Iraq Stock Exchange

The Iraq Stock Exchange (ISX) is Iraq's principal organized securities market. Based in Baghdad, it was created in 2004 during the restructuring of Iraq's financial and economic institutions after the 2003 invasion. The exchange was established under Coalition Provisional Authority Order No. 74 on April 18, 2004, as a sui generis independent and non-profit organization. The same legal framework also provided for the creation of the Iraq Securities Commission and an Iraq Depositary. The new exchange was intended to help move Iraq away from a centrally planned, state-dominated economic model toward a more transparent market economy supported by private-sector investment. The ISX replaced the earlier Baghdad Stock Exchange, which had operated under the Iraqi Ministry of Finance. It was incorporated and began operations on June 24, 2004, initially listing 15 companies. In its early period, the market used manual trading procedures. Brokers communicated buy and sell interest by telephone or shouted orders on the trading floor, while prices were displayed on whiteboards. Operating conditions were difficult: trading was interrupted for several months in 2006 because of violence, and power outages affected market activity. Nevertheless, the exchange continued to develop as one of the country's few formal venues for equity investment. Foreign investors were permitted to participate from August 2, 2007. This opening broadened the potential investor base and connected the Iraqi market more directly with regional and international capital. The exchange later modernized its infrastructure. On April 19, 2009, it moved to electronic trading, using systems supplied by Nasdaq, including an Electronic Trading System and a Central Depository System. The transition initially covered only a limited number of companies, with the intention of expanding electronic access across the market. The ISX operates under the oversight of the Iraq Securities Commission, an independent regulator modeled in part on the United States Securities and Exchange Commission. The commission supervises the exchange's Board of Governors and provides the regulatory bridge between the former state-operated market and the newer independent institution. The exchange itself functions as a self-regulated organization associated with its member brokerage firms. Its market infrastructure includes five trading sessions per week and two principal indices: the ISX60 Price Index and the ISX15 Free Float Market Capitalization Index. The latter is designed to represent the performance of leading listed equities using a free-float methodology. Companies represented among the exchange's prominent constituents have included Bank of Baghdad, Al-Mansour Investment Bank, Iraqi National Bank, Commercial Bank of Iraq, Asiacell Communications, and Baghdad Soft Drinks Company. The exchange's development has remained closely linked to Iraq's security situation, political environment, oil-dependent economy, banking sector, and prospects for reconstruction. In the first quarter of 2018, the ISX was reported as one of the world's stronger-performing markets, as investors anticipated improved economic conditions following the territorial defeat of the Islamic State. Listed-company numbers also increased during that period. At the same time, political uncertainty and renewed security concerns remained material risks; the market reportedly lost value around the May 2018 election. The ISX is a member of the Federation of Euro-Asian Stock Exchanges and continues to serve as an institutional mechanism for Iraqi equity trading and capital formation.

The modern Iraq Stock Exchange emerged from the post-2003 redesign of Iraq's economic institutions. Before the invasion of Iraq, the country's securities market was known as the Baghdad Stock Exchange and was operated by the Ministry of Finance. That arrangement reflected the wider role of the state in Iraq's centrally planned economy. The creation of a new exchange was part of an effort to establish institutions capable of supporting private ownership, market-based allocation of capital, and more transparent securities trading. Coalition Provisional Authority Order No. 74 established the Iraq Stock Exchange on April 18, 2004. The order treated it as a sui generis independent non-profit organization and also created the institutional basis for the Iraq Securities Commission and an Iraq Depositary. The Securities Commission was designed as an independent supervisory body, with a structure influenced by the United States Securities and Exchange Commission. It assumed responsibility for oversight of the exchange and its Board of Governors, helping connect the former government-run market with the new independent exchange. The ISX was incorporated and opened for business on June 24, 2004. It began with 15 companies. Trading was initially conducted manually. Investors submitted orders through brokers, who communicated by telephone or voice on the trading floor. Buy and sell prices were written on whiteboards rather than transmitted through a fully electronic order book. This early system operated in an unusually challenging environment. Violence caused a trading suspension lasting several months in 2006, and recurring electricity failures complicated the exchange's day-to-day activity. Despite these constraints, the market maintained regular trading activity and gradually built a base of listed companies and brokerage members. A significant expansion occurred on August 2, 2007, when foreign investors were allowed to participate. This change was important both for the development of the exchange and for Iraq's integration into regional capital markets. The ISX was also reported to have avoided the direct effects experienced by many markets during the 2008 global financial crisis, although its performance remained highly sensitive to domestic security, political conditions, oil prices, and the broader pace of reconstruction. The exchange's most important technological transition came in 2009. On April 19, it moved to electronic trading with systems provided by Nasdaq. The new infrastructure included an Electronic Trading System and a Central Depository System. Implementation began with only a small number of companies eligible for electronic trading, with expansion expected over time. This modernization replaced the limitations of the earlier pen-and-paper and whiteboard-based process with a more standardized mechanism for order handling, settlement, and market information. The ISX conducts five trading sessions each week and publishes two main indices. The ISX60 Price Index tracks a broad group of exchange equities, while the ISX15 Free Float Market Capitalization Index focuses on leading companies and applies a free-float market-capitalization approach. Constituents or prominent listed companies have included financial institutions such as Bank of Baghdad, Al-Mansour Investment Bank, Iraqi National Bank, and Commercial Bank of Iraq, as well as Asiacell Communications and Baghdad Soft Drinks Company. By the first quarter of 2018, the exchange was described as one of the strongest-performing markets globally. The reported improvement reflected investor expectations that the defeat of the Islamic State would support economic recovery and encourage corporate activity. The number of listed companies also rose during that period. However, the exchange remained exposed to substantial risks. Political instability, sporadic conflict, fluctuations in oil prices, and other economic grievances could quickly affect investor sentiment; the market reportedly fell by 7 percent around the May 2018 election. The Iraq Stock Exchange is a member of the Federation of Euro-Asian Stock Exchanges. Its long-term significance lies less in the scale of its market than in its role as an institutional foundation for Iraq's evolving private sector. It provides a formal venue for equity trading, supports securities-market regulation and settlement, and offers a channel through which domestic and foreign investors can gain exposure to Iraqi companies.

