Head of SEO in Tehran Times says capital market requires growth and equitable risk sharing

Iran’s capital market is in need of expansion, according to the head of the Securities and Exchange Organization (SEO). Hojjatollah Seyedi emphasized the importance of developing and investing in the capital market, focusing on fairly distributing risk alongside returns. Speaking at a conference on Islamic finance titled “Artificial Intelligence and the Future of Islamic Finance,” Seyedi highlighted the growing prevalence of Islamic financial instruments in Iran and globally.

Traditionally, Islamic finance was associated with compliance and the avoidance of prohibited practices. However, Seyedi pointed out that recent theoretical advancements in Islamic economics and finance have shifted the focus towards flexibility, fairness, and resilience. Despite facing restrictions, uncertainties, and complexities, Iran’s capital market has demonstrated resilience. External negotiations, domestic developments, economic indicators, budget changes, currency fluctuations, and inflation have all impacted trading activities in recent times.

Despite facing some negative trading sessions, Seyedi noted that over 70 percent of retail investors were actively buying shares, and transactions were proceeding smoothly. The key emphasis, according to Seyedi, is ensuring that trades are conducted in a fair and transparent environment, even amid prevailing uncertainties. He highlighted the asset-backed nature of Islamic capital markets as a significant strength, allowing for better structuring and management of risks.

Seyedi commended the Sharia committee of the SEO for its advanced approvals in recent years, attributing the progress to the dynamism of Shiite jurisprudence. While acknowledging that risk is inherent in capital markets, Seyedi emphasized that Islamic finance principles have delved deep into risk management practices. He stressed the importance of fairly distributing risk among market participants, reflecting a core principle of Islamic finance.

Efforts to expand and improve Iran’s capital market are crucial, especially in ensuring that risk is managed and distributed fairly. Despite external and internal factors impacting trading activities, the emphasis on transparency, fairness, and resilience must remain a top priority. The ongoing advancements in Islamic finance and the unique strengths of asset-backed Islamic capital markets provide a solid foundation for further development and investment in Iran’s capital market.