There is a law now getting to parliament mainly focused on the primary market. It is not comprehensive but it is good. It will establish firmly our supervisory body. At present, the market watchdog is not clear - the new law will look in more depth at the supervisory authority and its priorities. The new body will be totally independent from the ruling body of the exchange.

At the moment I have two contradictory positions: elected representative of the brokers and head of supervising the market. These put me in a very difficult position. The new law will change all this but, as an interim measure, I have split off the supervisory duties of the exchange and put them under a separate committee, which is possible under the existing regulations.

What will the new regulations for foreign investors involve?

Under the Foreign Investment Promotion & Protection Act [FIPPA] of last year, the position of portfolio managing is not clear. Running companies is not a problem now - they get a permit from the Finance Ministry within 45 days and transfer ownership. But a portfolio manager does not run companies but makes money as an expert in buying and selling securities. It is not quite clear in FIPPA how foreigners should be involved.

We have taken a gradualist approach in making our new proposals. In the first phase, all foreign portfolio managers will be able to hold up to 10 per cent of the total market capitalisation, which today stands at $30,000 million. The second element is that initially we are opening up only to corporations and funds rather than individuals. Third, there is a proposal that 10 per cent of net profit - after tax and currency exchange - can be taken out of the country after the first year and the remainder can be transferred after three years. This is because there is now no free exchange mechanism - it is pegged to the dollar. I hope that in the continuation of the government's economic adjustment programme, the exchange rate will be totally freed over the next three years. I want these regulations to start being implemented within the next three months.

How will the brokerage system be developed?

At present, the man in the street does not go directly to us but through a mutual fund. I am trying to create entities that can provide these services to people but in line with the Islamic code of banking and trade. This is one of the most important things to do over the next two months with the introduction of a new trading floor and improved index. We will restructure the brokerage system to let youngsters with brokerage backgrounds into the system, giving the man on the street better access. Now we are building physical trading halls in major cities. Normally brokers would do this but there are not enough now. We cannot expect people to do internet trading and we have no legal system in place to cover that. So we need to extend the brokerage network.

We have chosen the European model of using outlets of money centres such as banks as brokers because they have a very extensive network. This is the most economical way of expanding. I hope it will lead more educated people with financial experience to come into the market. The next step will be to open floors in free zones like in Dubai.

What targets do you have for market growth?

My programme is to develop the market to $40,000 million capitalisation by the end of the Iranian year 1382 - in six months' time. And within two years to bring it up to $100,000 million capitalisation. There are lots of public and government assets that can be transferred to private hands. We have calculated our figures by looking at what public assets can reasonably be put on the market in collaboration with the Iranian Privatisation Organisation [IPO]. Within two years, banks, steel companies and the remainder of the cement sector will be listed. Governments always put up a lot of resistance to transferring control. They want to delay the process or not transfer management rights. But I see no reason for that and many government officials and economic experts feel the same way.

This has created a market problem because they keep lots of stock. Market capitalisation is very high but last year the free-float volumes were only about 20 per cent of total capitalisation. By comparison, a major US company will have around 80 per cent of its capital as free float. We must work on the volume to increase market liquidity. n