Annual Report 2008 - Capital Markets Board of Turkey

Transcription

CAPITAL MARKETS BOARD OF TURKEY
Annual Report 2008
CONTENTS
TABLES • 6
GRAPHS • 8
ABBREVIATIONS • 9
MESSAGE FROM THE CHAIRMAN • 10
CAPITAL MARKETS BOARD OF TURKEY • 13
MISSION, VISION, DUTIES AND AUTHORITIES • 13
THE EXECUTIVE BOARD AND ORGANIZATION • 15
The Executive Board • 15
Organization • 17
BUDGET • 17
STAFF • 19
WORLD ECONOMY • 21
ADVANCED ECONOMIES • 21
DEVELOPING COUNTRIES • 24
FINANCIAL MARKETS • 24
STOCK EXCHANGES • 26
TURKISH ECONOMY • 29
TURKıSH CAPITAL MARKETS • 35
OUTSTANDING SECURITIES • 36
SECURITIES ISSUES REGISTERED WITH THE CMB • 37
ISTANBUL STOCK EXCHANGE • 39
ISE Equities Market National-100 Index, Trading Volume and
Number of Shares Traded • 40
Main Indicators for Corporations with Shares Listed on the ISE • 42
Equities Traded by Foreign Investors • 45
Bonds and Bills Market Transactions • 47
COLLECTIVE INVESTMENT SCHEMES • 49
Mutual Funds • 49
Investment Trusts • 56
PORTFOLIO MANAGEMENT COMPANIES • 59
FUTURES AND OPTIONS EXCHANGE INC. • 61
CENTRAL REGISTRY INC. AND INVESTOR PROTECTION FUND • 63
ISTANBUL GOLD EXCHANGE • 64
THE ISE SETTLEMENT AND CUSTODY BANK INC • 65
THE ASSOCIATION OF CAPITAL MARKET INTERMEDIARY
INSTITUTIONS OF TURKEY • 67
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INTERMEDIARY INSTITUTIONS • 67
ACTIVITIES OF THE CMB IN 2008 • 71
REGULATION • 71
Regulations • 72
Communiqués • 72
Rulemaking Decisions of the Board • 75
ONGOING REGULATORY AND OTHER ACTIVITIES • 77
REGISTRATION • 80
AUTHORIZATION • 80
Authorization of Intermediary Institutions • 80
Authorization of Collective Investment Schemes • 81
Authorization of Publicly-Held Companies • 84
Authorization of Independent Auditing Firms • 84
Authorization of Rating Agencies • 85
SURVEILLANCE • 85
Surveillance of Publicly-Held Companies • 86
Surveillance of Collective Investment Schemes • 88
Surveillance of Intermediary Institutions • 88
Oversight of Audit Firms • 88
Oversight of Rating Agencies • 89
Market Surveillance • 89
ENFORCEMENT • 89
ACCOUNTING AND AUDITING STANDARDS • 96
International Financial Reporting Standards • 96
Auditing Standards • 96
CASES, WRITTEN APPLICATIONS TO THE PUBLIC PROSECUTORS AND
ADMINISTRATIVE MEASURES • 97
Cases Against the Acts of the Board • 98
Cases Commenced by the Board • 99
ACTIVITIES FOR HARMONISATION OF LEGISLATION WITH THE EU
ACQUIS • 100
Activities for Harmonization of the Legislation and Co-ordination
with Other Institutions • 101
Activities to Benefit from the EU Funds • 102
INTERNATIONAL RELATIONS • 104
International Organization of Securities Commissions (ISOCO) • 104
Activities related to Organisation for Economic Cooperation and
Development (OECD) • 108
World Trade Organisation (WTO) and The General Agreement on
Trade in Services (GATS) • 109
Memorandum of Understanding • 109
Other Activities • 110
LICENSING AND REGISTER RECORDING • 113
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INVESTOR APPLICATIONS • 114
INFORMATION SYSTEMS AND TECHNOLOGICAL
INFRASTRUCTURE • 115
Projects in Improvement and Maintenance Stage • 115
Projects in the Development Stage • 119
Hardware and Infrastructure • 121
Internet Platform • 121
Information Security Management System • 122
Investigation of Information Systems • 122
European Union Funded Projects • 123
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TABLES
TABLE 1.1. INCOME AND EXPENDITURE OF THE CMB IN 2008 • 17
TABLE 1.2. STAFF OF THE CMB • 19
TABLE 2.1. SUMMARY DATA ABOUT WORLD ECONOMY • 23
TABLE 2.2. PERFORMANCE OF WORLD STOCK MARKETS (%) • 27
TABLE 3.1. MAIN ECONOMIC INDICATORS • 32
TABLE 4.1. CAPITAL MARKET INDICATORS • 35
TABLE 4.2. OUTSTANDING SECURITIES • 36
TABLE 4.3. SECURITIES ISSUES REGISTERED WITH THE CMB (TL THOUSAND) • 38
TABLE 4.4. SECURITIES ISSUES REGISTERED WITH THE CMB ($ MILLION) • 39
TABLE 4.5. MAIN INDICATORS FOR THE ISE EQUITIES MARKET • 42
TABLE 4.6. THE MAIN INDICATORS FOR CORPORATIONS WITH SHARES LISTED ON THE ISE • 43
TABLE 4.7. SECURITIES BALANCE OF FOREIGNERS AND TRADING VOLUME • 46
TABLE 4.8. TRADING VOLUME FOR THE ISE BONDS AND BILLS MARKET • 47
TABLE 4.9. PORTFOLIO COMPOSITION OF A- TYPE MUTUAL FUNDS (%) • 52
TABLE 4.10. PORTFOLIO COMPOSITION OF B-TYPE MUTUAL FUNDS (%) • 53
TABLE 4.11. PORTFOLIO COMPOSITION OF A AND B-TYPE MUTUAL FUNDS (%) • 53
TABLE 4.12. THE CURRENT STATE OF EXCHANGE TRADED FUNDS • 55
TABLE 4.13. THE CURRENT STATE OF FUNDS OF FUNDS • 55
TABLE 4.14. THE CURRENT STATE OF A-TYPE INVESTMENT TRUSTS • 57
TABLE 4.15. THE CURRENT STATE OF B-TYPE INVESTMENT TRUSTS • 58
TABLE 4.16. THE CURRENT STATE OF REAL ESTATE INVESTMENT TRUSTS • 58
TABLE 4.17. THE CURRENT STATE OF PORTFOLIO MANAGEMENT COMPANIES • 59
TABLE 4.18. TRADING VOLUME OF FUTURES AND OPTIONS EXCHANGE • 61
TABLE 4.19. ISTANBUL GOLD EXCHANGE • 65
TABLE 4.20. TAKASBANK STATISTICS (2008) • 66
TABLE 4.21. LICENSES OF INTERMEDIARY INSTITUTIONS • 68
TABLE 4.22. TRANSACTIONS OF INTERMEDIARY INSTITUTIONS • 68
TABLE 5.1. REGISTRATION APPLICATIONS AND REALIZATIONS • 80
TABLE 5.2. ACTIVITIES SUBJECT TO AUTHORIZATION OF THE CMB AND THE INSTITUTIONS THAT CAN
CARRY OUT THESE ACTIVITIES • 81
TABLE 5.3. APPLICATIONS OF INTERMEDIARY INSTITUTIONS • 81
TABLE 5.4. APPLICATIONS OF COLLECTIVE INVESTMENT SCHEMES • 83
TABLE 5.5. APPLICATIONS OF PUBLICLY-HELD COMPANIES • 84
TABLE 5.6. SUBJECTS OF ENFORCEMENT ACTIVITIES • 92
TABLE 5.7. THE DENUNCIATIONS OF THE ISE ABOUT MANIPULATION CASES • 93
TABLE 5.8. THE NUMBER OF PROHIBITED PERSONS OR LEGAL ENTITIES • 93
TABLE 5.9. SANCTIONS AS A RESULT OF ENFORCEMENT ACTIVITIES • 94
TABLE 5.10. ADMINISTRATIVE PECUNIARY PUNISHMENTS CAUSES AND AMOUNT • 95
TABLE 5.11. THE ENFORCEMENT ACTIVITIES ON BEHALF OF THE FCIB • 96
TABLE 5.12. ADMINISTRATIVE CASES AGAINST THE BOARD ACTS IN THE LAST 3 YEARS
(ACCORDING TO THE TOPICS) • 98
TABLE 5.13. THE ADMINISTRATIVE CASES AGAINST THE BOARD ACTS WHICH HAVE BEEN
ADJUDICATED • 98
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TABLE 5.14. CIVIL CASES AGAINST THE BOARD IN LAST 3 YEARS • 98
TABLE 5.15. THE WRITTEN APPLICATIONS BY THE BOARD TO THE PUBLIC PROSECUTOR AND CASES
WHICH HAVE BEEN COMMENCED UPON THESE WRITTEN APPLICATIONS IN
LAST 3 YEARS • 99
TABLE 5.16. CASES WHICH HAVE BEEN COMMENCED AS A RESULT OF THE WRITTEN APPLICATIONS OF
THE BOARD TO THE PUBLIC PROSECUTOR AND HAVE BEEN ADJUDICATED IN
LAST 3 YEARS • 100
TABLE 5.17. CIVIL CASES COMMENCED BY THE BOARD IN LAST 3 YEARS • 100
TABLE 5.18. REGIONAL TRAINING SEMINARS ORGANIZED IN 2008 • 106
TABLE 5.19. BOARD’S ATTENDANCE AT IOSCO MEETINGS • 108
TABLE 5.20. BILATERAL MOU’S SIGNED BY THE BOARD • 110
TABLE 5.21. LICENSING EXAMINATIONS • 111
TABLE 5.22. ACTIVITIES OF GROUP OF INVESTOR REQUESTS • 115
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GRAPHS
GRAPH 3.1. MONTHLY AVERAGE INTEREST RATE AND MATURITY OF TREASURY BILLS • 30
GRAPH 3.2. TL/USD RATE MONTHLY AVERAGE AND STANDARD DEVıATıON • 31
GRAPH 4.1. OUTSTANDıNG SECURıTıES • 37
GRAPH 4.2. SHARE OF PUBLıC AND PRıVATE SECTOR SECURıTıES ıN TOTAL • 37
GRAPH 4.3. ISE-100 INDEX AND TRADING VOLUME • 41
GRAPH 4.4. MARKET CAPıTALıZATıON ($ BıLLıON) • 44
GRAPH 4.5. PERCENTAGE CHANGE ıN MARKET CAPıTALıZATıON • 45
GRAPH 4.6. SECURıTıES HELD ıN CUSTODY FOR FOREıGNERS • 46
GRAPH 4.7. BONDS AND BıLLS DAıLY AVERAGE TRADıNG VOLUME ON EXCHANGE AND OFF-THE
EXCHANGE • 49
GRAPH 4.8. NUMERICAL DISTRIBUTION OF A AND B TYPE MUTUAL FUNDS • 50
GRAPH 4.9. A AND B TYPE MUTUAL FUNDS’ PORTFOLIO VALUE IN TL TERMS • 50
GRAPH 4.10. A AND B TYPE MUTUAL FUNDS’ PORTFOLIO VALUE IN USD TERMS • 51
GRAPH 4.11. KINDS OF A-TYPE MUTUAL FUNDS • 51
GRAPH 4.12. KINDS OF B-TYPE MUTUAL FUNDS • 52
GRAPH 4.13. KINDS OF PENSION MUTUAL FUNDS • 54
GRAPH 4.14. TRADıNG VOLUME (UNıT) • 62
GRAPH 4.15. TRADıNG VOLUME (TL) • 62
GRAPH 4.16. CHANGES IN THE TOTAL NUMBER OF OPEN POSıTıONS • 63
GRAPH 5.1. WRITTEN APPLICATIONS BY THE BOARD TO THE PUBLIC PROSECUTORS IN THE PERIOD OF
2005-2007 (ACCORDING TO THE TOPICS) • 99
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ABBREVIATIONS
CBRT, TCMB
: Central Bank of the Republic of Turkey
CMB
: Capital Markets Board of Turkey
CML
: Capital Markets Law
CPI
: Consumer Price Index
CRA
: Central Registry Agency Inc.
