1. Turkish Capital Markets
May 2017

2. Turkish Economy at a Glance
CONTENTS 3
Turkish Economy at a Glance 5
Structure of the Turkish Financial Markets 18
Turkish Capital Markets Association 26
Turkish Capital Markets 44
Investment Institutions 68
Investor Profile

3. TurkISH ECONOMY at a Glance

4. KEY MACRO-ECONOMIC INDICATORS
2012
2013
2014
2015
2016
Population and Employment
Population (mn.)
75.6
76.7
77.7
78.7
79.8
Unemployment (average, %)
8.4
9.0
9.9
10.3
10.9
National Accouts
GDP (bn. $)
871.0
950.0
935.0
861.0
857.0
GDP per capita ($)
11,588
12,480
12,112
11,014
10,807
GDP, real growth (%)
4.8
8.5
5.2
6.1
2.9
External Balance
Exports (FOB, bn. $)
152.5
151.8
157.6
143.8
142.6
Imports (CIF, bn. $)
236.5
251.7
242.2
207.2
198.6
Foreign Trade Balance (bn. $)
-84.1
-99.9
-84.6
-63.4
-56.1
Current Account Balance (bn. $)
-48.0
-63.6
-43.6
-32.1
-32.6
Current Account Balance/GDP (%)
-5.5
-6.7
-4.7
-3.7
-3.8
Foreign Direct Investment (net, bn. $)
9.5
9.3
5.8
12.5
9.1
CBRT Reserves (including gold, bn. $)
119.2
131.0
127.3
110.5
106.1
External Debt (bn. $)
339.5
389.8
401.9
396.1
404.2
Prices
CPI (y-o-y, %)
6.2
7.4
8.2
8.8
PPI (y-o-y, %)
2.5
7.0
5.4
5.7
Fiscal Balance
Primary Balance/GDP (%)
1.2
1.7
1.3
0.8
Budget Balance/GDP (%)
-1.9
-1.0
-1.1
General Government Debt/GDP (%)
32.6
31.3
28.7
27.5
28.3
Exchange Rates
USD (year-end)
1.78
2.13
2.33
2.92
3.52
Euro (year-end)
2.35
2.93
2.83
3.18
3.71
Source: CBRT, Treasury, TurkStat

5. Structure of the Turkish Capital Markets

6. Capital Markets Background
1982: Capital Markets Board established.
1985: Istanbul Stock Exchange (ISE) established.
1992: Takasbank (Settlement & Custody Bank) established.
1995: Istanbul Gold Exchange (IGE) established.
1997: Banks are forbidden to trade equities.
2001: Association of Capital Markets Intermediary Institutions of Turkey established.
Central Registry Agency established. Investors' Protection Fund established.
2002: Private pension system introduced.
2005: IFRS adopted for financial intermediaries and listed companies.
Turkish Derivatives Exchange (TurkDex) established.
Dematerialization of equities completed.
2006: Dematerialization of corporate bonds & mutual funds completed.
2009: Automated Disclosure Platform introduced.
Istanbul International Financial Centre strategy announced.
2011: Forex regulation passed.
2012: New Capital Markets Law passed.
ISE demutualised and merged with Istanbul Gold Exchange under Borsa Istanbul.
2013: Borsa Istanbul announced strategic partnership with Nasdaq.
Borsa Istanbul and TurkDex merged.
2014: The structure of the Association has changed and the membership base was expanded to cover asset management companies and investments trusts, in addition to brokerage firms and banks. The name of the Association was revised to Turkish Capital Markets Association.
2015: Takasbank introduced the Electronic Fund Distribution Platform (TEFAS).
Borsa Istanbul introduced new trading platform for equities (BISTECH).
2016: TCMA arbitration committees established.
Türkiye Wealth Fund established
2017: Auto-enrollment in the private pension system enacted.

