JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013
İSTANBUL MENKUL KIYMETLER BORSASI
2012 has been a year of transformation for
İMKB.
İbrahim Turhan
Chairman & CEO
Beginning of year 2012 marked the launch
of a new roadmap for İstanbul Menkul
Kıymetler Borsası (İMKB) to ensure improved
performance of capital markets in line with
the fine performance exhibited recently by
Turkish economy. The most significant part of
this roadmap entails transformation of İMKB
from a mutual public entity into a profit-making
company in harmony with the trends observed
in the global arena over the last years.
The new Capital Markets Law, which entered
into effect on December 30, 2012, is the
foremost factor to contribute to İMKB’s
structural change. The new legislation launched
demutualization process, as well as integration
with İstanbul Gold Exchange and Turkish
Derivatives Exchange, which will bear fruit in
2013.
With its US$ 309 billion market capitalization
as of end 2012, İMKB has also set a goal
to increase the depth of the market and to
augment the amount of funds channeled
to Turkish economy. Turkey’s current GDP,
approximately US$ 770 billion, is expected
to double by the year 2023 (the centennial
anniversary of the Turkish Republic) and İMKB
plans to reach a market capitalization around
50 to 60 percent relative to GDP in line with
global average.
Product range has been diversified in 2012.
Equity Repo Market and Futures and Options
Market were launched. In addition to Single
Stock Futures and Options, Sovereign
Sukuk trading has commenced. Technical
infrastructure of Equity Market Trading System
was improved, resulting in better market
efficiency. Closing session was introduced as
an important factor for efficient price formation.
Investor-based surveillance system came into
effect, which is highly instrumental in ensuring
the realization of trades in an open, orderly and
fair manner and fighting market abuse.
The IPO Campaign maintained its momentum
and 26 companies went public in addition to
235 corporate debt issuing in 2012. Investor
Awareness Campaign activities were initiated
and carried out throughout the year to increase
financial literacy and raise awareness about
capital markets.
Another major component of the Exchange’s
strategy has been the focus on international
cooperation. In line with its pivotal role in
İstanbul Financial Center project, İMKB
embarked on an extensive international
reach out to establish and strengthen ties
with exchanges in the region and globally.
Cooperation agreements have been signed
with exchanges of eight different countries.
These agreements envisage fostering
collaboration between exchanges, as well
as sharing of knowledge, information and
best practices. İMKB also initiated strategic
partnerships on connectivity with Egyptian
Exchange and on cross listing of ETFs with
Japanese and Korean exchanges. Furthermore,
İMKB and NYSE Liffe agreed on the launch of
futures and options contracts based on select
stocks from İMKB 30 Index.
All in all, focusing on the long-term results,
nurturing the marketplace, diversifying its
portfolio, facilitating innovation, and reaching
out for international collaboration İMKB is
attempting to transform itself into a more agile,
efficient and effective exchange. On its way to
becoming Borsa İstanbul, İMKB is committed to
achieving its goals and creating higher value for
all stakeholders.
HISTORY AND DEVELOPMENT
In 1981, Capital Market Law was enacted and
one year later, Capital Markets Board was
established. İMKB, formally inaugurated in 1985,
has an origin going back to early 1870s. As an
important milestone, new Capital Markets Law,
promulgated in 2012, brought many changes
to Turkish capital markets, including the
establishment of Borsa Istanbul.
İMKB provides a fair and transparent
marketplace for trading of a wide variety of
securities from equities, exchange traded
funds, warrants to government bonds, treasury
bills, corporate debt securities, money market
instruments (repo/reverse repo), derivatives
and foreign securities. Currently, there are six
markets operating at İMKB: Equity Market, Debt
Securities Market, Foreign Securities Market,
Emerging Companies Market, Free Trade
Platform and Futures and Options Market.
İMKB was recognized as a “Designated
Offshore Securities Market” by U.S. Securities
and Exchange Commission in 1993, and
was designated as an “appropriate foreign
investment market for private and institutional
Japanese investors” by Japan Securities Dealers
Association in 1995. İMKB has been approved
by the Austrian Ministry of Finance as a regulated
market in accordance with the regulations of
Austrian Investment Fund Act in 2000. Foreign
investors now account for a substantial volume
of daily trading and hold around 65% of the
publicly-held stocks in their portfolios amounting
to US$ 78 billion, as of end-2012.
İMKB currently owns 32.63% of İMKB Settlement
and Custody Bank, 30% of the Central Registry
Agency, 18% of the Turkish Derivatives
Exchange and 10% of Capital Market Licensing
and Training Agency of Turkey. On the
international level, İMKB has participations in the
Kyrgyz Stock Exchange, Baku Stock Exchange
and Sarajevo Stock Exchange with stakes of
24.51%, 5.26% and 5% respectively.
FUTURE OUTLOOK
• İMKB is steering a joint initiative for creating
an order routing platform to serve as a
single access point from and to local as
well as regional exchanges. This platform
will consolidate the liquidity of local and
regional markets and as a consequence,
contribute to the global recognition of the
local securities industry.
• İMKB is planning to integrate the submarkets
of Equity Market, which are namely
National, Second National, Institutional
Products and Watchlist market.
• İMKB will finalize FixAPI, FIX Protocol based
order routing infrastructure, in 2013.
• Recent regulatory change regarding pension
system is expected to cultivate investor base
and assets under management.
• Regarding public disclosure İMKB will
adapt itself to the new legal environment.
Actual cooperation with Central Securities
Depository (MKK) in Public Disclosure
Platform will be furthered.
• Endeavors continue to create electronic
session to facilitate more effective trading
in different geographical locations and
eliminating the effect of time difference.
CAPITAL MARKET DEVELOPMENT
AND ECONOMIC OUTLOOK
Turkish economy, while being influenced by
external factors such as global financial crises,
continues to grow steadily and the average
growth rate for the last decade was around
five percent. In 2012, export figures were very
positive for Turkish economy. In 2013, similar
role is expected from private consumption by
the triggering effects of falling interest rates.
In addition, public sector consumption further
adds to growth. Consumer credit expansion as
well as increase in business lending confirms
growth in consumption and investment.
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