EMC
: Emerging Markets Committee
EU
: European Union
FATF
: Financial Action Task Force on Money Laundering
GDDI
: Government Domestic Debt Instruments
GDP
: Gross Domestic Product
GNP
: Gross National Product
IAS
: International Accounting Standards
IFRS
: International Financial Reporting Standards
IGE
: Istanbul Gold Exchange
IMF
: International Monetary Fund
IOSCO
: International Organization of Securities Commissions
ISE, IMKB
: Istanbul Stock Exchange
MiFID
: Markets in Financial Instruments Directive
PDP
: Public Disclosure Platform
SPO
: State Planning Organization
TAIEX
: Technical Assistance Information Exchange Office
TAKASBANK
: ISE Settlement and Custody Bank Inc.
TASB
: Turkish Accounting Standards Board
TSPAKB
: Association of Capital Markets Intermediaries of Turkey
TURKDEX
: Turkish Derivatives Exchange
TURKSTAT
: Turkish Statistical Institute
UT
: The Undersecretariat of Treasury
USA
: The United States of America
WPI
: Wholesale Price Index
VCIT
: Venture Capital Investment Trusts
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MESSAGE FROM THE
CHAIRMAN
Ever since CMB’s foundation in 1981,
the Capital Markets Board of Turkey
(CMB) has always been engaged in
the conduct of implementing rules
and regulations in the Turkish capital
markets, that are in line with the international norms and developments,
in order to provide the secure, fair,
transparent and effective functioning
of the capital markets in Turkey.
Significant progress has been made in order to ensure that our rules and regulations are
in full harmony with those of the European Union. In this context, the twinning project
called “Assisting the Capital Markets of Turkey to Comply Fully with the EU Capital Markets Standards” was finalized successfully with the German Federal Ministry of Finance.
This project, whose contents exceeded regulations of more than 700 pages, aims to integrate the Turkish capital markets to EU norms and regulations.
The main responsibilities of the CMB are two-fold; namely regulation and supervision of
the capital markets in Turkey. However, there is now a common consensus that the regulatory function should be given more emphasis than the supervisory function. This is mainly
due to the fact that properly regulated markets need for supervision will become much
more minimized. The main purpose is to speed up the process of capital accumulation in
a safe and sound manner.
The world economy is undergoing serious financial and economic turmoil. Without doubt,
as the economic and financial structures of nations worldwide have been adversely affected
by the ongoing turmoil, the underlying entire international financial system has also been
severely struck. The post crisis era will most possibly lead to renewed forms of financial
and legal structures. As new forms of organizations and corporations will come into existence, the concept of regulation may just as well be newly defined. It is specifically at
this point, where the importance of regulatory authorities such as the CMB will increase
and the responsibilities and duties of regulatory authorities such as the CMB may change.
Regulatory authorities should not only be just watching the developments in the capital
markets but should rather be able to anticipate what will happen in the market in future in
a more proactive manner. Hence regulatory authorities should be able to carefully measure
the pulse of the market, and should be able to provide new gateway to new horizons for
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capital market players. Within this framework, we aim to enable CMB to become more
active and more adherent to the needs of the capital markets. Enhanced collaboration and
cooperation among marketplayers is indeed both vital and essential to the strengthening
process of the capital markets. Also, the works of other international regulatory authorities
and financial counterparties will play a significant role in the shaping of our regulations.
Despite the rapid development in recent years in Turkey to some extent, there is still scope
for further improvement in the investment climate. The creation of an attractive investment environment is by far the most important priority for the CMB. For this purpose,
the CMB will be in the process of ensuring that measures are in place that will improve
both the legal and operational environment of the capital markets. This in return will help
increase liquidity in the market and will enable the adoption of the new technological infrastructure and monitoring techniques that would enable financial tables to be prepared
in a better manner and will aid the marketing and design of new financial products and
would improve the demutualization plans for the Istanbul Stock Exchange (ISE), as well
as create better opportunities for the creation of an exchange for small and medium sized
enterprises.
By taking into consideration world economic and financial trends and our nation’s conditions, the CMB aims to adopt regulations proactively from within the market rather than
from the outside as merely an observer. Moreover, the CMB aims to share its supervisory
role with self regulatory organizations. Finally the CMB aims to provide a fair, sound and
efficient functioning of the capital markets that would help enable a mechanism that would
continuously provide resources to the economy and that would contribute positively to effective risk management practices.
Vedat AKGİRAY
Chairman of Capital Markets Boardd
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Capital Markets Board of Turkey
The Capital Markets Board of Turkey (CMB) is the sole regulatory and
supervisory authority that is responsible to regulate and control the secure,
transparent and stable functioning of the capital markets and to protect the
rights and benefits of investors with the purpose of ensuring an efficient
and widespread participation by the public in the development of the
economy through investing savings in the securities market in Turkey. The
CMB was established as a self-funding statutory public legal entity with
administrative and financial autonomy empowered by the Capital Markets
Law (CML) which was enacted in 1981 with the aim of implementing the
duties and exercising its authority endowed by this Law. The CMB has an
executive board consisting of seven Members/Commissioners, two of whom
are the chairman and the deputy chairman. The CMB’s headquarters is
located in Ankara, and there is also a regional office in Istanbul.
MISSION, VISION, DUTIES AND AUTHORITIES
The MISSION of the CMB is “to regulate and supervise the capital markets for the secure,
fair, transparent and efficient functioning of the capital markets, within the framework of
objectivity and accountability, conducting supervision and making clear and easy to understand regulations that are in conformity with international norms and developments,
and that meet the requirements of a constantly changing market environment.” The VISION of the CMB is “to be a leading and dynamic institution, which has a respected international reputation.”
The main duties and authorities of the CMB are as follows:
 To regulate and control the conditions of the issuance, public offering and sale of capital
market instruments with respect to the application of this Law;
 To register capital market instruments to be issued or offered to public and to halt the
public offering sale of capital market instruments temporarily in case the public interest
so requires;
 To determine standard ratios related to financial structures, and the use of resources of
capital market institutions subject to the CML in general or by areas of activity or types
of institutions, and to regulate the principles and procedures related to the publication
of these ratios;
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 To determine the principles related to independent auditing operations, including when
appropriate with respect to use of electronic media in the capital markets; to determine
the conditions for establishment and the working principles of institutions engaged in
independent auditing operations with respect to the capital market according to Law
No. 3568, dated 1 June 1989 by consulting with the Union of Chambers of Public Accountants of Turkey and to publish lists of those who have such qualifications;
 To reach general and specific decisions to ensure duly and timely enlightment of the
public and to determine and issue communiqués about the content, standards and principles for the publication of financial statements, reports and their audit, of prospectuses and circulars issued at the public offering of capital market instruments, and of
important information affecting the value of instruments;
 To supervise the activities of the issuers subject to the CML, banks with respect to provisions in paragraph (a) of Article 50 of CML, capital market institutions and stock
exchanges and other organized markets for compliance CML, decrees, communiqués
of the Board and other legislation related to capital markets by demanding all the necessary information and documents;
 To monitor all kinds of publications, announcements and advertisements relevant to
the capital markets made via any means of communication, and to ban those which are
determined to be misleading and to inform the related organizations to duly execute
what is required;
 To review the financial statements and reports and other documents obtained by the
CMB or submitted to the Board in accordance with the provisions of CML, to request
reports also from issuers and internal auditors and independent auditors about matters
deemed to be necessary and by evaluating the results obtained, to take the required
measures as proved in this Law;
 To determine the principles related to voting by proxy in the framework of the general
provisions at the general assemblies of publicly held joint stock corporations and to
make regulations related to those who collect proxies or acquire shares in an amount
enabling them to change the management of such corporations, or the obligation of
purchasing other shares and the rights of the partners who are in the minority to sell
their shares to persons or a group which has taken over the control;
 To regulate the qualifications and sale and purchase principles of any derivative instruments, including futures and options contracts based on economic and financial
indicators, capital market instruments, commodities, precious metals and foreign currency, the supervision of the obligations of those employed at the exchanges and markets where these instruments are traded, and of the rules and principles of activities and
of the rules, principles, and guarantees of the clearing and settlement system;
 To regulate agreements for the purchase or sale of capital market instruments with the
promise to resell or repurchase; to adopt market transaction rules related to these contracts; and to determine operating rules and principles related to these transactions;
 To determine rules and principles related to the borrowing and lending of capital market instruments and short selling transactions and, after obtaining the opinions of the
Undersecretariat of the Treasury and the Central Bank of the Republic of Turkey, to
adopt regulations related to transactions involving margin trading;
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 To make necessary regulations within the framework of related legislation with respect
to the issuing and public offering of capital market instruments in Turkey by non-residents;
 To regulate and supervise the clearing and custody of capital market instruments and
the rating of capital market institutions and capital market instruments;
 To determine the principles of establishment, operation, liquidation and termination of
newly established capital market institutions and to supervise them in order to ensure
the development of capital markets;
 To perform the examinations requested by the Related Minister; to submit reports to
the Related Minister in relation with its activities; to submit proposals to the Related
Minister with respect to the amendment of legislation concerning the capital market;
 To establish the qualifications necessary to serve as an expert institution with respect to
the appraisal of real estate for the purpose of capital market activities and to publish a
list of the institutions that have met these qualifications;
 To determine the rules and principles applicable to persons and organizations engaged
in making investment recommendations about the capital market, including the media
and electronic means;
 To determine the principles for issuing certificates showing the vocational training and
vocational adequacy of persons who shall engage in activities in the capital markets and
managers and the other employees of capital market institutions and with this objective
to establish centers and to determine the principles with respect to the activity;
 To regulate and supervise public offerings and capital market activities and transactions
that are made by means of all kinds of electronic communication tools and media and
similar tools including internet and pursuant to general rules to provide for and supervise the use of electronic signatures in activities within the scope of the CML;
 To make rules and regulations with respect to the method of collective use of voting
rights wholly or partly to select members of the board of directors and of company auditors by the general assemblies of stockholders of publicly held joint stock companies
subject to the CML;
 To collaborate in every aspect and to exchange information regarding the capital markets with any equivalent authority of a foreign country responsible for regulation and
supervision of their capital markets.
THE EXECUTIVE BOARD AND ORGANIZATION
The Executive Board
The Executive Board is proclaimed by the CML to be at the top of hierarchy within the decision making body of the CMB and is empowered to decide on issues within the authority
of the CMB.
The Executive Board consists of seven Members/Commissioners. The Council of Ministers
appoints two members from four nominations by the Ministry of State responsible for the
Economy. The other five members are appointed from the nominations of the “Ministry of
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Vedat AKG‹RAY
Chairman
M. Emin ÖZER
Board Member
Mithat HIZLI
Board Member
Mustafa KORHAN
Board Member
Abdülkerim EMEK
Board Member
Vahdettin ERTA
Board Member
‹lhami ÖZTÜRK
Board Member
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Finance”, the “Ministry of Industry and Commerce”, the “Banking Regulatory and Supervisory Board”, the “Association of Trade Chambers and Exchanges”, and the “Association of
Capital Markets Intermediary Institutions of Turkey”. Each of these institutions nominates
two candidates, one of whom is to be elected. All Commissioners are appointed by the Council of Ministers for a six-year period. The Council of Ministers appoints one of the members as the Chairman and the Board elects one of its members as the Deputy Chairman.
Organization
The CMB consists of the Chairman, the Executive Board and Departments which are responsible to the Chairman.
The Chairman is at the top of both the organization and decision making body of the
CMB. The executive vice presidents are authorized and responsible for the coordination,
operation and administration of the entire organization. The departments are as follows:
Department of Enforcement, Department of Corporate Finance, Department of Intermediary Activities, Department of Institutional Investors, Department of Market Regulation
and Surveillance, Department of Research, Department of Accounting Standards, Department of Data Processing, Statistics and Information, Department of Legal Consultancy,
Human Resources Department. In addition, there are specific groups; there is the Group
of European Union Affairs, Group of International Relations, Group of Investor Requests,
and Group of Licensing and Registration. The organization chart of the CMB is given on
the following page.