7. Regulatory Structure of the Financial Markets

8. Capital Market Institutions in Turkey

9. The CMB’s jurisdiction areas:
Capital Markets Board
Capital Markets Board (CMB) is the main regulatory and supervisory authority for the securities markets and institutions in Turkey.
The Board is responsible for the protection of rights and interests of investors.
The CMB’s jurisdiction areas:
Primary markets,
Secondary markets,
Investment services.

10. The exchange was demutualised in 2013.
Borsa Istanbul
Borsa Istanbul, formerly named as Istanbul Stock Exchange, was established in 1985.
The exchange was demutualised in 2013.
The exchanges operating in Turkey, namely Istanbul Stock Exchange, Istanbul Gold Exchange and the Turkish Derivatives Exchange merged under the roof of Borsa Istanbul.
Borsa Istanbul and NASDAQ OMX signed a partnership agreement in Technological infrastructure is provided by NASDAQ OMX.
European Investment Bank acquired a 10% share in 2015.

11. The main markets and the traded securities on Borsa Istanbul are:
Equity Market: Shares, rights coupons, ETFs, warrants, certificates.
Debt Securities Market: Government bonds, corporate bonds, asset backed securities, Islamic bonds, repo-reverse repo transactions, Turkish eurobonds, money market.
Derivatives Market: Single stock, equity index, gold, currency, commodity, overnight repo, metal, ETF and power futures. Single stock, currency, equity index and mini index options.
Precious Metals and Diamond Market: Gold, silver, platinum and palladium.

12. Takasbank (Istanbul Settlement and Custody Bank)
Takasbank was established in 1988 as a department of Borsa Istanbul. It was incorporated as a separate company in 1992 and became a non- deposit taking bank in 1995.
Takasbank is:
The clearing and settlement centre for Borsa Istanbul,
The central counterparty (CCP) for Borsa Istanbul Futures & Options Market,
The national numbering agency of Turkey.
It operates a money market.
Takasbank operates the Securities Lending & Borrowing Market and acts as the CCP for this market as well as the Borsa Istanbul Money Market.
The Bank allocates the legal entity identifier codes.
It operates the Electronic Fund Distribution Platform (TEFAS).
It records leveraged transactions and handles collateral management as an authorized trade repository institution.

13. MERKEZI KAYIT ISTANBUL – CSD OF TURKEY
Merkezi Kayit Istanbul – CSD of Turkey was established in as a private company.
It is the only central depository for all dematerialized capital market instruments.
The dematerialization process is completed for equities, mutual funds, corporate bonds, warrants, certificates, asset backed securities and investors’ (excluding investment institutions) government debt holdings.

14. Investor Compensation CentRE
Investors’ Protection Fund, which covered equity settlement obligations, was established in 2001.
Investor Compensation Centre replaced the Investors’ Protection Fund in 2013 with the renewed Capital Market Law.
It covers settlement obligations of all capital market instruments, up to TL 125,451 (~$ 35,000) in 2017, in case of liquidation or bankruptcy of investment institutions.
All investment institutions have to be a member of the Investor Compensation Centre.

15. Activities of Intermediaries
Equity Trading
Leveraged FX trading
Public Offering
Asset Management
Investment Consultancy
Fixed Income Trading
Derivatives Trading (exc. equity-linked products for banks)
BROKERAGE FIRMS
BANKS

16. Types of brokerage fIrms
Market
Makers
execution of orders from their own account by positioning their customers as counterparty
minimum capital: TL 25 million.
Execution
Brokers
execution of orders of in the name of customers and/or their own account
offering custody services
minimum capital: TL 10 million.
Introducing
reception of orders and transfer them to other brokers
minimum capital: TL 2 million.

17. ASSET MANAGEMENT COMPANIES
Portfolio Management Companies
May establish stock, bond, balanced mutual funds
Mn. capital required varies btw. TL 2 million and 10 million depending on AUM.
Real Estate
May establish only real estate investment funds
Mn. capital required varies btw. TL 1 million and TL 5 million depending on AUM.
Venture Capital
May establish only venture capital investment funds
Mn. capital required varies btw. TL 1 million and TL 5 million depending on AUM.

