“Blue Model” to reduce investment risk in Iran’s capital market (exclusive)
Baku, Azerbaijan, Oct. 9
By Farhad Daneshvar - Trend:
Most of Iranian brokerage firms lack enough capital to address the concerns of foreign investors regarding risk settlement in the country’s financial markets, a financial analyst believes.
Alireza Kadivar, a financial analyst and deputy head of Iran’s Novin Investment Bank, told Trend that the capital market’s officials have recently developed a new plan dubbed "Blue Model" aimed at removing the risk of foreign money being blocked in brokerage firms’ accounts in the country.
Brokers, so far, are expected to cover risks of client’s failure to honor their trade obligations, in the other world, foreign investors currently have to transfer the payment for purchasing an specific amount of stocks into a brokerage firm’s banking account before the purchase is made.
This imposes a great risk to investors as the brokers’ own capital in most cases is too tiny to settle the risks, a main factor discouraging foreigners from investing in Iran’s capital market.
Now after adopting the "Blue Model" investors will have an opportunity to open "escrow accounts" in Iranian banks, said Kadiver.
Therefore the investors will hold the payment required for purchasing stocks in their escrow accounts and brokerage firms will be permitted to receive the payment only after purchasing the stocks, he added.
The new decision will help foreigners to feel more safety as Iranian banks have huge capitals, he concluded.