BUDGET
The income and expenditure figures of the CMB are TL 75.90 million and TL 53.51 million
in 2008, respectively. The detailed figures are as follows (Table 1.1)
Table 1.1. Income and Expenditure of The CMB In 2008
1-INCOME
(TL)
Type of Income
Allowances
Realizations
Legal Income
48,010,000
44,983,368
230,000
400,000
3,000,000
1,010,000
160,000
223,292
395,590
8,124,104
3,474,527
920,656
1,300,000
17,783,614
54,110,000
75,905,151
Income from Lodgement
Other Real Estate Income
Income From Exchanges
Other Interest
Other Income
Net Funding
TOTAL
2-EXPENDITURE
Type of Expenditure
Staff
Social Security
Goods and Services
Current Accounts
Capital Cost
TOTAL
Allowances
31,644,000
Realizations
29,121,446
1,478,000
1,228,790
16,558,000
2,530,000
1,900,000
10,821,259
11,906,563
433,603
54,110,000
53,511,661
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The CMB can be considered as a self-financing entity since all the expenditures accrued
are paid by a particular fund which is established for this purpose in compliance with the
CML. A total of 0.2% of the volume of the securities registered with the CMB is paid by
the issuer as registration fee, which constitutes the financial sources of the budget. With
the latest amendments to the CML, 5% of the income of the exchanges established within the scope of the CML is transferred to this fund. In case the income from this fund
is insufficient to meet the expenditures of the CMB, the deficit is financed by an amount
allocated from the budget of the Undersecretariat of Treasury. However, such a deficit has
not occurred since 1992.
STAFF
The rank profile of the CMB staff at 2008-end is as follows (Table 1.2).
Table 1.2. Staff of the CMB
EXECUTIVE BOARD
7
TOP MANAGEMENT
29
Executive Vice Presidents
2
Heads of Departments
9
‹stanbul Representative
1
Deputy Heads of Departments
Advisors
7
10
EXPERT STAFF
193
Chief Experts
55
Experts
Chief Lawyers
Lawyers
JUNIOR EXPERT STAFF
113
6
19
65
Assistant Experts
55
Assistant Lawyers
10
IT STAFF
24
ADMINISTRATIVE STAFF
168
TOTAL
486
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World Economy
In 2008 the world economic growth slowed down considerably. In 2008
global economy grew 3.2%. On the other hand, in the last quarter of 2008
economic growth turned negative. As the financial crisis, which had started
in 2007, deepened in the last quarter of 2008, the world economy faced a
serious external shock. In this regard International Monetary Fund (IMF)
expects the world economy to contract by 1.3% in 2009.
International Monetary Fund (IMF) estimates the global economic growth to be 3.2% in
2008. In 2008 the GDP growth in advanced economies was 0.9% and in developing countries 6.1%. Among advanced economies, the GDP growth rates in 2008 were, 1.1%, 0.9% in
US and Euro area respectively and was -0.6% in Japan. Among the developing countries,
the GDP growth in the Asian region surpassed that of developing countries in other regions again this year.
The consumer price inflation in advanced economies was 3.4%, in developing countries it
was 9.3%. The Middle East region had the highest inflation rate among developing countries.
The world trade volume growth slowed down to 3.3% in 2008. The growth rate of exports
of developing countries was 6% and of advanced economies was 1.8%. In addition the
growth rate of the imports of developing countries was 10.9% and of the advanced economies was 0.4%.
ADVANCED ECONOMIES
As the financial crisis deepened after September, the economic performance in the advanced countries started to deteriorate. Starting in September, both manufacturing and
service sector indicators sank in advanced economies. All of these factors led to a serious
deterioration in world trade as well.
In all major advanced countries, industrial production declined, credit market conditions
deteriorated and worsening in real estate markets continued. Especially in the last quarter
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of 2008, GDP growth rates slid into negative territory. At the same time, commodity prices,
which had increased in the first half of the year, collapsed as the financial crisis intensified.
Many countries announced large stimulus plans in the face of significant worsening of their
economies. Monetary policies were loosened significantly and official rates approached
near zero in Japan and US. US Federal Reserve slashed official interest rates by 400 basis
points and in Japan where interest rates had been below 1%, official rates were further decreased by 40 basis points. In European Union, which is the other major economic area,
European Central Bank (ECB) increased interest rates in July, but slashed rates during the
fall as the financial crisis deepened. ECB was more conservative in loosening monetary
policy. Among other major countries; in United Kingdom Central Bank of England also
slashed interest rates substantially. As a result monetary policies in advanced countries were
loosened significantly in the face of financial crisis and deterioration in the economy.
Advanced economies resorted not only to monetary policies, but also to fiscal policies in
order to support economic growth. On the fiscal side, the biggest economic packages were
announced in US. In US the new Administration was expected to announce 800 billion
dollar economic package. The economic stimulus plans introduced in Japan was 105 billion dollar. Also European Commission and EU countries initiated important economic
packages.
US also led the way as far as packages announced for supporting the financial sector concerned. Until September, US Administration had used a case by case approach to help
troubled financial institutions. In addition, US Federal Reserve increased liquidity. As the
financial crisis worsened after September, this case by case approach was abandoned and
comprehensive packages for the financial sector were announced. In this regard US introduced 700 billion dollar bailout plan named TARP. Also comprehensive financial sector
bailout plans were announced in United Kingdom and European Union.
Bank deposit guarantees were raised in US, Europe and other countries. Also many countries announced guarantees for bank debt, in order to boost confidence in the markets.
Furthermore many countries injected capital to banks through different schemes. Although the comprehensive US plan for bailing out financial institutions envisaged removing troubled assets from bank balance sheets, this approach took a backseat later. In US
and Europe, governments rescued many financial institutions. With regard to capital markets, during the most turbulent period in the stock markets during fall, many countries
introduced limitations to short selling. Also many countries announced packages for the
corporate sector.
Annual Report
Tablo 2.1. Summary Data about World Economy
2006
2007
2008
Annual Growth Rate (%)
World Output
5.1
5.2
3.2
3.0
2.7
0.9
-United States
2.8
2.0
1.1
-Euro Area
2.9
2.7
0.9
-Japan
2.0
2.4
-0.6
Advanced Economies
Developing Countries
8.0
8.3
6.1
-Africa
6.1
6.2
5.2
-Asia
9.8
10.6
7.7
-Central and eastern Europe
6.6
5.4
2.9
-Middle East
5.7
6.3
5.9
World Output (US$ Billion)
According to the Exchange Rate
48,761
54,841
60,690
According to the Purchasing Power Parity
60,716
65,490
68,997
Inflation (Consumer Prices, %)
Advanced Economies
2.4
2.2
3.4
-United States
3.2
2.9
3.8
-Euro Area
2.2
2.1
3.3
-Japan
0.3
0.0
1.4
5.4
6.4
9.3
-Africa
6.3
6.3
10.1
-Asia
4.2
5.4
7.4
5.7
6.1
8.0
-Middle East
6.8
10.5
15.6
World Trade Volume (%)
World Trade Volume
(Goods and Services)
9.2
7.2
3.3
-Advanced Economies
8.5
6.1
1.8
-Developing Countries
10.9
9.5
6.0
-Exports
-Imports
-Advanced Economies
7.6
4.7
0.4
-Developing Countries
13.2
14.0
10.9
14,774
17,149
19,694
Total World Exports (US$ Billion)
Current Account (US$ Billion)
Advanced Economies
-United States
-Euro Area
-454.5
-389.6
-465.0
-788.1
-731.2
-673.3
31.5
20.4
-95.5
170.4
211.0
157.1
630.6
633.4
714.4
34.0
10.7
12.2
282.4
406.5
422.4
-82.5
-122.1
-142.2
-Middle East
252.9
254.1
341.6
-Japan
-Africa
-Asia
Capital Flows (US$ Billion)
-Foreign Direct Investment
-Portfolio Investment
Source: IMF World Economic Outlook, April 2009.
202.8
617.5
109.3
241.4
359.0
459.3
-100.7
39.5
-155.2
23
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DEVELOPING COUNTRIES
During the first half of the year, when the commodity prices had been elevated, emerging
market economies performed well. This performance led to the impression that the emerging markets could contain themselves from the adverse effects of the financial crisis. When
the financial crisis first erupted in 2007, “decoupling theory” hypothesized that the emerging markets were decoupled from the developed country economies, where the problems
were concentrated and emerging markets would be expected to continue to perform well.
But in 2008 it was evident that the emerging market countries could not escape adverse
effects of the crisis.
As the financial crisis deepened in the second half of the year, the performance of emerging market economies also worsened considerably. As the commodity prices and global
trade slumped, emerging markets started to feel the effects of the financial crisis. Emerging
economies was also being hit from the sudden reversal of foreign capital flows in addition
to the worsening in the real economy.
Russia particularly had considerable stress both in the economy and financial markets as
the oil prices slumped. Russia which faced considerable net capital outflows tried to maintain confidence in ruble and consumed part of its foreign exchange reserves as a result.
Central and East European countries which had high current account deficits and foreign
currency debt were also hit by the crisis in a fragile position. In this regard emerging European countries suffered heavily. Export dependent Asian economies saw demand for their
products from advanced countries and from China slumped.
Even in China economic growth slowed and authorities took serious economic countermeasures. China announced a stimulus package totalled 586 billion dollars including the
post-earthquake spending. This package was the second biggest after the US plan. China
also loosened monetary policy.
As the economic growth slumped at the end of the year, emerging economies began to
implement supportive monetary and fiscal policies.
FINANCIAL MARKETS
The financial crisis which had been inherited from the previous year entered a new and
very dangerous phase in the last quarter of 2008, after the collapse of Lehman Brothers.
The failure of Lehman Brothers, caused other financial institutions to write-off investments
related to Lehman Brothers. Concerns regarding counterparty risk among banks surged.
Money markets were frozen and equities tumbled and bank’s losses increased and as a
result, their capital bases were eroded. Ensuing panic brought the global financial system
to a standstill. Investors dumped all types of risky assets and flocked into safe heaven investments like government bonds. As the global financial system came close to a serious
collapse, authorities took unprecedented policy actions. These unprecedented policy actions took by the authorities, were successful in relieving the investors’ fears regarding a
catastrophe scenario.
At the beginning of September, US Administration had announced that mortgage finance
agencies (Fannie Mae and Freddie Mac) were taken into government conservatorship, in
order to support mortgage financing and prevent further turbulence in the markets. On
Annual Report
25
15th of September Lehman Brothers Holdings Inc. filed bankruptcy protection. Although
throughout the year the strains related to the financial crisis continued, the crisis reached
a peak with the failure of Lehman Brothers in mid-September. The failure of Lehman
Brothers was a key factor in the proliferation of the crisis. The main reasons were; Lehman
Brothers was a major counterparty in CDS markets, also its failure triggered CDS contracts
referencing the bank; money market funds after having losses on Lehman’s commercial
paper had difficulties and the bank was a truly global institution. As a result after Lehman
Brothers’ failure, global financial markets entered a deeper crisis. Since Lehman Brothers
was one of leading investment banks in the world, its failure increased worries regarding
its counterparties. AIG which was one of the biggest insurance companies in the world
also ran into difficulty as a result of one of its unit’s large CDS positions. US Administration which could not let another large institution go bankrupt announced its support to
insurer.
The crisis spread into European banks and interest rates rose in money market and there
were serious dislocations in the markets. In this regard, financial institutions which were
dependent on wholesale funding markets had difficulties. As a result authorities took
emergency measures. US Administration’s proposal to remove troubled assets from bank
balance sheets (the Troubled Asset Relief Program,TARP) was rejected by the US Congress
at the end of September. Nevertheless as the turbulence in the financial markets strengthened, US Congress approved the revised 700 billion dollar TARP plan on October 3. US
Federal Reserve and other major central banks undertook a coordinated round of policy
rate cuts on October 8. On October 13 US Federal Reserve established dollar swap lines
with central banks of major advanced economies. Also European Union countries including United Kingdom announced system-wide bank recapitalizations and guarantees for
bank debt. These broad measures succeeded in calming the markets. On the other hand,
large scale bailout plans increased government debt in developed countries. The adverse
affect of this development has not been yet been materialized.
The US government announced that up to $250 billion of previously approved TARP funds
were to be used to recapitalize banks. Furthermore starting from mid-October, the financial crisis spilled into emerging markets and bond yields increased and local currencies
depreciated. As the situation in the emerging market worsened, IMF and other international institutions announced support especially for emerging Europe. In order to prevent
US dollar funding difficulties, US Federal Reserve established US dollar swap lines with
systemically important emerging markets; Brazil, Korea, Mexico and Singapore.
