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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011
ISTANBUL STOCK EXCHANGE
In 2010, the ISE has taken up a number of
steps to strengthen the awareness in the
Turkish capital market.
Huseyin Erkan
Chairman & CEO
Established on December 25, 1985, the Istanbul
Stock Exchange (ISE) celebrated its 25th
Anniversary in December 2010. We are proud to
have fulfilled the mission of contributing to the
development of the Turkish economy during the
last quarter of a century. As one of the key
components of the Turkish financial system with its
market capitalization of US$ 308 billion and high
growth potential, the ISE aims to become a
regional financial centre in the near future.
In 2010, the ISE has taken up a number of steps to
strengthen the awareness in the Turkish capital
market. In cooperation with the Capital Markets
Board of Turkey (CMB), the Union of Chambers
and Commodity Exchanges of Turkey (TOBB), and
the Association of Capital Market Intermediary
Institutions of Turkey (TSPAKB), we initiated the
Initial Public Offering Campaign in order to
increase the number of initial public offerings to
ensure that more companies are able to access
the opportunities offered by capital markets.
Through this initiative, we aim to attract the largest
1,000 Turkish companies to the ISE while also
increasing the awareness of small and medium
sized enterprises about capital markets. The first
extensive occasion for this purpose was the “IPO
Istanbul Summit” held in Istanbul in May 2010.
Similar events were organized in other cities of the
country as well. Thanks to these efforts, 22 IPOs
were made in 2010, raising a total amount of USD
2.1 billion funds for companies. In addition to IPOs,
15 corporate bonds were issued in 2010,
generating funds totaling USD 1.3 billion.
Besides stimulating the supply-side, we also plan
to initiate an “Investor Campaign” to attract new
investors to capital markets in 2011. Our aim is to
achieve 7,500,000 investors, which is equal to 10
percent of Turkey’s population, in 2023 when we
will be celebrating the centennial anniversary of the
Republic of Turkey.
During the past year, we introduced two new
indices, namely Energy and Participation Indices.
The Participation Index is created to appeal to
especially religious and ethically conscious
investors. In 2011, we plan to launch the ISE
Sustainability Index to encourage companies to
adopt socially and environmentally responsible
policies.
In 2010, the ISE also introduced a variety of new
financial instruments, including non-voting shares
and warrants, and new markets including Repo
Market for Specified Securities, Interbank
Repo/Reverse Repo Market, and Offerings Market
for Qualified Investors. ISE also established the
Emerging Companies Market to allow small and
medium sized companies with growth potential to
raise funds through a flexible organized platform.
As to the performance figures, the ISE-100 Index
increased by 21 percent in US$ terms in 2010,
compared to year-end value of 2009. The Stock
Market maintained its exuberance, with a 35
percent increase in the total traded value, to reach
US$ 426 billion. As of year-end 2010, the market
capitalization of 338 companies traded on the ISE
increased by 30 percent, reaching US$ 308 billion
and the share of foreign portfolio investors in the
free-floating shares of the ISE stood at 66 percent.
During the year, the total traded value of the
Outright Purchases and Sales Market increased by
10.3 percent to US$ 298 billion, while the total
traded value of the Repo/Reverse Repo Market
increased by 4.2 percent to US$ 2 trillion as of
end-2010.
HISTORY AND DEVELOPMENT
In 1981, the Capital Market Law was enacted and
one year later, the Capital Markets Board was
established. In October 1984, the Parliament
approved the Regulations for the Establishment
and Operations of Securities Exchanges, which
paved the way for the establishment of the ISE,
formally inaugurated in 1985.
The ISE provides a fair and transparent
environment for trading of a wide variety of
securities namely, stocks, exchange traded funds,
warrants, government bonds, Treasury bills,
corporate bonds, money market instruments
(repo/reverse repo), foreign securities etc.
Currently, there are four markets operating at the
ISE; the Stock Market, the Bonds and Bills Market
and the Foreign Securities Market and Emerging
Companies Market.
In 1989, the foreign exchange regime was
amended to allow non-residents to invest in
Turkish securities, making the Turkish securities
markets open to foreign investors without any
restrictions on the repatriation of capital and
profits.
The ISE was recognized as a “Designated
Offshore Securities Market” by the U.S. Securities
and Exchange Commission in 1993 and was
designated as an “appropriate foreign investment
market for private and institutional Japanese
investors” by the Japan Securities Dealers
Association in 1995. Likewise, the ISE has been
approved by the Austrian Ministry of Finance as a
regulated market in accordance with the
regulations of the Austrian Investment Fund Act in
2000. As a result of all these developments,
foreign investors now account for a substantial
volume of daily trading and hold around 66% of
the publicly-held stocks in their portfolios
amounting to US$ 71.4 billion, as of end-2010.
The ISE currently owns 32.62% of the ISE
Settlement and Custody Bank, 30% of the Central
Registry Agency and 18% of the Turkish
Derivatives Exchange. On the international level,
the ISE has participations in the Kyrgyz Stock
Exchange and Baku Stock Exchange with stakes
of 24.51% and 5.26%, respectively.
FUTURE OUTLOOK
• The ISE established the “Emerging Companies
Market (ECM)” with an aim to offer a different
application procedure to small and medium sized
companies (SMEs) for trading on the Istanbul
Stock Exchange. In this respect, the ECM will start
operating in 2011. In order to contribute to price
formation and liquidity, trading on the Emerging
Companies Market, different from the continuous
auction system on the Stock Market, will be
through a combination of single price method and
continuous auction with market maker system.
The companies traded on the Market,
demonstrating progressive performance in time,
will have the opportunity to be transferred to any
of the submarkets of the ISE Stock Market.
• As part of its efforts towards increasing the
number of public offerings, the ISE started an IPO
Campaign in 2010. The first event of the
Campaign was the “IPO Istanbul Summit” held in
Istanbul in May 2010. Similar events were
organized in other cities of the country in 2010
and will be organized in 2011, as well. Continuing
to strive to attract the supply side, this year the
ISE will also initiate an “Investor Campaign”,
aimed at attracting savings to capital markets.
• In 2009, the ISE launched the Greece & Turkey
30 Index (GT-30) jointly with the Athens Exchange
and in 2010, the TSKB Energy Index jointly with
Industrial Development Bank of Turkey (TSKB).
The ISE has plans to introduce new indices jointly
with other institutions and other exchanges from
around the world.
• The ISE is working on launching a Repo Market
for Spesific Securities, where the pre-stated
government and private sector borrowing
instruments will be used in repo/reverse repo
trades. Unlike the existing Repo-Reverse Repo
Market, in this new market matching will take
place according to the ISIN code and the price of
the security, in addition to the beginning and
ending value dates, repo/reverse repo rate and
volume. Securities will be marked to the market by
the ISE during the repo term and margin calls will
be made when necessary.
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