18. TURKISH CAPITAL MARKETS ASSOCIATION

19. TCMA is under CMB supervision.
Founded in April 2001.
It is a self-regulatory professional organization in the Turkish capital markets.
The structure of the Association was changed and its name was revised to Turkish Capital Market Association in 2014, in line with the new Capital Markets Law.
TCMA is under CMB supervision.
Association has 231 members as of April 2017; 84 brokerage firms, 43 banks, 51 portfolio management companies, 9 securities investment trusts, 31 real estate investment trusts and 8 venture capital investment trusts.

20. MEMBERS

21. Contribute to the development of the capital market
Aims
Contribute to the development of the capital market
Meet the collective needs of members and facilitate solidarity among its members,
Prevent unfair competition between its members,
Enhance know-how in the sector.

22. Establish code of ethics for the profession,
functions
Establish code of ethics for the profession,
Establish professional rules and regulations,
Conduct research,
Offer educational programs,
Assist in the resolution of disputes,
Cooperate with related foreign institutions,
Engage in financial literacy activities.

23. ORGANISATION

24. International Memberships
Asia Securities Forum (ASF) member since 2009.
Federation of Euro-Asian Stock Exchanges (FEAS) affiliate member since 2009.
OECD International Network on Financial Education (INFE) affiliate member since 2015.
International Council of Securities Associations (ICSA) member since
International Forum for Investor Education (IFIE) member since International Forum for Investor Education/Asia Chapter founding member since 2010.
International Organization of Securities Commissions (IOSCO) affiliate member since 2003.
Islamic Financial Services Board (IFSB) observer member since 2016.

25. CENTRAL REGISTRY AGENCY 5% stake
PARTICIPATIONS
CENTRAL REGISTRY AGENCY
5% stake
one seat at the board of directors, out of 8 members
BORSA ISTANBUL
1.3% stake
one seat at the board of directors, out of 10 members
CAPITAL MARKETS LICENSING & TRAINING AGENCY
49% stake
2 seats at the board of directors, out of 7 members

26. Turkish Capital Markets

27. BIST-100 Index & Trading Volume
Source: Borsa Istanbul

28. Market Capitalization of Borsa Istanbul (Billion TL)
Source: Borsa Istanbul

29. Breakdown of borsa istanbul market Capitalization
Source: Borsa Istanbul

30. CONCENTRATION IN THE EQUITY MARKET (MCAP)
Source: Borsa Istanbul

31. Domestic Market Capitalization (2016, Billion $)
Rank: 32
Source: WFE
WFE definition excluding investment funds, ETFs, unit trusts, unlisted companies, holding companies with a mere business of holding shares on the exchange.

32. Market Capitalization/GDP (2016)
Rank: 51
Source: WFE, IMF

33. Number of securities in equity market
Equities: BIST Main+BIST Star+REITs+Venture Capital Investment Trusts
Other Equities: BIST Emerging Companies, Watchlist,
Pre-market Trading Platform
Source: Borsa Istanbul

34. Number of Listed Companies (2016)
Rank: 24
Source: WFE

35. Equity Trading Volume of Borsa Istanbul (Billion TL)
Source: Borsa Istanbul

36. Equity Trading Volume (2016, Billion $)
Rank: 22
WFE definition excludes investment funds, ETFs, unit trusts, holding companies with a mere business of holding shares on the exchange. Negotiated deals are included.
Source: WFE

37. Turnover Ratio (Equity Trading Volume/Market Capitalization - 2016)
Rank: 3
Source: WFE

38. Securities Lending/Borrowing in borsa istanbul (Million TL)
Source: Takasbank

39. Short Selling in borsa istanbul
Source: Borsa Istanbul

40. MARGIN TRADING
Source: TCMA

41. Futures Trading Volume of borsa istanbul
Source: Borsa Istanbul, TurkDex
Security expiry transactions are included. .