The financial markets slumped at the beginning of October. VIX volatility index which had
been around 20 during first 3 quarters jumped to around 80. Money market rates jumped
and the spread between money market rates and treasury bonds widened considerably.
The yield of 10 year US Treasury bonds, which had reached 4% during the year, plunged
to 2% at the end of the year, as a result of Fed interest cuts, the downfall in the inflationary
expectations, slump both in the economic activity and commodity prices and investors’
rush to safe heavens from risky assets. There was a comparable drop in the yields of treasury bonds of other advanced economies. Emerging market sovereign spreads represented
by EMBI spreads widened to a peak of near 900 basis points at the end of October after
hovering around 300 basis points during the year.
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Annual Report
Since the epicenter of the crisis was US and as the Federal Reserve slashed interest rates
aggressively starting from the beginning of the year, whereas European Central Bank hiked
interest rates on July, euro reached around 1.60 against the dollar. Nevertheless as investors dumped risky assets and flocked into dollar assets, euro depreciated abruptly against
the dollar. Japanese yen which had been widely used in “carry trade” positions appreciated
considerably, as investors closed such positions. Also sterling depreciated considerably;
since the UK economy was one of the most significantly hit economies by the crisis and
as the Bank of England slashed interest rates. As the crisis spread to emerging markets,
emerging market currencies depreciated against dollar as well.
Gold prices which had slumped in parallel to other commodities on October, strengthened
during rest of the year with its appeal as a safe heaven. Oil prices reached to $150 during the
year at a time where $200 per barrel was seen as possible, nevertheless starting from July
oil prices collapsed to under $40. Other commodity prices slumped, as the world economy
was experiencing significant slowdown.
STOCK EXCHANGES
2008 was a dismal year for stock markets. According to the data from the World Federation
of Stock Exchanges, close to half the market capitalization of world stock markets disappeared in this year’s decline. As a result individual investors saw much of their retirement
and personal savings melted away. This was a second blow to the households which had
been also hit by the plunge in home prices. Furthermore the plunge in share prices also
hampered bank’s capital replenishment activities. As the financial crisis deepened in the
last quarter of 2008, new issue market also dried.
According to the data from the World Federation of Stock Exchanges, highest declining
stock markets in 2008 were in Slovenia (-67.5%), Ireland (-66.2%) and Greece (-65.5%)
respectively. The least declining stock markets in 2008 were in Chile (-19.6%), Mexico
(-24.2%) and South Africa (-25.7%) respectively. Also the only country in the table where
stock market did not decline was in Iran (0.0%). All the other stock markets included in
the table lost value.
When the performances of the 47 stock markets in Table 2.2 are scrutinized the stock
markets worldwide declined 45% on average. The biggest decrease was in Asia Pacific
(-46.8%), the others were respectively Europe, North Africa, and Middle East (-46.3%),
South America (%-42.4) stock markets, and North America (-36.5%).
Annual Report
Table 2.2. Performance of World Stock Markets (%)
Region
North
America
South
America
Europe
Africa
Middle East
Asia Pacific
World
Stock Exchange
2007
2008
Amex – US
Mexico – Mexico
NASDAQ – US
New York – US
Toronto – Canada
17.2
11.7
9.8
6.6
7.2
-42.0
-24.2
-40.5
-40.9
-35.0
North America Average
Buenos Aires – Argentina
Lima – Peru
Santiago – Chile
Sao Paulo – Brazil
10.5
17.9
36.0
13.8
43.7
-36.5
-48.9
-59.8
-19.6
-41.2
South America Average
Athens – Greece
Barcelona – Spain
Bilbao – Spain
Copenhagen – Denmark
Deutsche Börse – Germany
Euronext Amsterdam – Netherlands
Euronext Brussels – Belgium
Euronext Paris – France
Euronext Lizbon- Portugal
Helsinki – Finland
27.9
17.9
5.2
1.9
5.5
17.6
4.8
-4.0
0.4
18.3
20.5
-42.4
-65.5
-41.8
-39.5
-49.0
-44.4
-51.5
-49.2
-43.1
-49.7
-53.4
Irish – Ireland
‹stanbul – Turkey
Milano – Italy
Johannesburg – South Africa
Ljubljana – Slovenia
London – United Kingdom
Luxembourg – Luxembourg
Madrid – Spain
Malta – Malta
Oslo – Norway
Swiss – Switzerland
Stockholm- Sweden
Tehran – Iran
Tel-Aviv – Israel
Vienna – Austria
Warsaw – Poland
-26.3
42.0
-8.0
16.2
78.1
2.0
21.2
5.6
1.3
8.1
-0.1
-6.0
-3.4
22.9
-1.4
10.4
-66.2
-51.6
-48.7
-25.7
-67.5
-32.8
-59.5
-40.6
-35.0
-55.7
-34.0
-42.0
0.0
-46.4
-61.0
-51.1
Europe, Africa, Middle East Average
Australian – Australia
Colombo, Sri Lanka
Hong Kong – Hong Kong
Jakarta – Indonesia
Korean –South Korea
Osaka – Japan
Philippine – Philippines
Shangai-China
Taiwan – Taiwan
Thailand – Thailand
Tokyo – Japan
9.6
13.8
-6.7
38.3
52.1
32.3
-11.0
21.4
96.7
8.7
26.2
-12.2
-46.3
-43.0
-40.8
-46.9
-50.6
-40.7
-44.0
-48.3
-65.4
-46.0
-47.6
-41.8
23.6
14.7
-46.8
-45.0
Asia Pacific Average
World Average
Source: World Federation of Exchanges
27
28
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29
Turkish Economy
The effects of the global crisis have been increasingly felt in Turkey in 2008,
as in the rest of the world. The shrinking domestic and foreign demand,
especially in the second half of the year has resulted in falling production
levels. Unemployment followed a rising trend in 2008 and reached 13.6 % at
the year end. As a result of a severe contraction in the industrial sector, non
agricultural sectors’ contribution to growth has been reduced considerably.
While government spending in the form of both investment and purchases
of goods and services has risen, declining private investment has been one
of the major factors contributing negatively to growth figures.
In the balance of payments, current account deficit has climbed to USD 41.6 billion in
2008, from USD 38.2 billion in 2007, reflecting a 9% increase from the previous year. With
19.7% increase in imports and 21.9% increase in exports, trade deficit in 2008 has been
USD 53.2 billion, reflecting a 13.9% increase from the previous year.
In 2008, net capital inflow to the country has been USD 37 billion, with a 1.1% increase
from the previous year. Direct foreign investment has fallen from 19.9 billion dollars in
2007 to 15.4 billion dollars in 2008. Similarly, portfolio investments have also fallen and
from 0.7 billion dollars of inflow in 2007, have turned to a 4.8 billion dollars of outflow in
2008. Despite the decrease in these two items, the rise in the foreign credits received resulted in a slight total increase of 1.1% in foreign capital inflow.
In 2008 the inflation rate has been 10.06%. Global economic developments throughout
2008 have had a predominating impact on the course of domestic inflation. After strongly
rising energy and commodity prices in the first three quarters of 2008, the last quarter has
experienced sharp decreases especially in energy and processed food prices. Nevertheless,
the overall yearly inflation has not been able to fall as much due to the cumulative effects
of the previous periods.
In 2008, central government budget income has been TL 208.9 billion, while expenditures
have been TL 226.0 billion. Accordingly, budget deficit has been TL 17.1 billion, remaining
below the targeted level of TL 18.0 billion. 2008 budget expenditures have been realized
as 101.5% of their targeted level, while budget income has been realized as 102.1% of its
targeted level. Non interest expenditures have been calculated to be TL 175.3 billion, as
30
Annual Report
105.38% of the target level and interest expenditures have been TL 50.6 billion with 90.5%
of its target level.
GDP growth in the Turkish economy for the year 2008 has been 1.1%. After uninterrupted
growth for 27 quarters, growth rate for the first time has been negative in the last quarter of
2008, following the slowdown which began in 2007.
Growth in the first quarter of 2008 has been 7.3%, and decreased to 2.8% and 1.2% in the
second and third quarters respectively. In the last quarter the decreasing trend has continued and has resulted in a negative 6.2% growth rate. In terms of sectoral distribution, the
largest contraction has been in the wholesale and retail trade sector, which has shrunk by
15.4%. Next biggest declines have been in the construction sector and manufacturing industry, with 13.4% and 10.8 % declines respectively, and taxes and subsidies have declined
by 9.8%. Agricultural sector, on the other hand, after contracting by 7% in the previous
year, has enjoyed a positive growth of 4.6%. Sectoral growth rates in the top three shrinking
sectors, namely wholesale and retail trade, construction, and manufacturing industry, on a
yearly basis have been 0.8%, -7.6% and -0.9% respectively and the most severe yearly contraction has been in the construction sector, which had enjoyed a 5.7% growth in 2007.
Graph 3.1. Monthly Average Interest Rate and Maturity of Treasury Bills
Source: HM
In 2008, current TL value of total domestic debt increased by 7.6% and reached TL 274.8
billion, while its dollar value fell to USD 181.7 billion by a 17.5% decrease. While the Treasury auction rate was 16.2% in January, it showed a rising trend until June, when it reached
21.5% and in the second half of the year, following fluctuations, fell to 18.6% in December.
On the other hand, in 2008, total deposits rose by 27% and reached TL 405.6 billion and
total credits rose by 24.5% and reached TL 284.3 billion. The share of foreign exchange
deposits in total deposits fell from 33.8% in 2007 to 33.2% in 2008.
Annual Report
Graph 3.2. TL/USD Rate Monthly Average and Standard Deviation
Source: CBRT
31
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Table 3.1. Main Economic Indicators
Indicators
GDP*
-TL
-$
- Growth*
- Industrial Production Index (Yearly
Average)
- Unemployment
Public Sector Borrowing Requirement/GNP
Central Government Budget
- Expenditures
- Non-Interest Expenditures
Personnel and SS Premiums
Goods and Service purchases
Current Transfers
Capital Expenditures
Capital Transfers
Credits Extended
- Interest Expenditures
- Income
-Tax income
- Non-tax income
Budget Balance (Deficit)
Primary Balance
Prices
- WPI (Year-end)
- CPI (Year-end)
- FX (Year-end-TL/$)
Debt Stock
- Domestic Debt Stock
- Domestic Debt Stock
- Domestic Debt Stock / GDP
- External Debt Stock
- External Debt Stock / GDP
- Public Sector External Debt Stock
- Debt of Central Bank
- Public Sector External Debt Stock / GDP
-Total Public Sector Debt Stock
-Total Public Sector Debt Stock / GDP
-Average Maturity of Domestic Debt Stock
Foreign Trade
- Imports
- Exports
- Foreign Trade Balance
- Current Account Balance
Monetary Indicators (3)
- Emission
- M1
- M2
- Total Deposits
- TL Deposits
- Foreign Exchange Deposits
- Foreign Exchange Deposits/Total
Deposits
- Credit Stock
- Total Credits/Deposits
- Deposit Banks Credits
- Deposit Banks Credits/Deposits
-Central Bank International Currency
Reserves
Unit
Million TL
Billion USD
%
%
%
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
%
%
TL
Million TL
Billion USD
%
Billion USD
%
Billion USD
Billion USD
%
Billion USD
%
Month
Billion USD
Billion USD
Billion USD
Billion USD
Million TL
Million TL
Million TL
Million TL
Million TL
Million TL
%
Million TL
%
Million TL
%
Billion USD
2006
2007
2008
758,391
529.9
6.9
843,178
648.6
4.7
950,144
741,3
1.1
115.3
114.3
10.5
-2.0
10.6
0.1
13.6
0.8(1)
178,126
132,163
42,887
19,001
49,851
12,098
2,637
5,689
45,963
173,483
137,560
35,924
-4,643
41,320
204,068
154,769
49,356
22,154
63,249
12,915
3,543
3,552
48,732
190,360
152,835
37,525
-13,708
35,045
225,967
175,306
55,522
23,941
70,116
18,441
3,173
4,111
50,661
208,898
168,087
40,812
-17,069
33,592
11.6
9.7
1.4131
5.9
8.4
1.1593
8.1
10.1
1.5218
251,470
175.7
33.5
206.5
39.0
85.3
15.7
16.1
261.0
49.3
24.0
255,310
220.2
33.9
249.0
38.4
89.2
15.8
13.8
249.0
38.4
25.7
274,827
181.7
24.5
276.8
37.4
91.7
13.5
12.4
273.4
36.9
31.9
134.6
93.6
-41.0
-32.1
162.0
115.4
-46.7
-38.2
193.9
140.7
-53.2
-41.6
26,815
72,162
297,481
276,924
171,726
105,199
26,073
77,674
345,028
319,353
211,467
107,886
32,724
83,380
434,205
405,599
270,929
134,670
38.0
33.8
33.2
182,773
66.0
172,167
62.2
228,057
71.4
218,077
68.3
284,310
70.1
268,518
66.2
60.8
71.3
70.1
Source:Turkish Statistical Institute, State Planning Organization, Central Bank of the Republic of Turkey,
Undersecretariat of Treasury, Finance Ministry
* New GDP series, basis year 1998
(1) Estimate (Source: SPO)
Annual Report
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34
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Annual Report
Turkish Capital Markets
At present, Turkish capital markets have the ability to compete at
international level in terms of instruments, institutions and legal
infrastructure and have the privilege to be listed among major financial
markets in the world. Some of Turkish capital markets indicators for 2008
are given in Table 4.1.
