Tehran Times – Given the widespread welcoming by market participants for launching futures and certificates of deposit for saffron trade at Iran Mercantile Exchange (IME) and its positive impact on transparency of the price of saffron and the elimination of intermediaries, IME will launch saffron options contracts by the end of current Iranian calendar year (March 20, 2019), IME’s managing director announced.
Hamed Soltaninejad stated that IME, aimed at hedging the price of saffron, and, consequently, creating the possibility of long-term planning and management of supply and demand for farmers and activists in this field, as well as the development of derivatives as one of the main pillars of the development of the Iran capital market, launched Saffron futures for the first time in Iran at the beginning of the year, being welcomed highly, IME’s International Affairs and Public Relations Department reported on Tuesday.
According to Soltaninejad, since the launch of these contracts, more than 11 million futures contracts have been traded on Iran Mercantile Exchange.
IME’s managing director further said that the introduction of new financial instruments would reduce transaction costs, increase transparency and elevate the level of transactions, adding, “the launch of saffron futures contracts in this year led to the development of traditional market structures to modern structures and the development of domestic markets for saffron. Therefore, due to the widespread appreciation of the market participants for saffron futures and certificates of deposits, saffron options contracts will be launched by the end of this year.
Soltaninejad expressed the advantages of using this financial instrument, saying that the options contracts would allow farmers to secure sales at certain prices. In addition, due to the low transaction costs and price transparency on the Iran Mercantile Exchange, the entry of farmers into this market will lead to the elimination of intermediaries and the price management for saffron.
Managing director of IME added: “The establishment and further development of commodity-based derivatives will ensure the farmers’ confidence in future prices and decision on the cultivating and selling in the future.”