2nd ETF to start trade soon if government accepts our proposal: SEO head

The head of Iran’s Securities and Exchange Organization (SEO) announced that the units of the second exchange-traded fund (ETF) will be traded soon if the government accepts this organization’s proposal.

“A few days ago, a proposal was submitted to the government, and if this proposal is accepted, the second ETF will start trade soon”, Hasan Qalibaf-Asl said on Sunday.

The second ETF’s director had announced in late October that the time when the fund’s units would be tradable was unclear.

Davood Razaqi said, “As two of the four refineries, whose shares are due to be offered via this fund, have increased their capital, but the capital boosting has not been considered in the ETF’s asset, the fund’s index cannot be opened yet.”

As he said, the capital boosting has occurred at Tehran Oil Refining Company and Isfahan Oil Refining Company.

In May, the Iranian government sold shares in three banks and two insurance companies via the first exchange-traded fund (dubbed Dara First).

The bank-based ETF holds 17 percent of government stake in Tejarat Bank, 17 percent in Bank Mellat, 18.32 percent in Bank Saderat Iran, 17.34 percent in Alborz Insurance Company and 11.44 percent in Amin Reinsurance Company.

Dara First, listed on Tehran Stock Exchange, which is Iran’s major stock exchange, was the first fund from a series of three ETFs, through them shares of some state-owned organizations and companies are planned to be offered.

The shares to be offered via the mentioned Iranian ETFs belong to those governmental bodies defined in Iran’s privatization program, a comprehensive plan seriously followed up by the government to downsize and reduce its role in the economy.

The second ETF (dubbed First Refinery, or Dara Second), which holds government shares in four major oil refining companies, namely Tehran Oil Refining Company, Isfahan Oil Refining Company, Tabriz Oil Refining Company and Bandar Abbas Oil Refining Company, was offered on August 26.

The government owns 20 percent of shares in each refinery.

It has also a plan to divest shares in giant auto and metal companies through a third ETF (dubbed Dara Third). The third fund is expected to hold 12.05 percent of government stakes in the National Iranian Copper Industry Company, 17.2 percent in Mobarakeh Steel Company, 14.04 percent in Iran Khodro, and 23 percent in SAIPA (the two main domestic carmakers).

Meanwhile, Finance and Economic Affairs Minister Farhad Dejpasand said on September 7 that the government’s remaining shares in three aforementioned banks will be offered via the third ETF.

An ETF is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, although deviations can occasionally occur.