Table 4.1. Capital Market Indicators
NUMBER OF CORPORATIONS REGISTERED BY THE CMB
NUMBER OF CORPORATIONS TRADED ON ISE
NUMBER OF CORPORATIONS NOT TRADED ON ISE
MARKET CAPITALIZATION
(TL Million )
($ Million)
NUMBER OF INVESTORS ON THE ISE
NUMBER OF INVESTORS OF MUTUAL FUNDS
NUMBER OF INTERMEDIARY INSTITUTIONS
-Banks
-Brokerage Houses
NUMBER OF MUTUAL FUNDS
-Number of Domestic Mutual Funds
-Portfolio Values
(TL Million)
($ Million)
-Number of Foreign Mutual Funds
-Portfolio Values
(TL Million)
($ Million)
NUMBER OF PENSION FUNDS
-Portfolio Values
(TL Million)
($ Million)
NUMBER OF INVESTMENT TRUSTS
-Portfolio Values
(TL Million)
($ Million)
NUMBER OF REAL ESTATE INVESTMENT TRUSTS
-Portfolio Values
(TL Million)
($ Million)
NUMBER OF VENTURE CAPITAL INVESTMENT TRUSTS
-Portfolio Values
(TL Million)
($ Million)
NUMBER OF PORTFOLIO MANAGEMENT COMPANIES
-Values of portfolios under management
(TL Million)
($ Million)
NUMBER OF INDEPENDENT AUDITING FIRMS
REAL ESTATE APPRAISAL COMPANIES
RATING INSTITUTIONS
570
323
247
182,025
119,698
989,853
3,111,510
145
41
104
340
297
23,979
15,768
80
54
35
121
6,042
3,973
34
553
364
14
4,077
3,289
2
141
93
23
30,738
20,213
97
50
8
35
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Annual Report
OUTSTANDING SECURITIES
Beginning from the 1980’s, increasing public deficits and their mode of financing have
resulted in a rapidly increasing stock of public securities in Turkey. Outstanding public
securities which were $ 4.1 billion at the end of 1986 reached $ 181.7 billion at the end
of 2008. Outstanding private sector securities also increased following the regulatory
restructuring of capital markets in 1980’s and the establishment of the Istanbul Stock
Exchange (ISE). Outstanding private sector securities rose from $ 1.2 billion in 1986-end
to $42.0 billion at the end of 2008.
As a result of faster increasing private sector securities until 1991, the share of outstanding
private sector securities in total rose from 23.2% in 1986 to 43.9% in 1991. In the period
after 1991, however, the speed of increase in outstanding public securities exceeded private
sector securities. Private sector securities (in dollar values) even fell in general until 1998
and this resulted in a substantial retreat in the share of outstanding private sector securities.
From the beginning of 1990’s, a strong “crowding out” effect of public securities has shaped
the developments in the securities market, whereby most of the funds in financial markets
have been used by the public sector.
Table 4.2. Outstanding Securities
Million $
Share in Total (%)
Ratio to GDP (%)
Million TL
Million $
Share in Total (%)
Ratio to GDP (%)
Million TL
Million $
% Change in $
values
Ratio to GDP (%)
TOTAL
Million TL
PRIVATE SECTOR
Year
PUBLIC SECTOR
1999
23,303
43,146
86.0
17.3
3,796
7,028
14.0
2.8
27,099
50,173
14.6
20.2
2000
36,802
54,784
84.3
20.5
6,868
10,224
15.7
3.8
43,670
65,008
29.6
24.3
2001 122,930
85,394
92.1
43.5 10,517
7,306
7.9
3.7 133,447
92,699
42.6
47.2
2002 150,939
92,345
92.0
39.7 13,177
8,062
8.0
3.5 164,115 100,407
8.3
43.1
2003 196,004 140,421
91.6
46.1 18,008
12,901
8.4
4.2 214,012 153,322
52.7
50.3
2004 227,415 169,447
90.0
43.1 25,186
18,766
10.0
4.8 252,601 188,214
22.8
47.9
2005 248,773 180,531
88.8
37.3 31,916
22,673
11.2
4.7 280,017 203,205
8.0
42.0
2006 255,240 177,497
86.1
33.5 41,058
28,552
13.9
5.4 296,299 206,049
1.4
38.9
2007 255,310 220,227
83.0
33.4 52,225
45,049
17.0
6.8 307,535 265,276
28.7
40.2
2008 274,827 181,700
81.1
24.5 63,990
42,048
18.9
5.7 338,817 223,748 -15.6
45.7
Ratios to GDP (1998 based series) are based on US Dollar values.
Source: CMB, UT.
However, with the ongoing economic program accompanied by fiscal discipline, the share
of private sector securities showed a slight increase. The share of private sector securities in
total outstanding securities climbed to 18.9% in 2008, after reaching 17% in 2007.
Annual Report
37
Graph 4.1. Outstanding Securities
Source: CMB, UT
Graph 4.2. Share of Public and Private Sector Securities in Total
Source: CMB, UT
SECURITIES ISSUES REGISTERED WITH THE CMB
The number of corporations registered with the CMB as of the end of 2008 is 570, 323 of
which are listed on the ISE. The CMB has registered the issue and sale of stocks belonging
to 107 corporations (including the shares of 5 investment trusts and 13 real estate investment trusts) having the market value of TL 11.7 billion ($ 7.7 billion) in 2008.
Stock issues have increased year by year and reached TL 3.0 billion ($ 4.8 billion) in 2000.
But, due to the economic crisis, it has shown a pause during 2001-2003 period, and again
increased considerably and amounted to TL 4.0 billion in 2005; TL 10.9 billion ($ 7.7 billion) in 2006; TL 7.8 billion ($ 6.8 billion) in 2007 and TL 11.7 billion ($ 7.7 billion) in 2008
(Table 4.3, Table 4.4). Despite the dominance of the government in the financial markets,
the funds having been transferred to the private sector via stock issues have accumulated
to as much as $ 52 billion since 1986.
38
Annual Report
Table 4.3. Securities Issues Registered with the CMB (TL Thousand)
Years
Stocks*
Mutual Funds
Part. Cert**
Asset
Backed
Sec.
Bank Bills
& Bank
Guaranteed
Bills
Pension
Funds
Shares*
Other
Total
1986
102
0
0
0
60
112
274
1987
187
45
0
0
76
374
682
1988
364
53
0
0
238
482
1,137
1989
972
162
0
0
98
1,072
2,304
1990
4,107
855
0
0
330
981
6,273
1991
4,444
65
0
0
726
1,496
6,731
1992
5,323
92
14,481
0
770
1,864
22,530
1993
9,573
5,355
52,756
0
2,388
1,921
71,993
1994
37,553
2,203
42,299
0
2,025
648
84,728
1995
51,333
4,249
113,928
0
1,300
3,716
174,526
1996
102,202
8,945
41,629
0
2,362
6,823
161,961
1997
305,732
34,330
23,000
0
9,935
5,453
378,450
1998
696,822
131,423
11,000
0
0
2,533
841,778
1999
678,871
176,674
0
0
0
0
855,545
2000
3,007,974
2,767,908
0
0
12,471
3,943
5,792,296
2001
1,684,498
3,830,879
0
0
147,697
67,321
5,730,395
2002
1,597,317
2,405,346
0
0
83,614
107,041
4,193,318
2003
1,749,597
6,078,693
0
40,000
0
13,437
7,881,727
2004
3,826,540
6,572,431
0
297,920
0
0
10,696,891
2005
3,991,870
2,390,989
0
929,187
0
13,000
7,065,859
2006
10,880,574
3,356,209
0
5,900,000
0
150,000
17,058,317
2007
7,863,767
1,848,305
0
450,000
0
380,210
10,542,282
2008
11,696,190
2,370,162
0
12,639,377
0
643,956
27,349,685
* Market value consists of capital increases in cash.
** Par value until 1998, market value for 1998 and afterwards
Annual Report
39
Table 4.4. Securities Issues Registered with the CMB ($ Million)
Years
Stocks*
Mutual
Funds
Part. Cert
**
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
152
219
256
458
1,576
1,064
774
867
1,261
1,122
1,256
2,010
2,670
1,616
4,823
1,375
1,061
1,172
2,690
2,977
7,704
6,783
7,686
0
53
37
76
328
16
13
485
74
93
110
226
504
421
4,438
3,126
1,597
4,071
4,621
1,783
2,388
1,593
1,557
Asset
Backed
Sec.
0
0
0
0
0
0
2,106
4,781
1,420
2,491
511
151
42
0
0
0
0
0
0
0
0
0
0
Pension
Funds
Shares*
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
27
209
693
4,155
388
8,306
Bank Bills
& Bank
Guaranteed
Bills
90
89
167
46
127
174
112
216
68
28
29
65
0
0
20
121
56
0
0
0
0
0
0
Other
167
437
338
505
377
358
271
174
22
81
84
36
10
0
6
55
71
9
0
9
106
328
423
Total
409
797
798
1,086
2,407
1,612
3,277
6,524
2,844
3,816
1,990
2,489
3,226
2,036
9,287
4,676
2,785
5,279
7,520
5,269
12,205
9,092
17,972
* Market value consists of capital increases in cash.
** Par value until 1998, market value for 1998 and afterwards
ISTANBUL STOCK EXCHANGE
Origins of organized securities markets in Turkey dates back to the second half of 19th
century. The first securities market was established during the Ottoman Empire period in
1866 following the Crimean War under the name of “Dersaadet Tahvilat Borsası (Istanbul
Bond Exchange)” which had been regarded as an opportunity by many European investors
who expected high returns on the shattered Ottoman economy. Following the foundation
of the Republic, “Securities and Foreign Exchange Law No. 1447”, launched in 1929 provided a basis for an organized Stock Exchange under the name of “Istanbul Securities and
Foreign Exchange Bourse”.
This new stock exchange had grown in a short period of time and had contributed considerably to the financing of enterprises throughout the country. However, both the 1929 crisis
and the outbreak of the Second World War had severely hampered the Turkish business
environment, which was still at infant stage, and had overshadowed the success of the stock
exchange. The following years, which witnessed a period of rapidly growing industry, had
also recorded increasing number of companies that offered their shares to the public. These
shares faced strong demand partly from institutional investors and mainly from individual
investors.
In the first half of 1980s, the Turkish securities markets underwent serious developments
in terms of setting up both the legal and institutional framework suitable for sound capital
40
Annual Report
movements. The CML was launched in 1981, and the Decree by Law No.91 establishing
the basic principles concerning the foundation and operations of securities exchanges was
launched in October 1983. Then in 1984 the Regulation concerning the foundation and
operations of the securities exchanges was issued in Official Gazette. Following the adoption of related regulations launched in the subsequent period, in December 1985 the ISE
was officially established and started its operations on January 3, 1986. Currently there is
an equities market and a bonds and bills market operating in the ISE.
