At the end of last month, the Iraq Securities Commission (ISC) announced new rules on stock suspensions. Effective September 1, trading is to recommence no more than four months after general assembly meetings when rights issues are announced and immediately otherwise. Pre-general assembly suspensions are limited to one week.
This new schedule is a big improvement. Previously, stocks were suspended after general assembly meetings for as long as three weeks even when no particularly market-moving news was announced. Post-rights issue suspensions have typically lasted anywhere from four to eight months. Warka Bank is still not trading over a year and a half after its failed rights issue early last year.
The one-week pre-general assembly period isn’t really news, however. This appears to have been in place since some time in the second half of last year. Formerly, there had generally been two weeks between the suspension and GA meeting dates.
It’s unclear why any of these suspensions were necessary in the first place or what has changed to make them less necessary now. I suspect that they were never really necessary and that nothing has changed. I think the ISC is simply trying to improve the trading environment ahead of the telecom IPOs that were supposed to have taken place last month.
If that is the goal, however, the new rules obviously do not go far enough. Unnecessary trading halts are just as unacceptable whether they last for four months or for eight.
If the ISC really wants to get an ‘A’ from foreign institutional investors it will have to eliminate pre-GA and post-rights issue suspensions altogether.