Iran Mercantile Exchange Ready to Launch Foreign Exchange Derivative

Thursday, 19 April 2018

Ghasem Mohseni said: Given the 10-year experience of Iran Mercantile Exchange in setting up the derivatives market, it has the necessary infrastructure and readiness to launch the foreign exchange derivative market.
According to the report by the IME’s International Affairs and PR, regarding the role of IME in supporting Iranian goods, the member of Securities and Exchange High Council stated that the government mandatory price setting and price controls damage the body of the country’s production, while this year’s motto as the year of “Support for Iranian Goods” could be implemented through the transparent pricing methods and competitive trades based on the supply and demand mechanism provide by the IME.

Ghasem Mohseni added: “One of the issues facing the producer and the consumer is the pricing and price transparency. So, if prices are predictable, manufacturers can plan better for more production”.

Mohseni said: IME’s trading mechanism helps to ensure the transparency and predictability of prices to get out of the government mandatory price setting system. In this condition, the process of price setting will be a function of supply and demand, and this supply and demand will be predictable with a high degree of significance for the future and can increase investment.

Regarding the unified USD rate and its effects on the IME’s transactions and the predictability of transactions for upstream and downstream industries, he stated that the currency exchange rate has significant effect on commodities, including oil and petroleum products, petrochemicals and base metals, which are priced in the global markets according to international currencies. Therefore, the more stable the currency exchange rate, the more comfortable the economic activists will be to predict future condition of their industries.

He added that the foreign exchange derivatives or currency futures and options contracts are of special importance and can be used by economic activists to hedge currency risk fluctuations. Launching foreign exchange derivative market will help economic activists to hedge currency risk fluctuations for their transactions without any pressure on the government’s budget or any kind financial burden on the government. Moreover, the central bank can implement its policies through the financial instruments in the foreign exchange derivative market; hence, the derivative market can help the central bank to regulate the foreign exchange market.

Mohseni, regarding the potential for launching the foreign exchange derivative market in the capital market of Iran, said: IME is 100% ready to launch the foreign exchange derivative market and has the required potentials. In addition, trading derivatives have been experience on gold coins and other commodities on IME for many years, and the required guidelines are ready and structurally prepared to launch of the foreign exchange derivative market by this exchange.