1
Iran FaraBourse
06 May 2012
Certificate of Mortgage Right
MASKAN BANK
1. INTRODUCTION
The life of Iran Capital Market could be divided into four periods:
1) 1967-1978: Since the beginning of TSE activity until revolution
The number of companies increased to 105 (22 private banks, 2 insurance
companies, and 81 industrial corporations). Most of this development
activity was due to the ratification of ownership development of
manufacturing units' stocks and tax exemption for the listed companies'
laws.
2) 1979-1988: Since revolution until the end of war
In the second period of TSE activities, two important events i.e. the Islamic
revolution and war invasion were reduced exchange activities severely. The
exiting number of listed companies decreased to 55 companies.
2
CONT…
3) 1989-2005: Since the end of war until ratification of new Securities
Market Law
In this period, TSE was taken into account as one of the most important
mechanisms for national economy optimization in order to facilitate the
contribution of the private sector in the productive activities through
transferring some of the state duties to the private sector.
4) 2005-Now: Since the ratification of the new Law until now
In this period due to changes in the structure of the capital market and
changes in regulatory and trading systems, the market growth in all fields
easily can be seen.
3
CONT… Under the new Act, the Securities & Exchange High Council(Council) and
the Securities and Exchange Organization(SEO) was introduced and
created as regulators of Iran capital market
The Council is the highest official executive organ of the securities market,
is responsible for setting the macro policies of the market.
The Securities and Exchange Organization (SEO) as second highest
official executive organ, is responsible to protect the rights of investors, to
organize, operate and develop a transparent, just and efficient securities
market, and to supervise a proper execution of the Securities Law.
4
REGULATORY FRAMEWORK OF IRAN CAPITAL MARKET
ESTABLISHMENT OF IRAN FARABOURSE
Based on Paragraph (8) Article 1, and Article 28 of the Securities Market
Law, and after obtaining permission from the Securities and Exchange
High Council, Iran FaraBourse was established in November 2008.
Iran FaraBourse officially began its activities in the second half of the
Iranian calendar year (28 September 2009). During the first 6 months,
only four companies were listed and today, after 2 and a half years, the
market has evolved into an exciting and growing marketplace where
individual and institutional investors trade securities of over 100
companies with the market capital of US$27billion.
6
FARABOURSE STATUS
Items 2010-11 2011- 12 %Changes
Market Cap- US$ Million 9,788 26,917 +170
Turnover-US$ Million 5,022 7,083 +41
Volume-Million shares 17,035 18,806 +10
Number of Trades 457,874 1,713,665 +274
Number of Buyers 208,910 448,402 +115
Total Number of Trading Symbols
20 109 +225
7
FARABOURSE MARKET STRUCTURE
8
Iran FaraBourse
First Market Second Market Block Trading Market Basic Market
Registered Capital ≥ $815,660
Free Float ≥ 10%
Life ≥ 2 Years
New Financial Instrument
Market
Equity/Asset ≥ 15%
Registered Capital ≥ $81,566
Free Float ≥ 5%
Life ≥ 1 Years
Amount ≥ $8 Million
Due ≥1 Year
Market Maker ≥ 1
CONT…
FaraBourse Markets
Second Market
Third Market
Stock Market
New Financial Instruments Market
First Market
Basic Market
Certificate of
Mortgage Right
Islamic Bond
Sukuk
Bank Certificates
Debt Market
MASKAN BANK Maskan Bank is a specialized bank in housing and construction sector. The
history of the Maskan Bank dates back to the year 1938, when Iran Rahni
Bank was established to support the construction of new housing in urban
areas. Iran Rahni Bank was established through a joint initiative of the
Ministry of Economic Affairs and Finance and Bank Meli Iran. Primary
aimed at financing Iran’s housing and construction sector, it began offering
real estate secured housing related loans, in order to facilitate the purchase,
construction, and repair of housing units.
Expanding its filed of activity, Bank Rahni was embarked directly on
construction operation in 1944, and has accomplished numerous large-scale
construction projects ever after. 10
CONT… On June 7, 1979 Maskan Bank, classified as state-owned, was established
through merger of Bank Rahni Iran, Bank Sakhteman (Building &
Construction Bank), Iranian Banks Construction Investment Company, and
other savings and mortgage associations around the country.
The registered capital of the Bank is now $1.7 billion, and the network
comprises of 1,214 branches.
To further support the monetary section of the country, Maskan Bank
included all available commercial banking services on its filed of activities.