• 2018

  Strong market performance amid recovery expectations

  [1]Iraq Stock Exchangeen.wikipedia.org

  The ISX was reported to be among the world's strongest-performing markets in the first quarter as investors anticipated economic recovery following the defeat of the Islamic State.

• 2009

  Electronic trading launched

  [1]Iraq Stock Exchangeen.wikipedia.org

  The exchange moved to electronic trading on April 19 using Nasdaq-provided trading and central-depository systems.

• 2007

  Foreign-investor access introduced

  [1]Iraq Stock Exchangeen.wikipedia.org

  Foreign investors were allowed to participate in the exchange from August 2.

• 2006

  Trading interruption during security crisis

  [1]Iraq Stock Exchangeen.wikipedia.org

  Violence led to a suspension of trading lasting several months, while power outages disrupted the market's operations.

• 2004

  Legal establishment of the ISX

  [1]Iraq Stock Exchangeen.wikipedia.org

  Coalition Provisional Authority Order No. 74 established the Iraq Stock Exchange as an independent, non-profit securities exchange and provided for related market institutions.

• 2004

  Operations begin

  [1]Iraq Stock Exchangeen.wikipedia.org

  The incorporated exchange began operating on June 24 with 15 companies.

A domestic, regulated capital-market institution supporting the transition of Iraq's economy toward private ownership, transparent securities trading, and broader investor participation.

• Capital-markets service · 2004

  Listed-equity market

  The ISX provides the organized marketplace through which shares of Iraqi listed companies are bought and sold. Its listed universe has included banks, telecommunications companies, investment firms, consumer businesses, and other Iraqi enterprises. Trading is conducted through member brokerages under the supervision of the Iraq Securities Commission.

• Trading infrastructure · 2009

  Electronic Trading System

  Introduced in 2009 with technology supplied by Nasdaq, the Electronic Trading System modernized the exchange's earlier manual process. It supports electronic order handling for eligible listed securities and was intended to expand progressively beyond the initial group of electronically tradable companies.

• Post-trade infrastructure · 2009

  Central Depository System

  The Central Depository System forms part of the Nasdaq-provided market infrastructure adopted by the ISX. It supports the recording and settlement framework for securities traded on the exchange and complements the electronic trading platform.

• Market index

  ISX60 Price Index

  The ISX60 Price Index is one of the exchange's principal equity benchmarks. It is intended to provide a broad indication of price movements among a selected group of companies listed on the Iraq Stock Exchange.

• Market index

  ISX15 Free Float Market Capitalization Index

  The ISX15 Free Float Market Capitalization Index tracks leading ISX-listed equities using a free-float market-capitalization methodology. Companies associated with the index have included major Iraqi banks, Asiacell Communications, and Baghdad Soft Drinks Company.

• 2009

  Adopt electronic trading infrastructureProduct launch

  Background

  The exchange's initial manual trading process relied on brokers, telephone communication, and whiteboards, limiting the efficiency and scalability of market operations.

  Action taken

  On April 19, 2009, the ISX introduced Nasdaq-provided electronic trading and central-depository systems.

  Aftermath

  Electronic trading created a more modern basis for order processing and settlement. The rollout initially covered only a limited number of companies, with broader adoption planned.

  Source

• 2007

  Open the exchange to foreign investorsStrategy

  Background

  The ISX was developing a new market structure and sought to broaden participation beyond domestic investors.

  Action taken

  Foreign investors were permitted to participate in the market from August 2, 2007.

  Aftermath

  The measure connected the Iraqi equity market more directly with international capital, although participation remained exposed to Iraq's security and political conditions.

  Source

1. 1Iraq Stock Exchangeen.wikipedia.org