Definition
There are a variety of ways for financing and one of important ones is capital market and through issuing fixed income securities. On the other hand choosing the best investment opportunity requires considering many features, one influential feature is liquidity. Trading mechanism is a tool to increase liquidity of securities traded on stock exchanges and market makers are drivers of this tool, increase the liquidity of their underlying securities and reduce price volatility.
Market maker performance
Fixed-income security trading on the stock exchange market and Iran fara bourse is conducted in two ways: negotiation-based and auction-based. Negotiation-based the market maker commits to purchase securities at least at par value. In the past almost all of the issued fixed income securities went through market making using this method.
In auction-based process for fixed income securities, market maker must order in specified range, cannot pledge the price floor and attempts are to increase the liquidity of the securities and restrict price volatility.
Market maker obligations
According to the Instructions of Tehran Stock Exchange, following are the duties and responsibilities of the market maker:
A. Bids on orders must fluctuate within the allowed range.
B. The difference between the lowest price in purchase orders and the highest price in market maker’s sales price leads to the maximum quoted range.
C. Purchase orders and sales orders must be equal to each other and be at least equals or more than the minimum order.
Note: If the purchase order or sales order is reduced to less than minimum order or the equality between these two is lost as a result of transaction, the market maker shall within two minutes accumulate the volume of such orders equal to each other or equal to or more than the minimum order.
It should be noted that if trading volume of the underlying share exceeds the value specified in the underwriting announcement, the market maker’s obligations regarding purchase and sale orders will be eliminated.
Market making funds
Stock trading is facilitation of trading for a given share or give offers to purchase or sell a certain number of shares. The purpose is to regulate supply and demand, limit the share price range and increase liquidity. Mellat exclusive market making fund established on December 12, 2015 under license of SEO. The fund is registered with SEO number 11410 and the company registration number 38052.
Mellat exclusive investment fund
| Fund manager |
Mellat IB |
| Compliance |
Tosee Moeen Mellat Investment company |
| Stocks subject to trading |
Mellat bank, MA insurance, Mellat leasing |
Mellat exclusive investment fund AUM
| Date |
NAV (IRI) |
AUM (IRI) |
| 2016 - 03 - 19 |
1,000,000 |
199,663 |
| 2017 - 03 - 20 |
574,594 |
1,195,826 |
| 2018 - 03 - 20 |
511,850 |
1,448,697 |
| 2019 - 03 - 20 |
1,220,448 |
3,454,252 |
| 2020 - 03 - 20 |
2,774,535 |
13,417,529 |
| 2021 - 03 - 20 |
5,098,081 |
40,110,777 |
| 2022 - 03 - 20 |
3,983,579 |
51,292,766 |
Service users
People who wish to increase liquidity of their owned companies’ shares.