Iraq just issued its first license to a foreign brokerage firm. . Bigger than that sounds, let me explain

The Securities Commission of Iraq has licensed the first foreign financial brokerage firm. Given the market that has been more or less off limits to foreign firms until now, this really represents an opening up and a step toward a more modern financial market in Iraq.

The regulator declared that the firm satisfied both the technical requirements, and those that would protect investors. Essentially this means they're putting in stricter controls and inviting international players.

Here is what it means to follow the ISX and frontier markets:

It shows regulatory maturity. The Iraqi market has been attempting to display itself to international investors as mature and international. The first licensed foreign broker is a concrete sign of a stabilizing and becoming more open system.

It imports foreign capital and experience. Brokers don't tend to turn up at markets alone. They come with a base of clients and better systems of trading, and a demand for high standards in compliance that the market has been missing.

It adds liquidity to the ISX. The market itself consists of some fine businesses but has low trading volumes. Foreign brokers should result in closer spreads, and better price discovery, eliminating liquidity discounts to a degree.

It drives domestic brokers to catch up. Competition usually leads to better execution, service, and technology on both ends.

This could be one of the more important developments in the Iraqi capital markets for years, not in the spectacular sense, but in the sense that its foundational.