ISE Equities Market National-100 Index, Trading Volume and Number
of Shares Traded
ISE Equities Market National-100 Index
In a general pattern of cyclical fluctuations, market indices both in terms of New Turkish
Lira and US dollar followed a downward trend from April 2000 to the end of 2002 and
then increased evidently from the beginning of 2003. This upward movement continued
generally in 2004, 2005 and 2006. On monthly basis, ISE 100-Index, being 41,182 in January 2007, continued increasing during the year, as a top of the year level being 57,616 in
October, and closed at 55,538 in December. The ISE 100-Index began with 48,662 in January, 2008 and was above 40,000 points in first five months of the year and then decreased
sharply. In November, 2008 Index was 25,224 points and closed the year with 25,710 points
in average. In 2008, the maximum point was reached in January with 54,708 points and the
minimum points was seen in November with 21,228 points.
Consequently, in 2008, ISE Share Price Index-100 decreased by 53% in TL terms and 62%
in US dollar terms. (Graph 4.3). In 2008, Industrials Index decreased by 51% (63% in US
dollar terms), Financial Index by 55% (65% in US dollar terms) and Services Index by 35%
(51% in US dollar terms).
ISE Trading Volume and Number of Shares Traded
Trading volume on the ISE had reached its peak value in 2000 with TL 111.2 billion (US
Dollar 181.9 billion) after recording only TL 9 thousand (US Dollar13 million) in 1986,
the first year of its operations. November 2000 and February 2001 crises led to a decrease
in the trading volume, but then with considerable increases the trading volume reached to
TL 146.6 billion (US Dollar100.2 billion) in 2003, and TL 208.4 billion (US Dollar 147.8
billion) in 2004. In 2005 the total trading volume in the ISE equities market was TL 269.9
billion (US Dollar 201.8 billion), in 2006 the total trading volume in the ISE equities market was TL 325.1 billion (US Dollar 229.6 billion) and in 2007 total trading volume was TL
387.7 billion (US Dollar 300.8 billion). In 2008, average daily trading volume was TL 1,325
million (US Dollar 1,041 million) and total trading volume was TL 332.6 billion (US Dollar
261.3 billion). This figure indicates a decrease of 14.2% points in TL terms and 13% points
in Dollar terms over the previous year.
In 2008, a total nominal value of TL 114.8 billion equities have been traded, which amounts
to nominal TL 457.3 million on daily average basis (Table 4.5).
Graph 4.3. ISE-100 Index and Trading Volume
Annual Report
41
42
Annual Report
Table 4.5. Main Indicators for the ISE Equities Market
Trading Volume
Year
No. of
Working
Days
(TL
Million)
Nominal
Daily Avg.
Value of
Trading
Stocks Traded
Volume
($ Million) (TL Thousand) (TL Million)
Daily Avg.
Nominal
Value of
Stocks
Traded
(TL
Thousand)
No. of
Contracts
(Thousand)
ISE Index
(*)
(198601=100)
1990
247
15
5,854
1,537
0.06
6
766
32.56
1991
247
35
8,502
4,531
0.14
18
1,446
43.69
1992
251
56
8,567
10,285
0.22
41
1,682
40.04
1993
246
255
21,770
35,249
1
143
2,815
206.83
1994
253
651
23,203
100,062
3
396
5,086
272.57
1995
251
2,374
52,357
306,254
9
1,220
11,667
400.25
1996
247
3,031
37,737
390,924
12
1,583
12,446
975.89
1997
252
9,049
58,104
919,784
36
3,650
17,639
3,451.0
1998
248
18,030
70,396
2,242,531
73
9,042
21,571
2,597.9
1999
236
36,877
84,034
5,823,858
156
24,677
25,785
15,208.8
2000
246
111,165
181,934
11,075,685
452
45,023
32,427
9,437.2
2001
248
93,119
80,400
23,938,149
375
96,525
31,380
13,782.7
2002
252
106,302
70,756
33,933,251
422
134,656
28,967
10,369.9
2003
246
146,645
100,165
59,099,780
596
240,243
29,994
18,625.0
2004
249
208,423
147,755
69,614,651
837
279,577
41,508
24,971.7
2005 **
254
269,931
201,763
81,099,503
1,063
319,289
43,943
39,777.7
2006
250
325,131
229,642
91,634,552
1,301
366,538
45,491
39,117.5
2007
252
387,777
300,842
116,824,185
1,539
463,588
48,340
55,538.1
2008
251
332,605
261,274
114,793,157
1,325
457,343
45,945
26,864.07
* For the period after Jan 1991, composite index based on closing prices.
** From January 14, 2005 onwards, Exchange Traded Funds (ETFs) started to be traded on National Market.
Source: ISE
When the year 2008 is analyzed on a monthly basis; the trading volume which was TL
34,738 million in January, was decreased by 34% in June to TL 22,819 million and then
moved between TL 23 – 30 billion till December. In December the trading volume decreased with 50% compared to January with TL 17,353 million (Graph 4.3). The lowest
trading volume was in December with TL 17,353 million with a 32% decrease from previous month.
Main Indicators for Corporations with Shares Listed on the ISE
The number of corporations with shares traded on the ISE equities market was 80 by the
end of 1986, the year in which the ISE was established. By the end of 2008, there are 284
corporations traded in the National Market, 18 corporations in the Second National Market, 3 corporations in the New Economy Market and 12 corporations in the Watch List
Market, making a total number of 317. Total nominal capital of these corporations is TL
62.1 billion (Table 4.6). During 2008, there have been 2 primary IPOs, and the total nominal amount of these issues is TL 529,950,000.
Market capitalization, which was only TL 0.7 million (US Dollar 938 million) by the end
of 1986, reached TL 182.025 billion (US Dollar 120 billion) at the end of 2008. For 2008
price/earnings ratio and turnover ratio are calculated as 5.76 and 128.4% respectively (Table 4.6).
Annual Report
43
Table 4.6. The Main Indicators for Corporations with Shares Listed on the ISE
Corporations with Shares Traded on the ISE
Total
Market
Nominal
Capitalization
No. of
Capital (1)
No. of
Total
Year Corpora(TL
CorporaNominal
(TL Thousand)
tions
Thousand)*
tions
Capital (TL
($ Million)
Traded Thousand )*
Price/
Earnings
Ratio
(%)
(2)
1990
916
14,476
110
9,528
55
18,737
Turnover
Ratio
(%)**
(3)
24.0
43.3
1991
1,092
32,304
134
22,490
79
15,564
15.9
52.9
1992
1,238
49,139
145
33,252
85
9,922
11.4
68.8
1993
1,284
71,286
160
46,758
546
37,824
25.8
20.7
1994
1,204
109,239
176
97,200
836
21,785
24.8
16.7
94.2
1995
922
223,804
205
191,249
1,265
20,782
9.2
7.7
226.0
1996
788
424,531
228
361,320
3,275
30,797
12.2
10.9
133.5
1997
743
909,295
258
783,234
12,654
61,879
24.4
19.5
113.6
1998
686
1,885,946
277
1,669,956
10,612
33,975
8.8
8.1
155.0
1999
319
3,615,344
285
3,392,829
61,137
114,271
37.5
34.1
102.8
2000
287
6,276,522
315
6,866,817
46,692
69,507
16.8
16.1
206.2
2001
278
9,959,472
310
10,515,933
68,603
47,689
108.3 824.4
161.5
2002
262
12,408,716
288
13,176,817
56,370
34,402
195.9
27.0
170.1
2003
265
16,515,936
285
18,008,193
96,073
69,003
14.5
12.3
192.4
2004
275
24,379,916
297
25,186,443
132,556
98,073
14.2
13.3
182.3
2005
282
31,243,840
304
31,916,222
218,318
162,814
17.2
19.4
153.9
2006
291
40,262,161
316
40,925,551
230,038
163,775
22.0
14.9
145.0
2007
292
50,947,112
319
51,584,747
335,948
289,986
12.2
12.0
137.0
2008
317
62,069,556
317
62,069,556
182,025
119,698
5.55
5.76
128.4
80.9
(1) Total Nominal Capital of Corporations with shares listed on the ISE.
(2) Total Market Value/ Total of the last two semi-annual net profits.
(3) Total Market Value/ Total of the last four quarterly net profits.
(*) Total Nominal Capital includes the most recent capital increases, for which the additional listing procedures are
not complete.
(**)Trading Volume/(Market capitalization at the beginning of the year+ at the end of the year)/2
Source:ISE
Total market capitalization in accordance with price movements has showed a very
fluctuating pattern over the years. Total market capitalization which was US Dollar 18.7
billion in 1990, fell down to US Dollar 9.9 billion in 1992. Similarly from US Dollar 114.2
billion in 1999 it fell down to US Dollar 34.4 billion in 2002, then with increases reached
US Dollar 289.9 billion by the end of 2007 but then decreased to US Dollar 119.7 billion in
2008(Graph 4.4).
Source: ISE
Graph 4.4. Market Capitalization ($ Billion)
44
Annual Report
Annual Report
45
When annual changes in market capitalization are analysed, it is seen that market
capitalization had recorded the highest increase in dollar terms in 1999, with 236%.
Following this increase, market capitalization decreased by 39%, 31% and 27.9% in 2000,
2001 and 2002 respectively and then increased by 100.6% in 2003, 42.1% in 2004, 66% in
2005, 0.6% in 2006, 77% in 2007, but decreased by 59% in 2008.
Market capitalization in TL terms increased by 476.1% in 1999, decreased by 23.6% in
2000, increased by 46.9% in 2001, decreased by 17.8% in 2002, increased by 70.4% in 2003,
38% in 2004, 64.7% in 2005, 5.4% in 2006 and 46% in 2007. In 2008 market capitalization
decreased by 53% relative to the previous year (Graph 4.5).
Graph 4.5. Percentage Change in Market Capitalization
Source: ISE
Equities Traded by Foreign Investors
Foreigners’ transactions in stocks fell considerably in 2001 due to financial crises of
November 2000 and February 2001, in 2002 followed a trend similar to 2001 and increased
as from 2003. In 2005 the total trading volume by foreigners is US dollar 81.1 billion which
means an increase of 117% compared to 2004. Analysis of foreign purchases and sales in
net shows that foreigners sold 3,134 million US dollar in 2000, purchased US dollar 509
million in 2001, sold US dollar 15 million in 2002, purchased US dollar 1,010 million in
2003, purchased US dollar 1,430 million in 2004, purchased US dollar 4,086 million in
2005, purchased US dollar 1,145 million in 2006. Foreigners purchased US dollar 74,332
million, sold US dollar 69,800 million and became net buyers of US dollar 4,532 million
during the period of January-December 2007. In 2008 foreigners purchased US Dollar
69,569 million and sold US Dollar 72,557 million which makes a net sell of US Dollar 2,988
million (Table 4.7).
As the accounts of foreigners and residents (figures are obtained from the Central
Registration Institution after the dematerialization process is started on 25.11.2006
while they are obtained from ISE Settlement and Custody Bank Inc. before this date) are
concerned, the ratio of equities owned by foreign customers to total equities in custody was
40.9% in 2000. This ratio increased to 49.2% in 2001, decreased to 43% in 2002, increased
to 51.5% in 2003 and to 54.7% in 2004. With an upward trend this ratio was 66.3% by the
end of 2005. The ratio of equities owned by foreign customers to total equities in custody
46
Annual Report
is 65.3% by the end of 2006 and 72.3% by the end of 2007. In 2008 this ratio decreased to
57.32% (Table 4.7, Graph 4.6).
