Is it necessary to change the base volume for the stock exchange?
According to Tejarat News, the base volume has had a negative impact on capital market transactions in recent years. Capital market participants believe that the volume and amplitude of fluctuations is one of the most important problems for traders.
The volatility range does not allow price fluctuations and the number of daily stocks must be filled. Accordingly, this issue can lead to more losses for capital market participants.
Soroush Haghroudi, Deputy Supervisor of Iran’s OTC market, also says in this regard: On February 1, last year, for the first time, the base volume was not announced for 20 OTC symbols in the first and second markets. This process continued and at the end of February, 3 symbols were removed from the base volume. Finally, with the addition of 6 other symbols at the end of March, the number of OTC symbols without base volume reached 29 symbols.
As a result, it is expected that the stock market will increase in the long run by eliminating the base volume.
What is the base volume?
The minimum number of shares that must be traded by a symbol in one day so that the company can apply the permissible price fluctuation in determining the stock price for the next day.
The base volume was formed in 2003 by Hossein Abdo Tabrizi. At the beginning of the law, it was based on the fact that 15% of the total shares of a stock exchange company would be traded within a year, and the working days of the year were 250 days. Based on this, the daily base volume of one share was considered to be 0.0006 (six tens of thousands) of the total shares of the company so that the main / final price could fluctuate.
This rule was made so that no one could trade the price of a company’s stock by trading a small number of shares at a price much higher or lower than the current price. That is, very simply, in order for the price of a stock to fluctuate and increase or decrease, at least a certain number of those stocks must be traded per day, which is called the base volume.
It is necessary to remove the base volume
Hossein Khazli, a capital market expert, wrote on Twitter: “No one dared to leave, until now!”
Ali Saadvandi, an economic expert, also wrote about the base volume: “Attention to increase the expected return on queuing gambling will deepen or this dilemma of subversive women will be healed.”
Another user wrote: “The range of fluctuations from the 29th in the stock market and over-the-counter market (except the stock market) changes to -6% to + 6%. This is a good thing and it will change to 10% by the end of the year. “But the conditions of the same condition as long as it is cumbersome is called the base volume.”
“For us contractors, Kayson is the giant and the end of the business. Today I was looking at the volume of his transactions, it was 8 million tomans and the sales queue was locked! Cause? A phenomenon called base volume and amplitude of fluctuation of 2%! “Turning the most liquid market in the country into the dullest market in the country was hard work!”
Despite these issues, it seems that changing the amplitude of the fluctuation and the volume of the fluctuation amplitude will bring new liquidity to the stock market in the long run.