ISTANBUL STOCK EXCHANGE
Osman Birsen
Chairman and CEO
The ISE was fifth among
the world’s emerging
market exchanges in
stock market index
performance with an
increase of 79.6% in
TL terms and 111.4% in
US dollar terms as
compared to year-end
2002.
For all world economies, 2003 has been a year
of recovery from the adverse effects of the
recession that the US and Europe faced in the
previous two years. In spite of the fact that the
agenda was not free of negative events, the
world economies started to strengthen in 2003.
The US took the lead in this recovery, with
falling interest rates, which helped consumption
and congruently increases in investments.
Asian countries, on the other hand, mainly
China and India, grew rapidly in 2003. The
growth in the European Union remained quite
slow comparatively, but more positive signs are
expected to come.
As far as Turkey is concerned, the single party
government that came into power, toward the
end of 2002, has brought much optimism to the
markets, which had been striving for stability for
a long time. The year 2003 has been one of
regaining for the Turkish economy. The Iraqi
War was anticipated with concern, but it was
concluded in a short time, which led the
nominal as well real interest rates to rapidly
return. The tight monetary policy and the
discipline applied in the budget led to a stable
decline in interest rates and, just as importantly,
inflation.
HISTORY AND DEVELOPMENT
In 1981, the Capital Market Law was enacted
and one year later, 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 on 26 December
1985.
Currently, there are four markets operating at
the ISE: the stock market, the bonds and bills
market, the international market and the
derivatives market. The ISE provides trading in
various instruments such as equities, bonds
and bills, and foreign securities as well as
foreign exchange futures contracts.
As of year’s end, 104 out of 119 members had
been provided with remote access to the stock
market trading systems. At the end of 2003, the
number of orders sent by members via Ex-API
(Express Application Programming Interface)
terminals reached 56.7% of all orders, with the
number growing steadily. Accordingly, efforts to
strengthen the technical infrastructure for
facilitating the placing of orders via the “Ex-API”
system are continuing. Bonds and bills market
operations continue to be carried out remotely.
The Istanbul Stock Exchange enjoyed the
upswing in the Turkish economy as well as the
general positive outlook in the world economy.
In 2003, the ISE was fifth among the world’s
emerging market exchanges in terms of stock
market index performance. The ISE main index,
National-100, increased by 79.6% in TL terms
and 111.4% in US dollar terms while the ISE
equity market’s average daily trading volume
gained 45% in 2003. Market capitalization also
registered an increase of 100%. In addition, the
ISE bonds and bills market average daily
trading volume increased by 56%.
FUTURE OUTLOOK
The ISE currently owns 23.9% of the ISE
Settlement and Custody Bank (Takasbank),
30% of the Central Registry Agency and 18% of
the Turkish Derivatives Exchange (TURKDEX).
On the international level, the ISE has
participations in the Kyrgyz and Baku Stock
Exchanges with stakes of 24.5% and 5.55%,
respectively.
As the chairing Exchange of the Federation of
Euro-Asian Stock Exchanges (FEAS) and the
project leader of the Southeast European
Cooperation Initiative (SECI), the ISE leads
many projects, one of which is to establish a
linkage among the securities markets in the
region via an electronic network of
intermediaries of these exchanges. Another
initiative of the ISE is the Securities Market
Development Program, carried out jointly with
the OECD and FEAS, which was completed
with the publication of “Basic Elements of a Law
on Concession Agreements”. Additionally, the
project “Enterprise Development and Finance”
conducted jointly with the OECD is near
completion.
• The ISE has been included in the
privatization program. Work toward
demutualization and privatization of the ISE in
coordination with the Capital Markets Board
(CMB) is on-going.
• Within the Central Surveillance Project
jointly developed with the CMB, the creating
of a new software system to allow surveillance
to be carried out electronically and more
efficiently is scheduled to be finished in 2004.
• The Disclosure Automation Project, enabling
companies to directly disclose information via
internet, is to be completed in 2004.
• In the Enterprise Development and Finance
Project conducted with the OECD, and
scheduled to be completed in 2004, active
participation of small- and medium-sized
enterprises to capital markets in the FEAS
region is encouraged.
• The Istanbul, Athens and Tel Aviv Stock
Exchanges continue their work to establish an
electronic member-to-member order routing
platform. A regional index and the
establishment of regional funds are also
planned for 2004. Local CSDs have continued
their cooperation to facilitate cross border
settlement and clearing.
• In the Cooperation among Securities
Markets (SECI) Project in Southeast Europe,
mainly the Balkans, efforts to establish an
electronic member-to member order routing
platform among the intermediaries of the
participating stock exchanges for securities in
the region continues.
FEDERATION OF EURO-ASIAN STOCK EXCHANGES YEARBOOK 2003/2004
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