Graph 4.6. Securities Held in Custody for Foreigners
Source: ISE
Table 4.7. Securities Balance of Foreigners and Trading Volume
Foreigners’
Securities in
Custody
($ Million)
Ratio of
Foreigners’
to Total
Securities in
Custody (%)
Purchases
Sales
( $ Million)
($ Million)
2000
7,404
40.9
15,138
18,272
2001
5,635
49.2
6,324
5,815
2002
3,450
43.0
6,427
6,442
2003
8,690
51.5
9,173
8,163
2004
15,283
54.7
19,399
17,969
2005
33,812
66.3
42,594
38,508
2006
49,313
65.3
44,833
43,688
2007
70,213
72,3
74,332
69,800
2008
42,152
57.32
69,568
72,557
January
55,358
58.39
8,212
9,135
February
57,331
58.39
7,213
7,063
March
46,492
57.59
6,534
6,877
April
51,185
57.69
6,155
6,073
May
51,368
57.33
6,898
7,085
June
43,657
58.88
5,543
5,426
July
57,834
59.09
8,431
7,803
August
53,499
58.53
4,458
5,731
September
45,893
58.06
7,207
7,466
October
27,877
54.88
4,150
4,963
November
25,628
53.33
2,817
3,147
December
27,331
53.33
1,946
1,784
Source: Takasbank - CRI- ISE
Annual Report
47
Bonds and Bills Market Transactions
In the Bonds and Bills Market of the ISE, the total transaction volume, involving outright
and repo/reverse repo transactions, after reaching the record level as TL 720 billion ( US
Dollar 1.1 trillion) in 2000, in 2001 and 2002 experienced a real slowdown. In 2002, total
trading volume in US Dollar fell by 17.5% and amounted to US Dollar 548 billion. In 2003,
trading volume increased by 49.6% and amounted to TL 1,254 billion, while in dollar
terms it increased by 54.4% and amounted to 856 billion. The increase in trading volume
that began in 2003 continued afterwards and in 2004 realized TL 1,924 billion, which
in dollar terms amounts to 1.4 trillion, in 2005 realized 2,340 billion TL which in dollar
terms amounts to 1.7 trillion, in 2006 TL 2,921 billion which in dollar terms amount to 2
trillion, in 2007 TL 2,935 billion which in dollar terms amount to 2.3 trillion and in 2008
TL 3,236 billion which in dollar terms amount to 2.5 billion. The 2008 figures indicate an
increase of 10.3% and 8.7% over the previous year in TL and US dollar terms respectively
(Table 4.8).
Daily average trading volume increased in dollar terms by 11.1% in 2008, and realized US
Dollar 10.014 billion. On a monthly basis, daily average trading volume showed fluctuations over the months, and realized between US Dollar 9 billion and US Dollar 10.5 billion
with exception of US Dollar 11.166 billion in July (Graph 4.7). A sharp decrease realized in
the end of the year and volume decreased to US Dollar 8.315 billion. With respect to relative shares, repo transactions constituted 90.5% of all transactions.
In 2008, trading volume of transactions executed off the exchange and registered to the
exchange was TL 208.028 billion (US Dollar 161 billion) for outright transactions and TL
472.331 billion (US Dollar 366.1 billion) for repo transactions. Daily average of the off-theexchange transactions showed fluctuations over the months, reached its highest level in
April and lowest level in November (Graph 4.7).
Table 4.8. Trading Volume for the ISE Bonds and Bills Market
ISE BONDS AND BILLS MARKET
Outright Transactions
2003
2004
2005
2006
2007
TL Billion
213
373
481
382
364
2008
301
$ Billion
144
263
359
270
279
239
Repo Transactions
TL Billion
1,041
1,551
1,860
2,539
2,571
2,935
$ Billion
702
1,090
1,387
1,770
1,993
2,274
Total
TL Billion
1,254
1,924
2,340
2,921
2,935
3,236
$ Billion
846
1,353
1,747
2,040
2,272
2,513
DAILY AVERAGE
TL Billion
5.0
7.6
9.2
11.6
11.7
12.89
$ Billion
3.4
5.4
6.9
8.1
9.0
10.01
Source: ISE
48
Annual Report
Annual Report
49
Graph 4.7. Bonds and Bills Daily Average Trading Volume on Exchange and
Off-the Exchange
Source: ISE
COLLECTIVE INVESTMENT SCHEMES
Mutual Funds
Two different types of mutual funds, Type A and Type B, exist in Turkish capital markets.
Type A mutual funds are required to invest at least 25% of their assets in equities that
are issued by Turkish companies, whereas mutual funds that have no such obligation are
classified as Type B. These two main groups of funds are subdivided into 17 categories of
mutual funds which are classified according to the financial instruments the fund portfolio
consists of. These are Notes and Bonds, Equity, Sector, Affiliate Companies, Group, Foreign
Securities, Gold, Precious Metals, Variable, Balanced/Mixed, Liquid, Index and Exchange
Traded Funds, Funds of Funds, Capital Guaranteed, Capital Protected Funds, Hedge Funds
and Private Funds.
There are 340 mutual funds in Turkey as of 2008-end. Among the mutual funds, variable
(121), liquid funds (50) and notes and bonds funds (48) are the most pervasive kinds such
that 64.4% of total mutual funds are formed by these three kinds of funds. (Graph 4.8)
50
Annual Report
Graph 4.8. Numerical Distribution of A and B Type Mutual Funds
In 2008, the total portfolio value of mutual funds, the first of which was established in 1987,
decreased by 9.5% (43% in USD terms) from TL 26.2 billion to TL 23.7 billion ($15.6 billion) compared to the previous year. Besides, there are 80 foreign mutual funds whose total
value of participation certificates in circulation in Turkey is $ 34 million as of 2008-end.
In 2008, the portfolio value of A-Type funds decreased by 35% compared to the last year’s
figure, from TL 917 million to TL 598 million ($393 million) while the portfolio value of
B-Type mutual funds decreased by 8.7% from TL 25.3 billion to TL 23.1 billion ($ 15.3
billion) (Graph 4.9, Graph 4.10).
Graph 4.9. A and B Type Mutual Funds’ Portfolio Value in TL Terms
Annual Report
51
Graph 4.10. A and B Type Mutual Funds’ Portfolio Value in USD Terms
A- Type Mutual Funds
As of the end of 2008 in the Turkish capital markets, there are 136 A-Type funds with the
total fund value of TL 597.7 million. Regarding the A-Type funds, variable funds takes the
first place with 39.4 %, the second place is index funds with 17.5%, third place is balanced
funds with 16.1% and equity funds follows them with 15.3% (Graph 4.11). The share of
equities in the portfolio composition of A-Type funds, increased from 32% in 1996 to 58%
in 2008 (Table 4.9).
Graph 4.11. Kinds of A-Type Mutual Funds
52
Annual Report
Year
Public Debt
Foreign
Securities
Reverse Repo
Corporate
Bonds
Equities
ISE Money
Market
Other
Table 4.9. Portfolio Composition of A-Type Mutual Funds (%)
1996
67.63
0.00
0.00
0.00
32.36
0.00
0.01
(Thousand
TL)
17,956
1997
17.20
0.00
43.54
0.00
39.08
0.00
0.19
69,435
338
1998
15.65
0.20
44.54
0.00
39.56
0.00
0.06
71,879
229
1999
13.74
0.00
30.84
0.00
55.40
0.00
0.02
283,443
522
2000
11.33
0.15
42.70
0.00
45.73
0.00
0.10
520,294
770
2001
15.78
0.01
22.44
0.00
61.77
0.00
0.00
568,737
393
2002
13.11
0.07
32.37
0.00
54.46
0.00
0.00
434,884
265
2003
17.57
0.12
18.36
0.00
63.95
0.00
0.00
743,863
552
2004
20.44
0.39
10.87
0.00
68.78
0.51
0.00
780,370
583
2005
15.83
0.54
12.29
0.00
70.44
0.88
0.02
1,033,149
770
2006
17.88
0.70
15.53
0.00
64.76
0.85
0.28
831,518
591
2007
16.03
0.27
14.96
0.55
68.16
0.28
0.30
919,383
793
2008
28.18
0.17
13.44
0.00
58.03
0.14
0.04
595,000
393
Total Value
(Million
USD)
166
Source: CMB
B Type Mutual Funds
As of the end of 2008, in the Turkish capital markets, there are 218 B-Type funds with the
total fund value of TL 23.1 billion. Among B-Type funds the most pervasive kind is variable
funds with 30.7% share, second place is liquid funds with 22.9% share and followed by
notes and bond funds with 22% share. In terms of portfolio value, liquid funds with 87%
(approximately TL 20.3 billion) have the biggest share (Graph 4.12).
Graph 4.12. Kinds of B-Type Mutual Funds
Annual Report
53
The portfolios of B-Type funds have heavily consisted of repo and government securities
in recent years. As of the end of 2008, the share of government bonds and T-Bills in the
portfolio has been 43.84% while the share of reverse repo has been 51.17% (Table 4.10).
When the portfolio composition of both types of funds are considered together, it is seen
that, as of 2008, 50.24% of the portfolios consisted of reverse repo, 43.46% consisted of
government bonds and T-Bills and 1.51% consisted of equities (Table 4.11).
Table 4.10. Portfolio Composition of B-Type Mutual Funds (%)
Year
Public
Debt
Foreign Reverse Corporate
ISE Money
Equities
Securities Repo
Bonds
Market
Total Value
(TL Million)
($ Million)
Other
1996
97.23
1.68
0.00
0.08
0.95
0.00
0.06
100
930
1997*
27.66
4.65
63.79
0.00
1.34
0.00
2.56
121
587
1998
40.14
0.32
59.09
0.00
0.33
0.00
0.13
275
876
1999
29.72
0.21
68.92
0.00
0.88
0.00
0.28
936
1,725
2000
13.24
0.20
86.36
0.00
0.17
0.00
0.04
1,417
2,100
2001
35.27
0.12
64.50
0.00
0.05
0.00
0.06
4,187
2,895
2002
51.04
0.10
48.81
0.00
0.03
0.00
0.02
8,912
5,426
2003
68.90
0.09
30.97
0.00
0.04
0.00
0.00
19,114
13,442
2004
68.71
0.00
28.32
0.00
0.06
2.91
0.00
23,663
17,726
2005
72.26
0.01
26.53
0.00
0.05
1.15
0.00
28,340
21,120
2006
39.07
0.06
59.18
0.00
0.26
1.41
0.01
21,180
15,068
2007
38.69
0.05
57.78
0.08
0.16
3.07
0.25
25,461
21,963
2008
43.84
0.04
51.17
0.00
0.08
4.41
0.46
23,151
15,213
* Since that year reverse repos are separated from government bonds and T-Bills
Source: CMB
Table 4.11. Portfolio Composition of A and B- Type Mutual Funds (%)
Year
Public
Debt
1996
92.74
Foreign Reverse Corporate
Equities
Securities Repo
Bonds
1.43
0.00
0.07
5.71
ISE
Money
Market
0.00
Other
0.05
Total Value
(TL Million)
($ Million)
118
1,088
1997
23.84
2.95
56.39
0.00
15.12
0.00
1.69
190
925
1998
35.07
0.29
56.08
0.00
8.45
0.00
0.11
347
1,105
1999
26.01
0.16
60.07
0.00
13.55
0.00
0.22
1,219
2,247
2000
12.72
0.18
74.63
0.00
12.40
0.00
0.06
1,938
2,870
2001
32.94
0.11
59.47
0.00
7.43
0.00
0.05
4,756
3,288
2002
49.28
0.10
48.04
0.00
2.56
0.00
0.02
9,347
5,691
2003
66.98
0.09
30.50
0.00
2.43
0.00
0.00
19,858
13,995
2004
67.17
0.02
27.77
0.00
2.22
2.83
0.00
24,444
18,309
2005
70.27
0.03
26.03
0.00
2.52
1.14
0.00
29,374
22,892
2006
38.27
0.09
57.53
0.00
2.70
1.39
0.02
22,011
15,659
2007
37.90
0.05
56.29
0.00
2.53
2.97
0.25
26,381
22,756
2008
43.46
0.04
50.24
0.00
1.51
4.30
0.45
23,746
15,603
Source: CMB
54
Annual Report
Foreign Mutual Funds
As of 2008-end, the number of foreign mutual funds whose participation certificates are
registered with the Board is 80. Among these funds, USD based funds have a net asset value
of US $ 15,236 million; Euro based funds have a net asset value of € 17,325 million. On the
other hand, the total value of participation certificates in circulation in Turkey is approximately $ 34 million ($ 22 million and € 9 million).
Pension Funds
Individual Retirement Savings and Investment System was put into place in 2003. As of the
end of 2008, the number of pension funds offered to public is 121. The total value of these
funds is TL 6,368 million. Among the pension funds the most pervasive kind, with 33,1%
share, is the funds investing in government debt instruments followed by variable funds,
liquid funds and equity funds (Graph 4.13).
Graph 4.13. Kinds of Pension Mutual Funds
Exchange Traded Funds
The Communiqué on Principles Regarding Exchange Traded Funds was published on the
Official Gazette dated 13 April 2004. As the end of 2008, nine exchange traded funds have
been sold to public and put into ISE Fund Market. The total value of these funds is TL 195
million, and six of them are based on various stock exchange indexes, one of them is based
on gold index and two of them are based on notes and bonds indexes (Table 4.12).
