JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013ISTANBUL GOLD EXCHANGEOsman SaracChairmanIstanbul Gold Exchange targets to stimulatelocal business and international attention withall other globally competitive enterprises whichwill provide Turkey to be a central hub for thegold business, due to its strategic position, asit lies in the heart of a major gold trade area,exposed to Middle East, Europe and GulfStates.For the integration of the Exchange to theinternational markets, there have beenimportant steps since 2007. In March 2008 wehave been an associate member to LondonBullion Market Association, by May 2008 wehave joined World Federation of DiamondBourses, by February 2010, we are honoredto be part of a large family with distinguishedmembers, FEAS as an affiliate member. TheExchange became a member of the KimberleyProcess Certification Scheme (KPCS), inAugust 2007, which aims to curb the flowof conflict diamonds, with 49 participantsworldwide.The Turkish gold jewelry market has undergonea major revival since the early 1990s with thetraditional and long-standing historical affinityfor gold jewelry adjusted for modern tastes.Turkey is now the world’s fourth largest marketfor gold jewelry, third largest manufacturingcentre and second biggest exporter.Istanbul Gold Exchange targets tostimulate local business and internationalattention with all other globally competitiveenterprises which will provide Turkey to bea central hub for the gold business.The annual gold export from Turkey reachedrecord levels in 2012. Due to the informationreceived from Turkish Statistical Institute, ithas reached US $ 16,3 billion, part of goldbars and other way of direct jewelry export toretailers, wholesalers abroad and sales to thetourists visiting Turkey last year. Due to TurkishExporters Assembly, direct jewellery exportreached to US $ 2,1 billion with a rise of 42%y-o-y. The rest of the export figures representsflow of gold bars from Turkey to other countrieswith an amount of US $ 14,2 billion with a rise of528% y-o-y (In 2011 bullion export figures wasUS $ 2,26 billion).As a first spot trading gold exchange in theworld. IGE was founded with the principlesemi-electronic system trading floor. By 2009.a new screen-based fully electronic tradingsystem has been launched with remoteaccess in order to provide investors 24 hourstrading. By August 2012, 24 hours internetbased electronic system was introduced to themarkets.Central Bank Statutory ReservesThe Central Bank of Turkey, has announced alegislation for the statutory reserves for gold.Year Gold SilverImport (ton) Transaction (ton) Import (ton) Transaction (ton)2002 128,9 143,06 139,1 216,732003 213,64 237,37 155,5 272,232004 250,93 280,81 209,5 3182005 269,48 328,75 207,9 362,822006 192,72 247,48 107,4 277,412007 230,79 328,38 93,37 320,882008 165,9 337,03 73,6 151,712009 37,59 226,63 5,59 382,672010 42,49 115,19 19,69 388,672011 79,97 227,05 41,8 408,082012 120,78 312,1 142,2 437,2Gold FiguresThe annual gold import of Turkey in 2012 wasestimated at US $ 8,2 billion due to TurkishStatistical Institute, partially from gold bars andother way of direct jewelry import to retailers.Istanbul Gold Exchange members have realizedas 120,8 tons of import with the amount of US$ 6,1 billion in the Exchange with a rise of 41,1tons from 2011 which represented a rise of 51%y-o-y. The gold trading volume reached 312,1tons with the amount of US $ 15,9 billion by2012 with a rise of 85,1 tons from 2011 whichrepresented a rise of 37% y-o-y.The annual silver import of Turkey in 2012through Istanbul Gold Exchange memberswas 142,2 tons with the amount of US $ 141,7million with a rise of 100,1 tons from 2011 whichrepresented a rise of 237% y-o-y. The silvertrading volume reached 437,2 tons with theamount of US $ 435 million by 2012, with a rise29,1 tons from 2011 which represented a riseof 7% y-o-y.By the increase of gold prices since 2007huge amount of gold came to the market asscrap and Turkey turned to be an exporter ofgold in the market. The supply of scrap goldto the market continued in 2012 and an annualamount of 80-90 tons of gold was supplied tothe market.In 2012 the gold demand by consumersthrough banking system saw high increases.By the recent years there is a raise of individualand corporate demand in gold and silver asinvestment and mutual funds and gold depositstool in banking system as well as jewelry sector.Istanbul Gold Exchange is having a role ofsafeguard for gold funds and gold ETF whichis listed in ISE. At the end of 2010 there werearound 6.000 kilos of gold kept in the Exchangeon the name of the 24 funds. At the end of2011 the number of funds and the amount ofgold kept in the Exchange vault rose also. Byend of 2012, 10.637 kg of gold belonging to2 Gold ETF, 47 Mutual funds were kept in theExchange Vault.Due to the legislation banks have to presentsome percentage of their gold deposits (9-11%) to Central bank accounts and optionallythey may hold some percentage of their TLor forex deposits statutory reserves in gold.By November 2012, there is about US $ 9,1billion gold deposits in banking system whichrepresents around 180 tons of gold. The totalgold held by Central Bank as gold and otherassets’ statutory reserves is totaled around 240tons which is mostly kept in Bank of England.By December 2012, Central Bank, statutoryreserves of the banks started on schedule tobe kept in IGE under the account of TR CentralBank. By December 2012, 547,56 kg of goldhas been kept under the account of CentralBank in IGE vault.PAGE 49