Central Securities Depository Of IRAN

background

How is a foreign trading account created in Iran’s capital market?

The investor sends the request form for trade permission to Securities and Exchange Organization of Iran (SEO) based on SEO’s criteria for granting permission through an eligible broker. Whenever the permission is issued, the broker sends it along with the request form for account creation to Central Securities Depository of Iran (CSDI) so that the trade account is issued.

 

Please refer to: https://en.seo.ir/Page/278/Forms

Who guarantees and facilitates the transfer of instruments’ possession and money between the buyer and seller in Iran’s capital market?

CSDI is the central registrar and clearing house for all the exchanges in Iran including Tehran Stock Exchange (TSE,) Iran FaraBourse (IFB,) Iran Mercantile Exchange (IME) and Iran Energy Exchange (IEE). It takes over the registry, clearing and settlement issues related to equity, Islamic securities (Sukuk,) derivatives, energy contracts, electricity, mercantile products by means of a full-fashioned registry system and multi-currency.

How long does the process of securities trading settlement take in Iran’s capital market?

The standard settlement cycle for brokerage transactions are as chart below:

 

 Type of securities Settlement time
Stocks T+2
Subscription rights of stocks T+2
Fixed Income Bonds T+1
Mixed transaction Fund T+2
Power Parallel Salam in Iran Energy Exchange (IRENEX) T+3
Commodity Depository Receipt(CDR): Gold T+1

Commodity Depository Receipt(CDR):

All types of listed products except Gold

T+2
Standard parallel Salam contract in Iran Energy Exchange (IRENEX) T+1
Standard parallel Salam contract in Iran Mercantile Exchange (IME) T+1
Iran Energy Exchange (IRENEX)Physical market in the domestic ring T+3
Iran Energy Exchange (IRENEX)Physical market in the international ring T+5
Islamic Bonds(sukuk) T+1
Housing Mortgage Rights (HMR) T+3

What is the type of currency to invest and pay in Iran’s capital market?

Iranian Rials (IRR) is the currency that is used in Iran’s capital market.

Exchange rate is available in https://cbi.ir/ExRates/rates_en.aspx

How can I enter the money and repatriate?

Please refer to Article 10 of "the Regulation Governing Foreign Investment":

- The foreign or Iranian nationalities/entities shall, by obtaining the trading license, be authorized to open accounts in Rials, in foreign exchanges, transfer foreign currencies to Iran, and convert them into Rials and vice versa in the Iranian banks for their banking and investing operations. Transfer of the original capital, capital gains and cash dividends received by the persons/ entities holding trading licenses overseas (outside Iran) shall be authorized in compliance with the national foreign exchange rules and other relevant standards and regulations. The Central Bank of I.R.I (CBI) shall deliver the foreign exchange equivalent of the transferable funds as described in Note 1 of this article to the foreign investor or the Iranian investor holding licenses at the official exchange rate in the national banking system in case of a single currency peg or otherwise, at the floating exchange rate. Under particular circumstances and at the discretion exercised by the Central Bank of I.R.I., such funds shall be payable in equal installments at a four month interval during the course of one year. The necessary guidelines for implementation of this article shall, within three months as of the approval date of the present regulations, be approved by the Ministry of Economic Affairs and Finance and the Central Bank of I.R.I.

How do I get my/my clients’ portfolio, which I have already requested for, from the relevant office?

You can get your/your client's asset statement and stock turnover by giving in identification certificates (passport)/power of attorney and referring to CSDI or by receiving your username and the link sent by CSDI which you can download your portfolio from, you can get your requested portfolios directly and with no need to refer to CSDI in person (via IPS).

What is IPS?

Investor Portfolio System (IPS) is a certain electronic service to the capital market practitioners that shareholders can get their latest status of assets and the data related to their supervising brokers in each symbol right after they receive its user-name.

For more information, please refer to https://enp.csdiran.com/

How can I get my dividend?

You can get your dividend in three ways:

• Declaring your SHEBA number (via Melli Bank of Iran) by referring to your broker in person.
• Referring to CSDI.
• Contracting issuers with CSDI.

What are Clearing and Settlement Systems?

Multi-currency Netclear (McNc)
Netclear is the multi-currency clearing and reporting system of CSDI which generates and provides electronic reports for beneficiaries imported from the post-trade system in the capital market.

• NC-Main Sub-system
Daily trades of TSE, IFB, IEE and IME exchanges are imported to NC-Main for clearance. These data are fetched from the CSDI’s post-trade system.

• NC-Web Sub-system
Beneficiaries; especially brokers can login to Netclear website at www.csdireports.com and receiving specialized reports.

