|
The requirements
for setting up
the commodity exchange
 |
Ahmad
Sadeghi,
General Secretary of TME |
The
inextricable, inherent link between supply and demand and the prominent effect
of this relationship on production and consumption bear witness to the
significance of creating a rule-governed system.
In this system
the terms and conditions of interaction between sellers and buyers have been
set out, the legal and executive mechanisms ensure direct and all-out
supervision; and the information system which is in charge of processing and
analyzing market data provides valuable information on the background
and future of
various transactions. As a result the destructive and unjustified fluctuations
are kept to a minimum.
Carrying out
the mutual commitments of the involved parties, and protecting the interest of
buyers and sellers, will inevitably lead to a healthy and robust production,
distribution and consumption system which in turn will benefit the national
economy in general.
To this end,
during the last few decades, a number of commodity exchanges have been set up
all over the world. The objective is, as stated before, to achieve a
rule-governed system. Those exchanges have now evolved into fully-fledged,
successful markets.
Here are some
of the world's active commodity exchanges:
-
London Metal
Exchange
-
Chicago
Board of Trade
-
New York
Mercantile Exchange
-
Central American Commodity Exchange
-
Beijing
Commodity Exchange
-
Budapest
Commodity Exchange
-
Indian Commodity Exchange
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The
necessity for establishing a metals exchange in Iran |
Due to lack of
a metals exchange in the past, there were numerous faults and problems with
the metal trade in Iran, and hence the instability and unreliability of the
market. The main shortcomings can be summarized as follows.
1. Unjustified
and destructive fluctuations in the metals market due to an ill-defined and
improper relationship between supply and demand.
2.
Non-existence of a proper executive and supervisory system to oversee meeting
the commitments, especially those of the sellers, who are the main producers.
3. Lack of a
transparent pricing system based on equilibrium of supply and demand as well
as other market requirements.
4. Absence of
a system to gather, process and analyze data so as to provide reliable
statistics regarding production, imports, exports and consumption.
5. Lack of
coordination between production and business sectors, especially regarding
imports and consumption market.
6. Lack of a
viable risk-management system to avert the future fluctuation in metal prices.
The most
important objectives and effects of creating the Tehran Metals Exchange are as
follows:
1. Formation
of a well-organized and consolidated market so as to facilitate cash and
futures transactions.
2. Organizing
the metals market through executive mechanisms and arrangements intended to
supervise obligations and interests of all parties involved.
3. Setting
price of metals based on interaction between supply and demand and market
needs.
4. Reducing
the odds of destructive fluctuations in the market, and also possibility of
risk transfer.
5. Making cash
and futures transactions possible, thanks to introduction of suitable tools in
the market for risk management.
6. Providing
financial facilities for purchase and sale.
7. Statistical
analysis of the market position, and provision of consultation services to
forecast future fluctuations with the aim of assisting the involved parties
with planning as well as meeting their obligations.
With the aim
of overcoming obstacles on the way of creating a consolidated market in which
supply and demand interact freely, the government and the parliament decided
to pave the way for the establishment of the Tehran Metals Exchange.
Consequently,
in note (c) of article (95) of the Third Development Plan, the Stock Exchange
Council was empowered to establish commodity exchanges in the country.
Following this
act, in note (35) of the 1380 Budget Law, the Iranian Parliament authorized
the Ministry of Industry and Mines, in cooperation with other related
organizations, to set up and launch the metals exchange. |
