the capital market, are offered in the market. In this way, a part of the shares of these companies will be handed over to the public, and after obtaining the necessary permits, the collected resources will be used to complete the projects.
He added another tool is Sukuk bonds. In the last few years, due to the expansion of this market and due to the limitations of the banking resources, the capital market has expanded a lot and the use of sukuk for financing is not comparable with the past. There has been a lot of growth in financing through this instrument and some limitations have been removed. The next tool is crowdfunding. More companies have been able to finance up to fifty billion tomans via this method.
Alireza Tavakoli Kashi said in the last 10-15 years, we have made relatively good progress in the field of new financial instruments in the capital market, and we currently have a variety of instruments at our disposal. The most important task of the capital market in this area is to help finance businesses and this task has been performed well. He stated we have all kinds of bonds and instruments in the capital market, and if a company wants to finance in the capital market, we do not face the lack of instruments.
Tavakoli Kashi went on to say that in the field of modern financial instruments, we have had successful experiences in recent years, such as designing and offering various types of debt bonds, lease bonds, murabaha bonds, Islamic Treasury bills, and ETF. Today, the improvement of processes and procedures is a top priority, today's need of the securities market is the development of trading methods and tools to facilitate transactions.
He emphasized today we are facing a strong competitor, the cryptocurrency platform market, which is growing rapidly. Some of these platforms with a lifetime of less than 5 years are ahead of our capital market with a lifetime of 50 years. It looks like these platforms could host our capital market tools with a little reform. Also, these platforms give leverage to their customers as much as they want. They do not have the same fee and the fees are charged according to the volume of transactions, according to the market and according to the way of ordering. In addition to this, they have other advantages such as 24 and 7 performance, immediate settlement of transactions and risk management.
Aref Aliqlipour said currently we have more than 40 instruments in the capital market, so different companies with different business models can use them for financing, but we could not reach a level of production that would meet the needs of the society. One of the reasons for this challenge is that our financing has not yet led to a jump in production. Financing is for the purpose of providing working capital. We should have separated the tools that lead to a jump in production from the tools for providing working capital. The concept of business environment sustainability is not included in the tools.
Amir Hamouni stated it seems that there is no need for tool making considering the ups and downs of the capital market and the position of this market in the country's economy. There is enough diversity in this field and we have special Islamic financial tools at our disposal, some of which are not available in other countries, and we are one of the most diverse markets in the world in terms of Islamic financial tools.
Regarding why the variety of tools has not led to the stimulation of production and employment and the growth of the country's economy, he said in our market, the tools have not been promoted much yet. In addition, processes such as issuing bonds in our capital market are very complicated and time-consuming.
Hamouni added that the privatization and offering of state-owned companies in the capital market and the formation of capital in this market is an opportunity that should not be neglected. National Iranian Oil Company, National Gas Company, etc. can be listed in the capital market. We have enough tools in the capital market to hand over state-owned companies, and we hope that this opportunity will be used in line with the development of the capital market and the growth of the country's economy. The jump in production depends on making such big decisions.
He added other instruments, including ETNs, have a place to develop and spread. This tool was one of the most useful tools introduced by the Shariah committee and it can be used in the gold market as well.