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Dear Participants, Ladies and Gentlemen;
It is a great delight and honor for me to address such a distinguished audience today at Mondo Visione Exchange Forum. I strongly believe that this organization will truly reflect ongoing transformation in exchange business and will offer a great chance to discuss challenges and opportunities lying ahead of us.
Globalization, huge advancements in technology, varying customer needs and demands and changing economic conditions have not just changed our daily lives but also transformed the way we do business. Capital markets are no exception in this context.
In order to remain competitive, enhance corporate governance and boost profitability; more and more exchanges have demutualized, gone public and started to offer a wider range of products. Today, around 75% of exchanges are for-profit institutions while more than 85% of them are multi-asset platforms.
Moreover, we see a significant number of M&A deals or strategic alliances among exchanges which aim to protect their market shares and sustain growth.
Exchanges also have to cope with alternative trading platforms which now lead the rankings in terms of traded value (BATS Chi-X Europe and Turquoise in Europe). Accordingly, huge investments are made in order to upgrade technology through either in-house development or strategic agreements with global players.
Esteemed Participants,
At this point, there were important questions to ask ourselves in Turkey as well: Is Turkish market ready for great transformation in economic and financial system? Have we put in place the necessary financial infrastructures which will meet the demands of potential investors? Will we be able to provide our companies with much-needed capital that will help them to become global?
We knew that the financial markets to benefit most from such structural change are the ones which provide investors with broadest product mix on reliable and transparent platforms with the highest efficiency possible. Thus, we are fully aware that the steps which we have been taking will shape the destiny of our market and economy, too.
Ladies and Gentlemen,
I would like to touch upon what we have recently done in Turkey in this regard. The enactment of new Capital Markets Law in December 2012 has been a game-changer for financial markets in Turkey. With the new law, Istanbul Stock Exchange merged with Istanbul Gold Exchange and Turkish Derivatives Exchange (TurkDex) to form Borsa İstanbul as a joint stock company. Thanks to the merger of separate exchanges, 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.
Today, Borsa İstanbul is one of the most well-established and liquid exchanges in emerging economies. At the end of 2014, the traded values for equity and fixed income markets reached USD 400 bn and USD 3,5 trillion respectively. This makes Borsa İstanbul the 7th largest among emerging equity markets in terms of trading volume and the 5th largest bond market in the world based on electronic order book.
Yet, we continue to broaden our product mix. New corporate debt issues jumped to USD 30.3 billion in 2014 from almost nothing in 2010. We launched index and equity options and equity future contracts to meet the needs of investors with different risk and return preferences. Sukuk trading commenced in 2013 as well and we expect this business line to flourish in near future.
In 2014, the establishment of Private Market was also very significant for Turkish capital market. In this venture-capital platform, early-stage companies meet potential institutional investors such as venture capitals, angel investors and private equity funds. Moreover, with the new Electricity Market Law; EPİAŞ, a new Exchange at which Borsa İstanbul holds a stake was established for the spot trading of energy instruments. In addition, Borsa İstanbul will be the operator of that exchange and energy derivatives will be traded at Borsa İstanbul markets.
Aware of significant role of technology in exchange business, Borsa İstanbul signed a strategic partnership agreement with Nasdaq in 2013 to renew its technological infrastructure. Thanks to the strategic partnership, Borsa İstanbul will acquire a state-of-the-art technology platform that is utilized by leading exchanges of the world. In this way, a multi-asset, multi-currency trading platform, integrated into all post-trade functions will be in the service of all investors. First phase of the project will be completed in November 2015 and we will start to use new technology in our equity market.
Dear Participants,
We are also fully aware that becoming a financial hub is not possible without strengthening linkages with exchanges and international organizations.
In this context, the cooperation between Borsa İstanbul and LSE Group is an important milestone not just for BIST but also for Istanbul’s journey to become an international financial center. According to the agreement between two parties, futures and options on BIST 30 index and options on leading stocks in Turkish market are offered by London Stock Exchange on its platforms. Moreover, LCH.Clearnet undertakes the post-trade process and acts as the central counterparty for the transactions.
Moreover, we are now at the latest stage of establishing a strategic partnership with EBRD. With the agreement, The EBRD will be a shareholder at BIST with 10%. The investment will help Turkey deepen its capital markets. Both parties will work together to improve the efficiency and liquidity of Borsa İstanbul to make it more attractive to domestic/international companies and investors. We will also
In addition to this new initiative that will change BIST’s shareholder structure, Borsa İstanbul is now preparing to be a listed a company as well. We attach great importance to Borsa İstanbul’s IPO as it is a historical step for the Turkish capital market. We want to make it a good example for all other nonpublic companies in terms of offering size and free-float rate. That is why we take every step very carefully. Up to 42.75% of BIST shares may be listed on our platform hopefully until the end of 2016 depending on market conditions.
Dear Participants,
Turkey, in the context of 2023 vision, also aims to be among the 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 infrastructure accordingly.
We believe that in order to compete in this new business environment; we need to have the most advanced technology, the widest range of products, human capital of highest quality and strongest links possible with global players. And that is what we would like to achieve at Borsa İstanbul.
At the end of my speech, I would like to thank the organizers for this very fruitful and timely event and extend my wishes that the conference result in concrete outcomes.
