Big Changes Planned for Iraqi Stock Markets

With 84 listed companies, the ISX has a market capitalization of $9.5 billion to serve a population of 30 million, an amount substantially smaller than other oil-dependent markets in the Gulf Cooperation Council, which range in size from $208 billion in the United Arab Emirates to $479 billion in Saudi Arabia.

Toward the end of 2013, the ISX asked the Iraqi Securities Commission (ISC), which regulates the stock market, to ease requirements for custodians to hold shares.

In the past, industry insiders have complained that the proposed capital requirement set by the ISC was too onerous. "The original requirement was $50 million, which is a large amount for such a small market," said a source who requested anonymity.

"My understanding is that some of the big banks are now looking at offering their services in this regard," said Sanjay Motwani, president of Sansar Capital, which runs one of the largest equity funds in Iraq and has invested some $27 million since 2011. "Some of the major foreign banks have entered Iraq in the last couple of years, and they've said that custody is something on their template. So I'm hopeful that a custodian will be appointed and once it has, I wouldn't be surprised if it led to a 300% re-rating in the market, because there will be a huge wall of money hitting Iraq."