Removing the default risk for foreign investors

Dr. Bijani by clarifying the Blue Model pointed out: “Removing the default risk for foreign investors”

 Bijani by mentioning that one of the distresses of major foreign investors will be relieved also said: “One of the risks that major foreign investors were concerned about was the default risk. 

The Blue Model is a new opportunity for the foreign investors and it is also optional. It means that the foreign investors with major capital in hand are able to use this option. Moreover, there is no mandate regarding the use of this option for them.

Bahador Bijani, vice chairman international & foreign investment affairs at the Securities and Exchange Organization, said: “This option is available for some of the investors and the process of qualification to recognize the viable investors is performed by Central Securities Depository of Iran (CSDI).”

He declared: “The foreign investors who their investment portfolios have reached to a certain level, by the approval of Central Securities Depository of Iran will be able to use this option in order to cover the brokers default risk.”

As Bijani said this is a scheme that has been designed and suggested by CSDI and it has been approved by the board of directors of Securities and Exchange Organization.

He also added: “This option has been formally stated by CSDI and there have been negotiations with banks about it in order to put it in practice in the minimum of time.”

Vice chairman international & foreign investment affairs at Securities and Exchange Organization said: “With this solution we can relieve foreign investors from the concern until they become more familiar with Iranian capital markets and financial institutions. In this case they will be certain that no risk will exist in this way for their investments.

Later on, Bijani said that the role of brokerages will not be removed and he also mentioned: “brokerages will continue their activities as before and they receive their fees. The point for the new situation is that the default risk of brokers settlement commitments will be removed because there will be a new account opened in the bank under the name of the investor for the settlement process.”

By stating that after the complete removal of the sanctions for the fiscal and monetary system which would create a newer opportunity for investors, he mentioned: “There is no major international custodian in Iran. Thus, until the major international custodians are able to operate in Iran, there should be a predicted set of solutions in order to relive the investor from the investment risk.”

Bijani also pointed out that SEO has been joined the IOSCO and he said: “IOSCO has three purposes which the second purpose is to support the investor and investment. Furthermore, our membership in this international organization will give the foreign investors the assurance that the IOSCO standards will be applied in Iranian CAPITAL Market. Nevertheless, international standards had existed in Iran even before joining the IOSCO. Though, currently after joining officially to the IOSCO, the investors are more at peace in mind than before.

Release Date: 10/30/2016


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