Securities and Exchange Organization (SEO) of Iran and the Iraqi Securities Commission (ISC) signed a Memorandum of Understanding (MoU) to create a joint investment fund.
The fund will be based on master-feeder fund model, according to the SEO News Agency, Financial Tribune reports.
The MoU was signed in Tehran on Monday in a meeting attended by the SEO board members, chairman of ISC, Alaa Abdulhussein Al-Saeidi, Iraq’s ambassador to Iran, Sa'ad Jawad Qandeel.
A master-feeder structure is a device to pool capital raised from investors into a master fund. Investors put capital into their respective feeder funds, which ultimately invest assets into a centralized master fund. It is the master fund that actually invests in the market, the paper explains.
The master fund is responsible for making all portfolio investments and conducting all trading activity. Management and performance fees are paid at the feeder-fund level. The primary purpose served by the feeder fund master fund structure is reduction of trading costs and overall operating costs.
Among other things, the MoU includes agreements on opening a branch of Iran Mercantile Exchange in Iraq, creating conditions for two-way import and export of goods through a mercantile bourse and offering advice on legal and technical issues related to capital market.
On improving the financial culture for capital market investors, the two sides agreed to sharing experience on financial literacy, bilateral cooperation to organize exhibitions in Iraq, creating a virtual platform for simulation of stock market in Arabic language, publishing Arabic-language books on capital market and holding MBA courses in Iraq.
SEO chief, Shapour Mohammadi, said both sides agree to create the grounds that would make it possible for Iranian companies to be listed in Iraq’s capital market and Iraqi companies to be listed in Tehran Stock Exchange, adding that a special taskforce will first review the relevant prospects.
They also discussed ways to coordinate and integrate legal mechanisms governing the capital markets in the two capitals, according to Financial Tribune, the first English economic daily of Iran.