The Bank is the unique financial arm of Iranian government in execution of
Mehr Housing Scheme. This scheme is designed in 2007 to provide the
majority of Iranian people with the opportunity of becoming housing owner.
The process of granting facilities to this scheme is accelerated during
recent years.11
MASKAN BANK STATUS
Items 2010 2011 %Changes
Total Assets- US$ Million 24,532 42,562 +73
Total Liabilities-US$ Million 23,367 40,784 +74
Shareholders' Equity-US$ Million
1,165 1,778 +52
Total Revenue- US$ Million 937 1,567 +67
Total Expenses- US$ Million 865 1,463 +69
Net Profit- US$ Million 53 86 +62
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PRIVILEGED INVESTMENT DEPOSIT ACCOUNT
Maskan Bank as the only specialized bank in the housing sector, in
achieving its goal of providing housing for various sector of society,
especially low-income communities, has designed a "Privileged
Investment Deposit Account".
Depositors in this account, in addition to receiving a reasonable
profit, may also benefit from certificates of mortgage facilities.
These certificates give depositor the advantage of applying for a
house loan without having to wait long time.
13
CONT… Since these certificates can be conveyed to others, an informal
market has been created to exchange these certificates in recent
years.
Expansion of the informal market, showed the necessity of
organizing transactions of the certificates more than ever before.
The Maskan Bank as a custodian of the housing market in the
country, has put on its agenda creating a transparent and efficient
market for transactions of these certificates.
The Bank has recognized that the best way to do this is to convey
the transactions from informal markets to an official OTC market.
The instruments has examined and confirmed by the Sharia
Committee in SEO. 14
THE PRIVILEGED ACCOUNT CONDITIONS
This account is in the form of a short-term investments deposit account.
The Bank defined three types for this account; Individuals (code;8726),
legal entities (code;8728), and certain individuals (code;8727).
Legal entities for its employees or others and certain individuals with
charity aims in order to enjoy the certificates need to have contract with
the Bank. Their minimum deposit amount should not be less than 270
MIRR ($22,000) in any time during the term of contract. The Bank
would separately calculate and allocate the certificates to these
accounts. The allocation is usually based on 30 to 45 percent of the
average account balance during the year.
15
CONT… For individuals, the initial amount to open the account and also the
minimum amount during at least 6 months, is 50,000 IRR ($40).
The depositor can withdraw or deposit money in this account
frequently, provided that the minimum amount hold.
Opening more than one account by a depositor in different branches
is possible.
The profit calculations are performed at the end of each month and
will be paid on the first day of following month.
The Bank Obligations towards individuals depositors in this account
is only to pay the profit equivalent to the short-term investments
interest rate. 16
THE ALLOCATION PROCESS OF CERTIFICATES
Allocation of the certificates is possible only to a limited number of
accounts. Each year, based on the status of the resources, the Bank
determine how much percentage should be applied to the Privileged
accounts balance. It is between 15 and 45 percent.
The allocation of certificates will be done according to the amounts and
terms of the deposit accounts and will be based on pointing system. To be
considered into the system, the bases is completion of 6 months of opening
the account or the last allocation. Allocation of certificates to an account
with this method is possible frequently.
The certificates are valid for a period of two years. After the validity period,
the Bank does not have any commitment to the holder. The first series of
certificates issued on April 04, 2006.
Allocation of certificates to accounts are based on the following table.
17
THE ALLOCATION SYSTEM
18
Minimum waiting period
Coefficient(The average account balance)
Maximum Certificates- Million IRR
Maximum Certificates- US$
6 0/5 120 9,787
9 0/75 125 10,195
12 1 130 10,603
18 2 140 11,419
24 3 150 12,234
30 4 160 13050
36 5 170 13,866
THE MORTGAGE The depositors who receive certificates have the right to apply for the loan to
build or buy a housing unit or to sell the certificates.
Youth housing deposit account can be used along with the certificates to get the loan in order to buy or build a house.
The loan Interest rate would be 12 and 13 percent, if the certificates are used
for buying or building a house, respectively.
The loan amount for buying a house that the issuance date of building permit
is less than 12 years, is US$16,313. The amount is US$8,156 if the permit
older than 12 years and maximum 20 years.
Since each certificate bears 408 USD Loan, if someone is willing to buy an
apartment without holding any deposit in Maskan Bank, easily can buy 40
certificates from the market and apply for the maximum loan amount.19
CONT… Maximum repayment term is determined as follow:
20
Loan Amount- Million IRR
Loan Amount- US$
Repayment term- Year
Loan≤120 Loan≤9,787 12
120-150 ≤12,234 15
150-180 ≤14,681 18
180-200 Max=16,313 20
Maximum loan payable to a person on a house is US$16,313.
