Automotiv_September

Monthly automotive aftermarket magazine
Borsa Istanbul’s swap move to
attract London transactions
The Turkish stock exchange, Borsa
Istanbul (BIST) is establishing a
swap market to carry out overthe-counter
transactions between
financial market institutions in one
organized market.
This step to simplify liquidity
management and increase
transparency, would pull the overthe-counter
transactions from
the London market to this central
market in BIST and help monitor
financial markets more closely.
The market would also help
manage risks that occur as a result
of the positions that are opened
in the underlying assets, such as
exchange rates and interest rates,
more effectively. It will also produce
a liquid market where the risks are
cleared.
In terms of investors, with the
Istanbul Clearing, Settlement
and Custody Bank (Takasbank)
as the central counterparty, it will
be possible to produce a more
reliable environment so that the
institutions that have access to the
stock market can manage their risks
more effectively. Institutions that
have access to the stock market
in the financial markets will be
able to manage risks caused by
incompatibilities, such as maturity,
exchange rate, and interest type
differentiation, more effectively.
In a written statement BIST said that
"the swap market, which is one of
the most active markets in global
financial markets, has started to be
established in our stock market to
serve all financial sector participants,
especially our banks."
Accordingly, Takasbank, as the
central counterparty, will carry out
the clearing of the transactions in
this market and will provide risk and
guarantee management services.
"The commissioning of the swap
market in our stock market will
pave the way for such transactions,
which are often carried out overthe-counter,
to be carried out in
our country under the guarantee
of an organized market," the
statement read.
With the swap market, which is
planned to be realized for the
foreign exchange markets in the
first place, BIST will continue to work
on new products and markets, the
statement noted.
"The projects that will increase the
depth of our existing derivative
markets and their added-value
to the country's economy will be
accelerated," it added.
It stated that basic issues such
as market makers and liquidity
provision in the market operation
will be explained to the public
through consultation with all
stakeholders.
The Banking Regulation and
Supervision Agency (BDDK) has
recently set limits for banks in
Turkey to have up to 25 percent
of the bank's last calculated equity
as the sum of swaps and similar
transactions with residents abroad.
"If this restriction is relaxed for
transactions in BIST, the banks
may be relieved," said market
experts, stressing that transactions
between institutions themselves
will produce transparency in terms
of instantaneous visibility in this
organized market.
Analysts also pointed out that as
institutions like BIST and the BDDK
will carry out the flow of information
to the central bank very quickly, the
central bank will be more dominant
in the market and will be able to act
faster.
The Capital Markets Board (CMB)
said that data on these transactions
will be collected by Central Registry
Agency (CRA) and the necessary
regulations will be made quickly,
in order to transparentize the overthe-counter
derivative transactions
and monitor the risks.
22 SEPTEMBER 2018