Central Securities Depository of Iran to launch Credit Limit mechanism nationwide to minimize credit risk by specifying a credit limit for brokers.

In line with better risk management and in accordance with growth potential with a clear insight on safer trade, Central Securities Depository of Iran (CSD) will begin applying credit limits to each clearing house member.

CSDI President and CEO, Mr. Hossein Fahimi broke the news, saying “credit limits may be modified from time to time if such modifications are deemed appropriateunder the risk management controls set out by Securities and Exchange Organization of Iran’s Risk Monitoring Committee and CSDI.” He further added that the trade desk may reinstate or modify the Credit Limits after consultation with the participant.

Mr. Fahimi went on to say that the Credit Limit for each broker will be set based on the broker’s capital adequacy.

“CSDI has tightened up on credit control which in turn means that brokers arehaving to collect money faster or arrange premium finance to remove the credit risk from brokers,” the CEO added.

Credit Limit refers to the maximum amount of credit a financial institution extends to a client through a line of credit. The SEO’s Risk Monitoring Committee and CSDI usually set credit limits based the on each broker’s credit status.

Central SecuritiesDepository of Iran is the sole registry entity, custodian and clearing house inthe Iranian capital market using the hybrid registry system with a fullydematerialized book entry system.

Release Date: 1/30/2018

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