Regulatory Challenges in the Iranian Capital Market (Stock Exchange)

Regulation, as one of the most critical functions of modern governance, has led to the establishment of regulatory bodies—particularly in the domain of economic regulation—in many countries. The cyclical crises inherent in the market-based economic system have always necessitated the intervention of a force beyond the market itself. Today, regulation is viewed through a new lens: it represents a form of governance based on the concept of distributed power and no longer considers the state as the sole and unchallenged authority in exercising public control. The capital market, as one of the three main financial markets in Iran, has consistently faced challenges related to the enforcement and implementation of regulation. This study, grounded in theoretical frameworks and conducted using an analytical, descriptive, and comparative method, investigates the prerequisites for the formation of regulatory states. It demonstrates that Iran’s economic system, due to the extensive scope of government intervention, significantly diverges from the neoclassical economic paradigm that underlies economic regulation. Furthermore, the existence of a rentier economy and the absence of a free market—along with structural challenges such as the application of inappropriate institutional models in financial markets—have rendered the regulatory approach pursued in Iran’s capital market ineffective. These conditions necessitate fundamental legal, political, social, and structural reforms.