Iran is planning to roll out a range of new financial products as part of an effort to stimulate its capital markets and withstand the re-imposition of US sanctions following its decision to pull out of the Iran nuclear deal.
The new instruments will adhere to Islamic principles, which forbid interest payments or speculation, and will include insurance-linked securities, derivatives, warrants and a new form of sukuk, according to Iran’s Securities and Exchange Organisation (SEO).
The new form of Islamic bonds, which will employ an agency format known as wakala, are designed to provide financing for local companies, says the SEO. New regulations should be in place within nine months.
A distinctive factor of the Iranian sukuk is that they will pay variable rates, making them more like equities than existing products, which pay only a fixed rate.
The Tehran stock exchange has seen historically high numbers in recent weeks, however the Iranian rial has fallen 70% against the US dollar in the free market this year while inflation has risen.
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