Document Type : Original Article
Authors
1
Assistant Professor, Faculty of Law, Shahid Beheshti University, Tehran, Iran. Corresponding Author Email: mo_arian@sbu.ac.ir
2
PhD Candidate, Faculty of Law, Shahid Beheshti University, Tehran, Iran
Abstract
Introduction
Commodity exchange market is an organized and self-regulating market in which the sale and purchase of commodities take place based on predetermined rules. The regulation of organized market for commodities and its actors has special requirements, the lack of attention to which may distort its functioning and effective role in the country's economy. In order to meet these requirements, it is necessary for the market to have the power of self-regulation so that its managers can ensure the health of the market by imposing special regulations. In recent years, the supply and pricing of some commodities, such as petrochemical products, have been subject to regulatory intervention by entities outside the organized market of petrochemical products due to the existence of economic sanctions and restrictions on the supply of raw materials. Such an intervention has made serious challenges to the proper functioning of this market. In general, regulatory intervention poses this serious risk that the rules imposed by external entities may not be in line with the specific requirements of the market, and this raises the question of whether the rules currently imposed by the Working Group on the Market Regulation (MRWG) are in line with the specific rules of the organized commodity market? another question that has to be answered is that if there is any conflict/s, are there any solution/s that can be proposed for removing the conflicting situation/s? The present study seeks to achieve these goals by identifying the authorities active in the field of regulating the petrochemical products market and explaining their legal status, as well as determining to what extent the rules established by the aforementioned authorities conflict with each other and what solution or solutions can be considered to overcome the conflicting condition/s.
Methods
To achieve the mentioned goals, this research will try to criticize and evaluate the regulations imposed on the organized market for petrochemical products relying on existing library resources.
Results and Discussions
The findings of this research indicate that some of the rules imposed by the Working Group on the Market Regulation regarding the minimum offering, price determination, and information disclosure in the three stages of pre-offering, offering, and settlement of funds in the Commodity and Energy Exchanges are in conflict with the provisions contained in the relevant guidelines on the mentioned exchanges. In order to save the legal status of the fundamental principles governing commodity exchanges, including free competition, transparency, non-monopoly, etc., it is necessary to resolve the conflict in favor of the main rules governing the aforementioned exchanges, because the conflicting rules in the Market Regulation Directive, as described in this research, are explicitly contrary to Article 36, Clause C of the Permanent Rules Act and Articles 17 and 18 of the Law on the Development of New Financial Instruments and Institutions. Therefore, the aforementioned conflicting regulations have no validity against the laws enacted by the Parliament. On the other hand, based on Sub-section 2, Clause "T" of the Decision of Presidential Special Representatives on Designating Members of the Specialized Working Groups of the Targeted Subsidies Department and their Detailed Duties, the Working Group on the Market Regulation and the Petrochemical Specialized Committee do not have the authority to determine prices or minimum offering or require disclosure of information without complying with the rules governing commodity exchanges. It is worth noting that, contrary to what was stated above, the competent authorities of commodity exchanges in practice comply with the provisions of the Market Regulation Directive in order to resolve the conflict. This practical solution of the said authorities does not mean that the conflicting rules in the Market Regulation Directive have legality, and the admission of the provisions of the Directive in question by the aforementioned authorities to the detriment of the specific rules governing commodity exchanges will gradually weaken the legal status of commodity exchanges and their fundamental principles. Although the government (i.e. Ministry of Industry, Mine and Trade- Market Regulation Working Group) has assumed legislative power for itself by invoking the sanctions imposed on the country and intervenes to regulate the market by announcing base price or minimum offering and other interventions in the organized market of petrochemical products, as mentioned above, the Working Group on the Market Regulation and the Petrochemical Specialized Committee have no authority to make regulations in this field, and their authority is limited to coordinating and supervising the determination of tariffs and pricing. Furthermore, should the sanctions require the government to provide the petrochemicals with subsidized raw materials and feedstocks in order to manage the domestic market, and in return, the government expects that the prices of products be determined by the order of the Working Group on the Market Regulation, it is suggested that the supply of petrochemical products or other specific products affected by the sanctions be managed outside the organized commodity market, so that the special rules governing organized commodity markets do not limit the government's authority to manage the market of these products.
Conclusion
The offering of petrochemical products on the commodity exchange and government intervention in their supply and sale processes contradict the function, nature, and essence of the organized markets and the general principles governing them. In practice, as mentioned, such a strategy will weaken in long term the position of the commodity exchange in the country. Therefore, as a practical solution to overcome the aforementioned situation, it is suggested that any stakeholder in the commodity exchanges can pursue the annulment of these conflicting regulations by filing a complaint to the Administrative Court of Justice
Highlights
- Exchanges are considered organized markets, and trading of commodities outside the framework of an exchange is called an unorganized market.
- The regulations imposed by the Market Regulation Working Group regarding supply and pricing conflict with the rules of the organized market.
- Government interference in the process of offering petrochemical products on the stock exchange is contrary to the general principles governing organized markets.
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