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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2008TAKASBANK ISE SETTLEMENT AND CUSTODY BANK INC.AFFILIATE MEMBEREmin CatanaPresident & CEOOne of the greatest achievements ofTakasbank in 2007 was the commencementof the acceptance of instructions throughSWIFT integrated Real Time Gross Deliveryversus Payment Takasbank System.Being aware of its role and responsibility for theTurkish and international capital markets, Takasbankcontinues to develop new projects and each yearadds more instruments and mechanisms to create aproductive and reliable settlement and custodyenvironment and thus, to offer international marketplayers an environment that will ensure a stabletechnical and operational infrastructure,In 2007, Takasbank started to accept instructionsthrough SWIFT integrated Real Time Gross Deliveryversus Payment (RTG DvP) Takasbank System. Withthe realization of this project, the DvP settlementprocess is integrated with SWIFT system targeting toprovide T+1 pre-matching between the custodianbanks and brokerage houses giving service toforeign investors.During the course of the year 2008, theimplementation of SWIFT integrated RTG DvPsystem continued with great success. Responding tosystem users' requests, Takasbank will be working tointroduce other transactions to the SWIFT system aswell. With this system, which involves preliminaryelectronic confirmation, Takasbank expects to limitthe number of confirmation-related defaults inforeign institutional investors' transactions and toreduce the operational workload of brokeragehouses as well as settlement banks. The newsystem will also increase automation incommunication between SWIFT users andTakasbank and allow these users to provide servicesthat are more efficient to their customers. Takasbankis also planning to expand the scope of transactionsthat can be performed through the SWIFT system in2008 while introducing new applications for theRTGS delivery-versus payment system, in line withsystem users' requirements. The first field of thisimplementation expansion will be the announcementof corporate action information via SWIFT.In the framework of FEAS efforts, Takasbank sharedits accumulated experience and knowledge aboutthe clearing and settlement issues in Turkish capitalmarkets with its peers in FEAS region. In thiscontext, Takasbank and the Central SecuritiesDepository of the Islamic Republic of Iran (CSDI)signed a Memorandum of Understanding (MoU) inorder to establish a mutually beneficial relationshipbetween the two institutions. This agreement aims toserve the goal of improving performance andinternational competitiveness through mutualexchange of information, know-how and trainingactivities.Within the responsibility of its convenorship of FEASAffiliate Task Force and with the aim of betterunderstanding the needs and goals of affiliatemembers and to provide a more efficient as well asproductive working platform, Takasbank preparedboth a revenue/expense survey and a corporategovernance questionnaire for the ClearingInstitutions, CSDs and CCPs operating in the posttradearena and sent these questionnaires to thepost-trade institutions in the FEAS region. Within thiscontext, Takasbank is also preparing a leaflet whichwould gather the existing internationalrecommendations and best practices related tocorporate governance in securities settlementsystems to be distributed in the 14th GeneralAssembly of FEAS on 10-12 November 2008 at AbuDhabi. I believe that the implementation of thesebest practices about corporate governance wouldenhance the safety and efficiency of globalsettlement process within FEAS capital markets andthus, contribute to increasing volumes of crossborder transactions among FEAS markets.General InformationTakasbank is incorporated as a non-deposit takinginvestment bank and is authorized by the CapitalMarkets Board of Turkey to function as: the Clearingand Settlement Institution for the ISE markets, theClearing House for the Turkish DerivativesExchange, the National Numbering Agency of Turkeyand the Custodian for the Mutual Funds and PensionFunds incorporated in Turkey.Services Provided• Central clearing and settlement for the organizedmarkets of ISE and Turkish Derivatives Exchange(TurkDEX),• Cash settlement and transfer facilities (domesticand cross-border),• Cross-border settlement and custody services,• Real Time Gross DvP settlement (among brokersand custodians) for equities via integration withSWIFT system• Takasbank Money Market,• Securities Lending and Borrowing Market (SLB),• Cash Credits,• Allocation of ISIN for securities issued in TurkeyBrief HistoryTakasbank, started as a department within theIstanbul Stock Exchange (ISE) in 1988, and originallydealt with the provision of settlement services forsecurities traded by the members of the ISE. InJanuary 1992 , the operations of that departmentwere transferred to an independent company, theISE Settlement and Custody Co. Inc., which was setup under the shareholdership of the ISE and itsmembers. This company was then transformed intoa bank and renamed Takasbank (ISE Settlement andCustody Bank, Inc.) in 1996.Form of SecuritiesDematerializedForm of Settlement and Transfers:Book-entryLegal StatusJoint stock companySettlement PeriodEquities: T+2Bonds and Bills: T+0Derivatives:T+1Type of Commercial EntityPrivate sector for-profit companyDoes Takasbank Act as a CentralCounter Party?No for the ISE markets. (However, default procedureis applied for the settlement of the ISE markets).Yes for TurkDEXRegulated byCapital Markets BoardBanking Regulation and Supervision BoardCentral Bank of Turkey.Size of Guarantee Fund(As of August 2008)ISE Equities Market: US$ 40 millionISE Bonds and Bills Market: US$ 48 millionOwnershipIstanbul Stock Exchange (ISE): 32.62%Banks (19): 34.48%Brokerage Houses (67): 32.90%Board of Directors: 11 MembersIstanbul Stock Exchange: 4Banks: 3Brokerage Houses: 2Capital Markets Board: 1and the President and CEO of Takasbank.Memberships to International OrganizationsAssociation of National Numbering Agency (ANNA)International Securities Services Association (ISSA)Society for Worldwide Interbank Telecommunications(SWIFT)Association of European Central SecuritiesDepositories (ECSDA)Future OutlookIn 2008, Takasbank intends to:• Continue its efforts to become a CentralCounterpartyfor equities and establish a central collateralizationsystem• Providing access to the SWIFT system throughTakasbank network for non-SWIFT memberinstitutions ;• Establishment and implementation of a distributionand settlement system for investment fund units onthe integrated system with the CRA• Development and expansion of the scope ofInvestment Fund Custody System;• Contribute to the development of internationalstandards for securities and implementing thesestandards in Turkey.• Give-up process for TurkDEX transactions;• Creation of an electronic securities data base• Unbundling of Takasbank services and initiationof service/product based pricing system* Please refer to page 80 for the Turkey country report.CONTACT INFORMATIONContact Name Ms. Filiz Kaya E-mail international@takasbank.com.tr Website www.takasbank.com.trPAGE 97