Iran Mercantile Exchange was established on September 20, 2000 in accordance with the article 95 of the new law of the Securities Market of the Islamic Republic of Iran and following the merge of the agricultural and metal exchanges of Tehran. The merge marked a new chapter in Iran capital market providing endless trading opportunities for the clients in and out of the country.
Various products and commodities are listed and traded in IME which are categorized in three classifications:1. Industrial Products and Commodities:
the ferrous and non-ferrous metals such as Steel, Copper, Aluminum, Zinc and Lead in various form, dimension and sizes, different types of Cement, Coke, Precious Metals Concentrate, and other basic products are traded in the industrial trading session from 10:30 to 12:00 (+3.5 GMT), at the trading floor through semi electronic open outcry.
** Gold: gold bullions having different fineness from 999.9 to 900, are traded from 12:00 to 12:30 in the trading floor2. Oil Products and Petrochemicals:
oil related products range from Bitumen, Base oil, Crude Oil, Fuel Oil, RPO, carbon black, chemical products and petrochemicals like PP, PE, LDPE, LLDPE, Aromatics, SBR, PS, MS, and many others. The trades in this group are carried out from 13:30 to 16:00
the agricultural products traded in IMErange from cereals to oilseeds to oilcakes and other grains and products like wheat, feed wheat, feed barley, yellow corn, maize, raisin, lentil, chick peas, sugar, meat, eggs, saffron, pistachio, traded in the fully electronic multi-commodity trading system.
**Multi-Commodity: All agriculture products and some oil products like Bitumen, VB and Lubcuts are traded in the multi-commodity system from12:30 to 12:50.
***Gold Coin Futures: traded as one of the most active and successful underlying assets in the futures contracts in IME. Trading hour ranges from 10:00 to 18:00.
There are 70 listed brokerage companies in IME who are the members of the exchange licensed by the market regulator, the Securities and Exchange Organization (www.seo.ir). The brokers are authorized to trade on behalf of the clients and settle and clear the contracts for them.
Offerings and Orders
Offerings are the commodities in the spot market are announced and notified 24 hours, before the trading takes place, through the exchange website www.ime.co.ir/offerings so the sellers and clients would be able to place their orders with the brokers and rest assured for trading to be matched and cleared.
In the derivatives market the clients order their trades as per specifications of the futures contract and in accordance to the order types specified in terms of order validity and the price. Around 55 brokerage firms are licensed to trade futures for their clients. At the same time there 4 consecutive contract months issued for the investors.
- Metals and Mines
- Oil and Petrochemical,
- Agricultural Products
Iran Mercantile Exchange has planned to develop its activities and complex trading system via strengthening its international presence in Middle East markets, which are one of the hot spots in the financial markets and within world-class exchanges. Regarding this fact, here is a list of developing activities:
- Full member of AFM (Association of Futures Markets) since 2007
- Signing MoU with Belarusian Universal Commodity Exchange (BUCE) in 2012
- Signing MoU with Kazakhstan Exchange (BEREKET) in 2012
- Holding on site training courses for FEAS
Spot Trading Resulting in Physical Delivery:
Based on the settlement and clearing terms and conditions mentioned in the offering notice, the industrial, petroleum and agricultural products and commodities are traded in following mechanisms:Cash trades:
It is defined as prompt cash payment against taking prompt delivery. After matching the trade, the buyer shall pay the full amount of the contract value. The clearing house issues the warehouse warrant (receipt) and the customer takes the delivery of the commodity within 72 hours or more but limited to 10 days as per offering notice delivery information.
It is prompt payment against forward date delivery. The client pays in advance the contract value effective after matching the trade and receives the commodity by virtue of the warrant issued by the clearing house within the period specified in the offering notice on delivery information. The seller receives the contract value within 72 hours or within the time specified in the offering notice but not later than 10 days. The offering details and delivery date is also announced to the brokers by the trading floor supervisor before the trade.
It functions as deferred payment against prompt delivery. In this type of transaction, the buyer pays in different payment according to the terms stated in the notice of offering and receives the commodity in advance after matching the trade and based on the warrant issued by the clearing house. The seller shall receive money from the clearing house within the period specified in the notice of offering.
According to the trading rules of the futures market, futures trading is broker-based so the clients must place their orders as per contract specification with one of the brokers licensed for futures trading. The initial margins are paid by the clients to their own specific account code named in the name of the clients but the clearing house is the sole authority for transferring the margins or other charges and fees among the client accounts. The bid and orders are placed electronically in quos waiting for their identical price to be matched. During the course of trading the clients are in contact with their brokers adjusting their bid or price based on the price information, volatility factors and the news in the national or international markets. Trading commences dynamically from 10:00 to 18:00 and by matching of the prices of bids and asks open positions or open interests are formed which may remain up to the end of the trading session or are offset and closed by the broker in the clients request. At the end of the trading hour a daily settlement price is calculated and announced by the clearing house for the settlement of the contracts and clearing the risky accounts. The C/H issues margin calls for the lower-than-the-maintenance amount client accounts to bring the amount of their account to the initial margin level. At the end of the contract month those clients who are interested in physical delivery of the underlying asset may take or make delivery of the commodity subject of the contract.
To become a customer of the futures market, one shall follow the below process:
- Opening account with IME clearing house via a broker
- Initial margin payment/ placing orders /confirming the price or validity of the order and matching the orders based on the price and the time of order placed and registered in the order book of the client and exchange
- Delivery of the underlying asset at sellers-buyers option
The Built-in Clearing House:
the clearing house is the counter-party of the trade partners, which is assigned to clear the contracts and ensuring the settlement and delivery where applied.
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