Iraq is expected to choose a custodian bank within the next two months and the UK’s HSBC is the strongest contender, according to the Abdul Razzak al-Saadi, chairman of the Iraq Securities Commission (ISC).

“For the time being any bank can apply for a custodian licence, we are looking at some banks, we have found HSBC is the one following this project seriously, but we are looking for more than one bank,” says Al-Saadi.

The appointment of a custodian is likely to increase foreign investment in the Iraq Stock Exchange (ISX), an aim that the ISC has set out for this year.

“Foreign institutional investors will not come to the market unless it has custodians. The custodian’s work ranges from opening an account in the depository to settlement of creeds, cash management, reconciliations, reporting and collecting corporate actions,” says Arindam Das, head of HSBC Securities Services in Mena.  

The ISC is hoping to increase market activity by encouraging more companies to list on the exchange. Currently the average daily volume of trade is ID80m, but Al-Saadi is aiming for ID2bn by the end of the year.

“We hope to get more companies to list on the stock exchange. At the moment, there are 84 companies on the ISX, but in Iraq we have more than 250 shareholder companies,” says Al-Saadi.

Currently regulations stipulate that only companies with 100 or more shareholders are eligible to list on the ISX.