• CertReporter application
Cert Reporter creates electronic certificate for issuers to replace the paper ones. The software facilitates preparation of certificates and provides services such as searching, filtering and printing.

• BrokerReporter application
Broker reporter is a windows application which generates buy/sell declarations and certificates for brokers.

• CertDistro sub-system
Distribution of customers’ online certificates is done by this system.

Sepas
This system is provided for electronic clearing and settlement in combined markets, Kish market, energy exchange, etc. This system eliminates paper work and provides electronic bank payments (clearing and group payments). Furthermore, the system provides the service to banks in order to know about the status of brokers’ accounts.

Settlement Guaranty Fund (SGF)
SGF has designed to manage brokers’ risk of default and its fund. The main purpose of SGF is to guarantee the obligations of the two trading parties against each other. This system involves the calculation of resources and the contribution of members to the Guarantee Fund and recording and reporting of defaults. This system has information exchange with other systems like Netclear. The system is accessible through internal URL.

For more information, please refer to: http://en.csdiran.com/pages?page=English/Services/SGF

 

 

Future Post Trade System (FPTS)

The main purpose of FPTS is to automate the operations of post-trades of futures market.

What are the risk management actions in CSDI?

Risk Management: Responsible for taking care of post-trade-related tasks, CSDI plays a significant role in managing systemic risk. To this purpose, CSDI has designed and launched the services bellow towards managing the risks related to the clearing house:

• Settlement Guarantee Fund (SGF)
• Asking for collateral from clearing house participants
• Margin on futures contracts
• Freezing account for credit purchases
• Appling Credit Limits for brokers
• Adopting T+2 Settlement Cycle

What are the Corporate Actions in CSDI?

Corporate Actions: According to article 37 of “Tehran Stock Exchange-Regulation on Listing the Securities”, dividend distribution, capital increase, mergers and acquisitions are some of services carried out in CSDI.

 

For more information, please refer to: http://tse.ir/cms/Portals/0/int/Listing%20Requirements%20at%20TSE.pdf

 

• Benefit Distribution: Since CSDI has all the information regarding securities, as well as Sukuk, Certificates of Deposit, and other fixed income securities, benefit distribution is made solely by this company.


• Capital Increase: Since CSDI has all the information of share beneficiaries (investors), it centrally starts to underwrite the capital increase of the issuers’ preemption rights which has devolved the issues in question upon CSDI. After the capital raise verification by the supervisory body, SEO, CSDI begin to do the act of raising the capital on shareholders’ capital in the form of bonus issue or preemption right. Mixing the capital increase in the form of the underwriting preemption is among the acts CSDI does in this regard.


• Pledging Securities: We at CSDI provide services to guarantee the obligations or the repayment of the loan received by the pledger (the owner of pledged securities) and given by the security – receiver (the person in favor of whom the securities are pledged) which is in fact reliable banks and financial institutions. Releasing the properties in question after meeting the obligations or selling the pledged assets usually occurs after the process of pledging.
For more information, please refer to: http://en.csdiran.com/pages?page=English/Services/PledgingSecurities

 

• Legal Transfer of Securities: Since CSDI is responsible for safekeeping the securities, in case of issuing a confiscation order by legal authorities, the aforesaid securities will be seized by the company until the time of final verdict. Another trial operation done by the CSDI belongs to deceased investors. In case of death of a shareholder, its financial assets will be transferred to his/her heirs through electronic means.


• Information Editing: Information editing is an action which is being done in order to remove any discrepancy between shareholders’ profiles in the computer system and their identification or their corporate identities for corporate shareholders.

What are value Added Services?

• CSDIData
This system is used to inform brokers of latest portfolio and supervising broker changes of their customers.

 

• Kara
This system is provided to integrate and facilitate e-services for brokers.

 

• Dara
Dara system is an electronic portal for investors and aims to integrate e-services provided for investors. (IPS is one of Dara subsystems mentioned before)

 

• Dana
Dana provides electronic services and information for issuers.

 

• Corporate Data Gathering (CDG)
This product is a Windows application used to validate shareholder's information sent by issuers and brokers to CSD for acquiring account or share allocation.

 

• Danesh
Danesh is designed to facilitate the processes like collateral management, profit distribution, etc.

• Comprehensive information gathering system (CIGS)
It is a comprehensive customer information registration system to computerize and automate the process of collecting and managing customer information.

 

Appendix

http://tse.ir/cms/Portals/0/int/Listing%20Requirements%20at%20TSE.pdf

http://en.csdiran.com/Content/pages/documents/books/NetClear2018.pdf

http://en.csdiran.com/Content/pages/documents/books/Legal-finalweb.pdf

http://en.csdiran.com/Content/pages/documents/books/SAMIP.pdf