42. Trading Volume in Futures Markets (2016, Billion $)
Rank: 26
Source: WFE

43. Number OF Listed corporate bonds IN BORSA ISTANBUL
Source: WFE

44. Number of Listed Corporate Bonds (2016)
Rank: 20
Source: WFE

45. Investment Institutions

46. Fixed Income Trading Volume of Intermediaries (Billion TL)
Source: Borsa Istanbul
Excluding Central Bank and Takasbank.

47. Repo-Reverse Repo Trading Volume of Intermediaries (Billion TL)
Source: Borsa Istanbul
Excluding Central Bank and Takasbank.

48. Equity Trading Volume of Intermediaries (BILLION TL)
Source: Borsa Istanbul

49. Futures Trading Volume of Investment Institutions (Billion TL)
Source: Borsa Istanbul, TurkDex

50. forex Trading Volume (Billion TL)
Source: TCMA

51. CONCENTRATION IN TRADING VOLUMES (2016)
Source: Borsa Istanbul, TCMA

52. TOP 10 MEMBERS IN THE MARKETS (2016/12)
Source: Borsa Istanbul, TCMA

53. Number of Finalized Corporate Finance Deals (Brokerage Firms Only)
Source: TCMA

54. Initial Public Offerings
Source: Borsa Istanbul

55. CORPORATE Debt Securities IssuANCE
Source: Borsa Istanbul

56. Institutional Investments (Billion TL)
Source: Borsa Istanbul, TCMA

57. Asset Management by Brokerage Firms
Source: TCMA

58. Asset Management by Asset Management Companies
Source: CMB, TCMA

59. Brokerage Firms’ Branch Network
Source: TCMA

60. Brokerage Firms’ Employees
Source: TCMA

61. ASSET MANAGEMENT COMPANIES’ Employees
Source: TCMA

62. banks’ Employees
Source: BRSA

63. Balance Sheet of Brokerage Firms (Billion TL)
Source: TCMA

64. Income Statement of Brokerage Firms (Million TL)
Source: TCMA

65. Breakdown of Brokerage Firms’ Revenues (MILLION TL)
Source: TCMA

66. Balance Sheet of ASSET management companies (million TL)
Source: TCMA

67. Income Statement of ASSET management companies (MILLION TL)
Source: TCMA

68. Breakdown of ASSET management companies’ Revenues (MILLION TL)
Source: TCMA

69. Investor Profile

70. Breakdown of Total Savings (Billion TL)
Source: BRSA, CRA, TCMA estimates

71. Savings of Domestic Investors
Total Domestic Inv. Savings as of
2016: TL 2 trillion
Source: BRSA, CRA, TCMA estimates

72. Savings of FOREIGN Investors
Total Foreign Inv. Savings as of
2016: TL 350 bn
Source: BRSA, CRA, TCMA estimates

73. Number of Equity Investors

74. Breakdown of Market Capitalization (Billion TL)
Source: CRA, Borsa Istanbul

75. Share of Foreign Investors
Source: CRA, Borsa Istanbul

76. Equity Ownership According to Investor Categories
Source: CRA
Total equity portfolio as of 2016: TL 247 bn

77. Breakdown of Equity Trading Volume by Investor Categories
Source: TCMA

78. Corporate bond Ownership According to Investor Categories
Total corporate bond portfolio as of 2016: TL 49 bn.
Source: CRA

79. Mutual fund Investors
Source: CRA

80. pension fund Investors
Source: PMC
Portfolio size includes government contributions.

81. Breakdown of FUTURES Trading Volume by Investor Categories (Brokerage Firms Only)
Source: TCMA

82. Forex Trading Volume of Brokerage Firms
Source: TCMA

83. www.tspb.org.tr info@tspb.org.tr