FEDERATION OF EURO-ASIAN STOCK EXCHANGES > YEARBOOK 2002/2003 > PAGE 40
ISTANBUL STOCK EXCHANGE
L E T T E R F R O M T H E C H A I R M A N AND CEO
The Istanbul Stock Exchange (ISE)
continued functioning normally, that
is, trading went on in a fair, orderly
and transparent environment.
2002 has been another difficult year for
Turkey. The effects of the 2001 economic
crisis continued well into 2002. Early
elections toward the end of the year brought
about a new and strong government -not a
coalition this time- and only one opposition
party in the Parliament. Having longed for a
stable political and economic environment
for a long time, the markets welcomed the
new government with great optimism.
The Istanbul Stock Exchange (ISE) continued
functioning normally, that is, trading went
on in a fair, orderly and transparent
environment. The ISE main index, National-
100, lost 34% in 2002 as compared to 2001,
for the second year in a row. The ISE Equity
Market average daily trading volume, which
had followed a strong upward trend since
1996, experienced a decrease for the second
consecutive year, losing 13% in 2002. The
devaluation of the Turkish lira should be
taken into consideration, however, as the
average daily trading volume rose 12% on a
Turkish lira basis.
our trading system. During 2002, we have
seen the new system firmly adopted by our
members. Currently, about one-third of all
orders are sent by electronic means while
12% of individual investors use the Internet
to send their orders.
Osman Birsen
Chairman and CEO
In 2001, we completed the wide area network
(WAN) project, providing remote access to
HISTORY AND DEVELOPMENT
In 1981, the Capital Market Law was enacted
and one year later, the main regulatory body,
the Capital Markets Board, was established. In
October 1983, the Parliament approved the
Regulations for the Establishment and Functions
of Securities Exchanges, which paved the way
for the establishment of the Istanbul Stock
Exchange (ISE), formally inaugurated at the end
of 1985.
Among the factors influencing the rapid
expansion of the ISE were the privatization,
accelerated growth of the mutual funds due to
the tax concessions and the liberalization of the
entrance of the foreign investors into the capital
markets. Currently, there are four markets
operating at the ISE which are mainly the ISE
Stock Market, Bonds and Bills Market,
International Market and the Derivatives Market.
ISE provides trading in various instruments such
as equities, bonds and bills, private sector bonds,
and foreign securities as well as foreign exchange
futures contracts.
On the international level, as the chairing stock
exchange of the Federation of Euro-Asian Stock
Exchanges (FEAS) and the project leader of
Southeast European Cooperation Initiative
(SECI), the ISE leads many projects, one of which
is to establish a common trading platform that
links the securities markets in the region. The
Securities Market Development Program,
initiated jointly by the OECD, the ISE and FEAS,
has been completed. The project, aimed at
supporting the development and collaboration
of stock exchanges in Eurasian countries and the
work carried out, was compiled in the reference
handbook, “Best Practices for the Development
of Stock Exchanges in Transition Economies.”
The handbook provides the stock exchanges
with a basic set of legal and market guidelines
consisting of 28 Best Practices grouped in the
main topics of “the regulation of stock
exchanges,” “institutional framework of stock
exchanges,” “operation of stock exchanges,”
“clearing, settlement,” “custody and registration,”
and “issuers and intermediaries.” The
implementation of the 28 key regulatory and
institutional issues set out in the handbook will
bring stock exchange practices in transition
economies into alignment with global norms and
standards.
FUTURE OUTLOOK
The stock exchanges of Istanbul, Athens and Tel
Aviv have continued their efforts to select the
appropriate technical infrastructure to establish
an electronic member-to-member order routing
platform among the three stock exchanges.
Within the framework of the collaboration efforts,
a regional index covering the three markets and
the establishment of regional funds are to be
introduced. The facilitation of cross-border
settlement and clearing through the cooperation
of local CSDs as well as multilingual disclosure
issues are also to be developed. developed to expand the use of remote ISE
connections (ExAPI Project).
A new interface enabling electronic transmission
of orders between the members’ systems and
the ISE Stock Trading System has been As a contingency plan, efforts toward enhancing
the backup capability of the trading systems will
provide the continuation of trading without any
interruption in case of natural disasters.
The final phase of the Disclosure Automation
Project is scheduled to be finished at the end of
2003. This will enable the companies to directly
disclose information using Internet technologies
and digital certificates.
To ensure investor protection and a fair and
competitive trading environment a new
Surveillance System Automation Project has been
launched in 2002.
The sub-markets of the ISE Stock Market are to
be restructured with the aim of increasing the
number of traded companies. According to the
new classification, the Stock Market will be
diversified into 3 sub-markets: “First National
Market,” “Second National Market” and “New
Economy Market.”