Iran has been an outcast as western powers applied sanctions in response to its nuclear program, the isolation having mixed consequences for the nation. However, Forex Magnates’ research, in the latest QIR report, shows that Iranian investors have an appetite for trading in margin FX and CFD instruments.
The country, which is the second largest economy in the Middle Eastern region, has gradually developed its domestic economy and trading environment. The country boasts three recognised trading venues for financial instruments; the Tehran Stock Exchange for equities, Farabourse for OTC products and the Iran Mercantile Exchange for commodities products.
Ongoing sanctions on the country have impacted the way international firms do business with Iran, however, despite the rigid hurdles several FX and CFD firms have found alternative solutions to cater to the needs of domestic investors. Making payments for deposits and withdrawals is the biggest drawback, with most western and international banks refusing to transact with Iranian financial institutions, however the report brings to light a number of genuine remedies that are actively used by traders.
On the ground, FX is evolving both from a user and regulatory perspective since it first entered over a decade ago. On the one hand, Iranian authorities have discouraged FX trading, as it is not a regulated asset class, thus filtering out the types of users that engage in trading. In addition, Iranian FX traders have become more financially literate through a number of FX and financial portals providing news and information about financial markets, as a result both points have impacted the way investors make trading decisions and traders are more serious when making investment decisions. FX is seen as an investment product as opposed to gambling.
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Fundamentals, such as economic growth, the countries exchange rate and international sanctions have forced the average Iranian investor to invest locally, the local bourse seeing a sharp rise in private investor participation which ultimately creates an investor community that is more ‘market savy’. In addition, like in developed markets where margin trading has evolved off the back of traditional equities and bonds trading, there are numerous opportunities in Iran for margin products once the sanctions are lifted.
Certain overseas regions are still key for Iran as trading partners with a large Iranian expatriate population, Dubai being home to over 600,000 affluent Iranians. Key data in the report looks at brokers operating in the country alongside potential marketing techniques and opportunities for firms to target the region.
Iran is certainly an interesting proposition, a country where traders are screaming out for diversity in their investment portfolio.
To access the full story, the Forex Magnates Quarterly Industry Report (QIR) for Q1 2014 is now available, and contains useful, interesting and business critical information for participants operating in the world of financial markets.