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The difference between accrued sales and borrowed sales

The difference between accrued sales and borrowed sales

The accrual sales method is used with the use of borrowed sales in order to balance the market and make it bilateral. Due to religious and jurisprudential issues, borrowed sales are not used in Iran and instead, accrued sales are used. The overall sales of borrowing and sales are similar, but there are some differences between them, which we will examine below.

The difference between accrued sales and borrowed sales

In other countries’ markets, borrowed sales are used, but in Iran, due to religious and jurisprudential issues, it is not possible to use borrowed sales (any loan that comes with the condition of paying interest becomes usury), but considering that to balance the market. And its bilateralization required a tool with the use of loan sales. By order of the head of the Stock Exchange and Securities Organization, a new idea was presented based on the power of attorney plan. Execution was also feasible.

 

Note that the reason for changing the name of the loan sale to the obligation sale is that in the instrument of sale, the individual undertakes to buy and return the shares sold from the market, which means that he does not borrow the share like the loan sale tool, but commits to buy and sell. It is refundable, and in terms of a power of attorney contract, this is the most acceptable way that can happen to sell an obligation.

One of the differences between commitment sales and loan sales is that the basis of work in loan sales is the borrowing of shares from the owner, provided that interest is paid, and the basis for working in the sale of commitment is a power of attorney contract between the owner and the investor.

This means that by offering a power of attorney and other terms of the contract of sale, the owner of the shares allows the applicant to achieve his trading strategy by selling the shares owned by him and in his own name, until the due date and at any time. When the owner asks for his shares, he can repurchase them in the name of the owner, just like the shares sold.

To implement accrual sales, after approving this style of jurisprudential perspective, draft the relevant instructions with the presence of various departments of this organization and representatives of the stock exchange and over-the-counter company, Central Depository Company, Technology Management Company, Brokers Association and companies providing online transaction services. , Was reviewed by the Stock Exchange and Securities Organization’s Regulatory Committee.

After reviewing the “Instructions for the sale of accrual securities on the Tehran Stock Exchange and over-the-counter” in June 1998, it was approved by the board of directors of the Exchange Organization and was announced on August 21, 2009. Bahador announced the launch of a commitment to sell stocks by the end of 1998 in the capital market.

Until the unveiling ceremony of the accrual sales mechanism was held on March 25, 2009 in the presence of Ali Sahraei, CEO of Tehran Stock Exchange, Hassan Amiri, Deputy Supervisor of Stock Exchange and Publishers Supervision of Stock Exchange Organization, and Amir Hamouni, OTC CEO. The mechanism of selling commitment in the capital market on eight stock exchange symbols was started with the aim of increasing transparency and strengthening liquidity.

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