TRADING THE CERTIFICATES Each month, Technology Department of Maskan Bank send an electronic
file consists of list of the new certificates holders to the CSDI through a
secured telecommunication line. The file include the profile of accounts’
holders along with the number of allocated certificates.
CSDI first check the profiles with “Office of Civil Registration” and
“Companies Registration Office”. For individuals; First name, Family
name, Father name, Date of birth, Place of birth, Place of issue, ID number,
ID serial number, National number, and Post code. For legal entities; Name
of the firm, Registration number, registration place, Postal Address, and
Fixed Telephone Number.
Then, CSDI create the trading symbol in trading system and data are
recorded under the trading symbol. The trading symbol include the word
“Loan” plus the month and the last two digits of the year (As an example:
LoanMay12).
21
CONT… At the next stage, the hard copy of certificates is published by the CSDI,
and convey to the bank. The bank distributes the certificates through its
branches throughout the country to depositors.
Now certifications are ready to trade via Iran FaraBourse New Financial
Instruments Board.
The trading procedure is the same as trading a stock or a bond.
The first trading day of the first symbol, the price fluctuation limits were
not applied. From then onwards, the limits applied.
Since the certificates are valid for two years, when they are approached to
expiry date, the market price should approach to zero. Thus, they should be
separately traded in different trading symbols. Following this rule, every
month Iran FaraBourse open a new symbol. 22
CONT… In order to open a new symbol, the last closing price of the latest
symbol is applied and fluctuation limits is applied.
In the post session any changes will be send to the Technology Dep.
Of the Bank through Secured line. The data will be record on the
Bank systems. Similarly, the Bank would send any changes in the
certificates status to the CSDI. In case of applying for the loan,
CSDI will inactive the certificates in the trading system.
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CONT…Saturday to Wednesday DayPreopening 8:30 – 9:00, Trading 9:00 to 12:00 Hours
Atos Euronext Market Solutions (AEMS) SystemContinuous Auction Trading MechanismsIran Rials Currency
±5% Price fluctuation Limit
T+3 Settlement
88 Active Brokers
700 Trading Stations over the country
Bid/Ask, Low, High and last Price, Indices, Trading value and Volume, and Companies Announcements
Real Time Information
Not Permitted Short Selling / Margin Trading
MARKET STATUS OF CERTIFICATES
Items 1389-1390(2010-12)
No. Symbols 17
Volume 5,900,000
Turnover- US$ 353,752,039
Total Number of Certificates 7,677,583
Number of Inactivated Certificates 3,210,960
Available Certificates 4,466,623
Total Number of Loans 191,939
Number of Loans Applied 80,274
Applicable Loans 111,665
25
26
2-Nov
-10
22-Nov
-10
12-Dec-
10
1-Jan
-11
21-Jan
-11
10-Feb
-11
2-Mar-
11
22-Mar-
11
11-Apr-
11
1-May-
11
21-May
-11
10-Jun
-11
30-Jun
-11
20-Jul
-11
9-Aug
-11
29-Aug
-11
18-Se
p-11
8-Oct-
11
28-Oct-
11
17-Nov
-11
7-Dec-
11
27-Dec-
11
16-Jan
-12
5-Feb
-12
25-Feb
-12
16-Mar-
12
5-Apr-
12
25-Apr-
120
10
20
30
40
50
60
70
80
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Vol
ume
Pric
e -U
S$LoanNov10
27
29-Dec-
10
14-Jan
-11
30-Jan
-11
15-Feb
-11
3-Mar-
11
19-Mar-
11
4-Apr-
11
20-Apr-
11
6-May-
11
22-May
-11
7-Jun
-11
23-Jun
-11
9-Jul-
11
25-Jul
-11
10-Aug
-11
26-Aug
-11
11-Se
p-11
27-Sep
-11
13-Oct-
11
29-Oct-
11
14-Nov
-11
30-Nov
-11
16-Dec-
11
1-Jan
-12
17-Jan
-12
2-Feb
-12
18-Feb
-12
5-Mar-
12
21-Mar-
12
6-Apr-
12
22-Apr-
120
10
20
30
40
50
60
70
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Pric
e-U
S$
Vol
ume
LoanDec10
28
Thank you
Q&A
Maskan BankFaraBourse
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