Corporate Governance

Stock Exchange Practices in Iraq

By J. Robert Brown

The need for capital markets have become di rigueur everywhere, including in some unexpected emerging markets.

Apparently one legacy of the US presence in Iraq will be US style capital markets.  The WSJ reported back in April that the Iraq Stock Exchange (ISX) started electronic trading for five of the 91 exchange traded companies.  (A non-electronic system started in 2004).  Since then, the Exchange has been holding three sessions (including one electronic session) a week.  

The ISX is a non-profit that is owned by member-brokers.  Although not a governmental body, the Exchange is supervised by the Iraq Securities Commission.  For an indication of the trading volume, go here. 

The Exchange shows no signs that it has been subjected to requirements of Shariah.  A glance at the listed companies indicates that there are non-Islamic compliant companies trading on the ISX.  These include banks and insurance companies and, apparently, at least one brewery. 

Moreover, by having the Exchange be subject to oversight of the Iraq Securities Commission, the structure seems to duplicate the model in the US.  The ISX is owned by members (as was the NYSE before becoming public) and subject to government oversight.  Moreover, as in the US, the Iraq Securities Commission is an "independent" regulator. 

It will be interesting to see how much of this US style model survives the US departure from Iraq.

Full post as published by The Race to the Bottom on July 14, 2009 (boomark / email).