FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2013
İSTANBUL MENKUL KIYMETLER BORSASI
2013 has been a new beginning for Borsa
İstanbul.
İbrahim Turhan
Chairman & CEO
Last year has been a period of historical
change and transformation for both Borsa
İstanbul and Turkish capital markets. After the
new Capital Market Law (CML) was enacted on
December 30 2012, Borsa İstanbul became a
joint stock company and separate exchanges
of Turkey at which trading of various asset
classes take place merged under the umbrella
of Borsa İstanbul. With the merger, Borsa
İstanbul is now a one-stop shop for all kinds
of financial instruments and investors have
the opportunity to trade in a wide range of
products which include equities, fixed income
instruments, derivatives and commodities.
The enactment of new CML, demutualization
process, consolidation of local exchanges
were all critical steps of a strategic plan to
restructure legal, organizational and financial
infrastructures of Turkish capital market and to
position Istanbul as an international financial
center. Borsa İstanbul aims to provide investors
with broadest product mix on reliable and
transparent platforms with highest efficiency
possible and increased its efforts accordingly.
The year 2013 has witnessed a historical
initiative in Turkish financial market in this
regard. Aware of significant role of technology
in exchange business, Borsa İstanbul signed a
strategic partnership agreement with Nasdaq
OMX to renew its technological infrastructure.
With the agreement, Borsa İstanbul will obtain
HISTORY AND DEVELOPMENT
Borsa İstanbul, previously known as İstanbul
Menkul Kıymetler Borsası (İMKB), has its origins
going back to 1870s. In 1981, Capital Market
Law was enacted, a year later Capital Markets
Board of Turkey was established, and İMKB
was inaugurated in 1985. A new Capital Market
Law, was introduced at the end of 2012, which
overhauled Turkish capital market system in line
with international standards and paved the way
for the birth of Borsa Istanbul.
Borsa İstanbul became the name of the
umbrella entity resulting from vertical and
horizontal integration of Turkish capital market
institutions. Horizontal integration is completed
after the merger of İMKB, Istanbul Gold
Exchange and Turkish Derivatives Exchange
in April 2013. Vertical integration with post-
trade institutions is work in progress. A wider
portfolio of instruments was developed under
state of the art technology employed by the
leading exchanges of the world and a multi-
asset, multi-currency platform, integrated
into all post-trade functions, with customary
key features such as connectivity and risk
management will be in the service of all
investors. Borsa İstanbul will also have the right
to make changes and improvements on these
technology solutions which will enable it to
develop and maintain its technology in medium
and long term.
In 2013, companies raised USD 2,4 billion
through 18 IPOs and 1 SPO in equity market
while total revenues through 330 corporate
issues in debt market amounted to USD 29
billion in 2013 from USD 23,5 billion last year.
Increasing Market Capitalization to GDP ratio
to 70 to 80% levels and the number of listed
companies to 1.000 by 2023 are major targets
of Borsa İstanbul. In this context, a new project
called ListingIstanbul has been initiated in order
to attract foreign companies for listing in Turkey
and Investor Awareness Campaign activities
were carried out throughout the year to
increase financial literacy and raise awareness
about capital markets.
Borsa İstanbul has continued its efforts to
further diversify product offerings in 2013 as
well. Index options trading commenced in
April 2013. With the new Electricity Market Law
which became effective in March 2013, Energy
Borsa İstanbul. Derivative and precious metals
instruments are included into the portfolio in
addition to the existing instruments such as
equities, exchange traded funds, warrants,
government bonds, treasury bills, corporate
debt securities, money market instruments
(repo/reverse repo). As of end-2013, there are
five operational markets: Equity Market, Debt
Securities Market, Emerging Companies Market,
Futures and Options Market and Precious
Metals and Diamond Markets.
Borsa İstanbul was recognized as “Designated
Offshore Securities Market” by U.S. Securities
and Exchange Commission in 1993, and was
designated as “appropriate foreign investment
market for private and institutional Japanese
investors” by Japan Securities Dealers
Association in 1995. It has been approved by
Austrian Ministry of Finance as a regulated
market in accordance with the regulations of
Austrian Investment Fund Act in 2000.
Market Operation Joint Stock Company Market
(EPİAŞ) will be created and Borsa İstanbul will
be a stakeholder of the company with 30%
share while it will serve as the trading platform
for energy derivatives. Furthermore, derivative
contracts written on metals will be launched in
2014.
As an exchange which aims to be the
technology and finance hub of the region,
Borsa Istanbul establishes new relations
with exchanges all around the world. For this
purpose, 6 MoUs have been signed with stock
exchanges and international organizations
around the world. Joint product and technology
development schemes, connectivity projects,
exchange of personnel, education are major
cooperation areas where Borsa İstanbul
continue to work and like to show significant
progress in this respect.
Turkey, in the context of 2023 vision, aims to
be among 10 biggest economies in the world,
have an export volume of USD 500 billion and
place Istanbul as an important financial center.
Such goals require the presence of a strong
capital market and efficient exchange. Borsa
İstanbul is fully aware of its responsibilities in
reaching these targets and redesigns its legal,
organizational and technological infrastructures
accordingly.
Foreign investors constitute a substantial part
of total trading volume and hold around 62 %
of the publicly-held stocks in their portfolios,
amounting to US$ 60 billion as of end-2013.
As of end-2013, Borsa İstanbul owns 52.08
% of İstanbul Settlement and Custody Bank,
30 % of Merkezi Kayıt Kuruluşu (Central
Registry Agency), 100 % of Turkish Derivatives
Exchange, and 10 % of Capital Market Licensing
and Training Agency of Turkey. Internationally,
Borsa İstanbul is a shareholder at Baku Stock
Exchange (4.76 %), Kyrgyz Stock Exchange
(24.50 %), Montenegro Stock Exchange (24.38
%), and Sarajevo Stock Exchange (5 %).
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