Annual Report
55
Table 4.12. The Current State of Exchange Traded Funds
Founder
1 AKBANK T.A..
Total Value
(Thousand
TL)
Name of Fund
S&P/ IFCI TÜRK‹YE A TYPE
1,280,584
2 B‹Z‹M MENKUL DE⁄ERLER A.. DOW JONES DJIM TÜRK‹YE A TYPE
4,972,046
3 F‹NANSBANK A..
DOW JONES ‹STANBUL 20 A TYPE
26,733,023
NON FINANCIAL NFIST ‹ST. 20 A TYPE
SME SMIST ‹ST. 25 A TYPE
‹STANBUL GOLD B TYPE GOLD
FTSE ‹STANBUL BOND FBIST B TYPE
790,794
1,203,459
33,344,098
106,125,620
8
‹ YATIRIM MENKUL DE⁄ERLER
DOW JONES TURKEY EQUAL 15 A TYPE
A..
9
‹ YATIRIM MENKUL DE⁄ERLER
IBOXX TURKEY INDEX BOND B TYPE
A..
14,976,708
5,140,479
TOTAL
194,566,811
According to the Communiqué, an exchange traded fund is an asset established for
managing a portfolio with principles of risk diversification and fiduciary ownership, whose
shares are traded in the stock exchange, whereby authorized participants that directly
participate in the creation process by delivering securities and cash that reflect the portfolio
composition of the fund and receiving participation certificates in return or authorized
participants deliver the participation certificates in the amount of at least one creation
unit to the custodian and receive securities and cash corresponding to the participation
certificates.
Funds of Funds
Funds of Funds are investment funds that uses an investment strategy of holding a portfolio
of other investment funds in order to benefit returns from various management strategies
of funds. As of 2008-end total value of funds of funds is amounted TL 10,3 million (Table
4.13).
Table 4.13. The Current State of Funds of Funds
Founder
Title of Fund
Total Value
Date of Public
(Thousand
Offering
TL)
SENTEZ A TYPE FUNDS OF FUNDS
2,626
28.01.2008
SENTEZ B TYPE FUNDS OF FUNDS
3,838
28.01.2008
3 YAPI ve KRED‹ BANKASI A.. B TYPE WORLD FUNDS OF FUNDS
3,883
10.12.2007
TOTAL
These funds have started to create their portfolios at the end of 2007.
10,347
56
Annual Report
Guaranteed Funds
“Guaranteed Funds” are structured to secure the whole or a part of the initial capital of
an investment returned or generate a certain amount of return at a certain maturity date
or dates based on an appropriate investment strategy and the guarantee of a guarantor in
accordance with the principles of prospectus. By the end of 2008 there are three guaranteed
funds performing in the Turkish Capital Markets.
Protected Funds
“Protected funds” are structured in an appropriate investment strategy with best effort to
have the whole or a part of the initial capital of an investment returned or generate a certain amount of return at a certain maturity date or dates to the investor in accordance with
the principles of prospectus. The first establishment and public offering of protected fund
has been realized in 2008. By the end of 2008, the total value of 26 protected funds is TL
71.3 million.
Hedge Funds
“Hedge Funds” are launched only for qualified investors and these funds have been introduced to Turkish capital markets in 2008. By the end of 2008, the total value of 5 hedge
Funds is TL 6.9 million.
Investment Trusts
Three types of investment trusts operate in Turkey, which are A-Type and B-Type Securities
Investment Trusts, Real Estate Investment Trusts and Venture Capital Investment Trusts.
Securities Investment Trusts
There are two types of securities investment trust in Turkey which are A-Type and
B-Type.
By the end of 2008 the total value of 34 investment trusts is TL 551.3 million. The portfolios
of these companies are composed of corporate securities (35.67%), government bonds and
T-Bills (41.43%) reverse repos (21.61%) and the rest is foreign securities and some other
investment instruments.
As of the end of 2008, there are 30 A-Type investment trusts with TL 400 million paid in
capital, TL 470 million market capitalizations and TL 530 million net asset value, in the
Turkish capital markets (Table 4.14).
Annual Report
57
Table 4.14. The Current State of A-Type Investment Trusts
A-Type
Investment Trusts
Date of
Establishment
Registered
Capital
(TL Thousand)
Paid in
Capital
(TL
Thousand)
Net Asset
Value* (TL
Thousand)
Market Value
(TL Thousand)
1 AK
18.09.1998
40,000,000
18,000,000
37,979,899
37,979,892
2 ALTERNAT‹F
14.09.1995
50,000,000
20,400,000
28,601,211
26,201,923
3 ATA
20.03.1997
50,000,000
7,946,201
7,177,905
7,177,907
4 ATLANT‹S
19.08.1994
20,000,000
6,000,000
3,570,014
3,570,012
5 ATLAS
22.10.1993
10,000,000
3,432,000
3,176,238
3,176,237
6 AVRASYA
01.03.1996
10,000,000
6,000,002
2,863,870
2,863,873
7 BAKENT
20.01.2006
6,000,000
6,000,000
4,735,044
6,347,754
8 BUMERANG
17.05.1995
10,000,000
6,000,000
5,639,169
5,639,166
9 DEN‹Z (1)
05.05.1995
25,000,000
14,985,000
40,236,516
40,236,508
10 ECZACIBAI
15.06.1998
25,000,000
14,000,000
22,017,782
22,017,786
11 EGEL‹ & CO.
02.09.2004
20,000,000
20,000,000
9,592,492
11,285,280
12 EURO
14.03.2006
50,000,000
5,000,000
5,428,592
5,428,590
13 EVG
22.03.2005
5,000,000
2,500,000
2,331,920
2,331,920
14 F‹NANS
17.11.1995
50,000,000
15,000,000
16,572,537
13,810,455
15 GARANT‹
09.07.1996
100,000,000
18,750,000
20,087,306
16,411,200
16 GED‹K
12.03.1998
10,000,000
6,930,000
5,934,470
5,934,471
17 HEDEF
22.03.2005
50,000,000
4,250,000
3,100,490
3,100,490
18 ‹NFO
22.09.2003
10,000,000
4,500,000
3,084,723
3,084,723
19 ‹
16.08.1995
135,000,000
39,375,000
179,756,131
52,560,270
20 METRO
07.03.2006
20,000,000
3,000,000
1,311,655
1,311,654
21 MUSTAFA YILMAZ
05.08.1994
10,000,000
5,000,000
2,725,718
2,725,720
22 OYAK
25.04.2007
50,000,000
10,000,000
8,349,234
8,349,230
23 TAC‹RLER
14.02.2006
20,000,000
5,000,000
3,868,600
3,868,600
24 TAÇ
22.08.1994
20,000,000
1,995,000
7,937,225
4,398,546
25 TAKS‹M
16.02.2006
5,000,000
2,700,000
1,076,465
1,076,466
26 TSKB
10.11.2000
100,000,000
100,000,000
18,134,382
100,746,600
27 VAKIF
13.06.1991
15,000,000
5,000,000
11,598,822
7,732,550
28 VARLIK
10.02.1998
50,000,000
6,000,000
9,389,524
6,240,960
29 YAPI KRED‹
02.10.1995
50,000,000
31,425,000
53,878,865
53,878,854
YATIRIM
30
F‹NANSMAN
31.12.1998
50,000,000
10,000,000
10,702,327
10,702,330
1,066,000,000
399,188,203
530,859,126
470,189,966
TOTAL
(*) NET ASSETS=Portfolio Value+Liquid Assets+Accounts Receivable-Accounts Payable
(1) The title of Demir Investment Trust has been changed to Deniz Investment Trust
Source: CMB
58
Annual Report
As of the end of 2008, 4 B-Type Investment Trust is operating (Table 4.15).
Table 4.15. The Current State of B-Type Investment Trusts
B-Type
Investment
Trusts
Date of Estab.
Registered
Capital
(TL Thousand)
Paid in
Capital
(TL
Thousand)
Net Asset
Value (*) (TL
Thousand)
Market Value (TL
Thousand)
1 Euro
03.03.2006
10,000,000
8,940,000
10,035,060
10,035,061
2 ‹NFOTREND
23.12.2004
15,000,000
5,000,000
5,292,314
5,292,315
3 MARBA
29.09.2006
20,000,000
3,000,000
3,798,062
3,798,063
4 MERKEZ
13.07.2006
30,000,000
3,000,000
2,798,132
2,798,133
75,000,000
19,940,000
21,923,568
21,923,572
TOTAL
(*) NET ASSETS=Portfolio Value+Liquid Assets+Accounts Receivable-Accounts Payable
Source: CMB
Real Estate Investment Trusts
There are 14 real estate investment trusts in Turkey which have a total net asset value of
TL 4,076 million and market capitalization of TL 4,034 million. The portfolio of these real
estate investment trusts whose shares are listed on the ISE is composed of real estate investments (88.8%), government bonds and T-Bills (10%), reverse repos (1.06%) and real
estate projects (0.14 %). Detailed information on real estate investment trusts is given in
Table 4.16.
Table 4.16. The Current State of Real Estate Investment Trusts
Real Estate
Investment Trusts
Date of
Estab.
Registered
Paid in Capital
Capital
(TL Thousand)
(TL Thousand)
Net Asset
Value (TL
Thousand)
Market Value (TL
Thousand)
1
AKMERKEZ
15.02.2005
27,400,000
13,700,000
923,465,001
488,953,000
2
ALARKO
31.07.1996
20,000,000
5,490,100
219,887,712
85,206,352
3
ATAKULE
21.08.2000
100,000,000
63,000,000
174,009,246
59,850,000
4
EGS
01.10.1997
75,000,000
50,000,000
20,825,463
27,000,000
5
DO⁄U-GE
25.07.1997
500,000,000
93,780,000
135,684,972
56,268,000
6
‹
06.08.1999
2,000,000,000
450,000,000
1,160,882,173
405,000,000
7
NUROL
23.12.1997
50,000,000
10,000,000
48,227,099
15,500,000
8
ÖZDER‹C‹
06.08.1999
100,000,000
7,800,000
10,974,000
7,176,000
9
PERA*
03.09.1997
200,000,000
96,000,000
102,863,000
51,840,000
10
SA⁄LAM
06.09.2006
50,000,000
14,000,000
68,142,864
68,320,000
11
S‹NPA
26.11.1996
500,000,000
136,974,510
953,597,847
256,142,334
12
VAKIF
24.12.1996
100,000,000
18,480,000
88,343,309
2,412,500,000
13
Y&Y
03.06.2005
400,000,000
33,162,530
24,877,819
24,208,647
14
YAPI KRED‹
KORAY
24.04.2007
100,000,000
40,000,000
144,843,406
76,800,000
4,222,400,000
1,032,387,140
4,076,623,911
4,034,764,333
Total
(*) Pera Real Estate Investment Trust which was transformed from Pera Securities Investment Trust.
59
Annual Report
Venture Capital Investment Trusts
As of the end of 2008, there are 2 venture capital investment trusts in Turkey whose total
portfolio value is TL 170.2 million ($ 111.8 million). The portfolio of İş Venture Capital
Investment Trust, which is about TL 165.8 million, is composed of venture capital investments (54%) and securities (46%) of, whereas the 100% of the TL 4.4 million portfolio value of Vakıf Venture Capital Investment Trust is composed of money market instruments.
PORTFOLIO MANAGEMENT COMPANIES
As of the end of 2008, there are 23 portfolio management companies in Turkey. The total
value of portfolios managed by these companies is TL 30,738 million. 77% of the portfolios
managed belong to individuals, 16% belongs to institutional investors and 7% belongs to
corporations (Table 4.17). In terms of $, the portfolio value decreased to $ 20,209 million
in 2008 from $ 25,061 million in 2007, with decrease of 20%.
Table 4.17. The Current State of Portfolio Management Companies
Portfolio
Management
Companies
1 AK
Assets Under Management
(TL Million)
Number of Clients
Indiv.
Inst.
13
Corpo.
38
10
Total
Indiv.
61
Inst.
51.3
Corpo.
4,815.5
Total
171 5,037.9
2 ATA
0
10
0
10
0
95.9
0
95.9
3 FORT‹S
ECZACIBAI4
UBP
4
19
1
24
5.1
496.7
1.7
503.6
154
9
1
164
19.9
67.6
3.3
90.9
5 DEN‹Z
0
12
0
12
0
347.6
0
347.6
960
29
47
1,036
42.3
768.6
25.6
836.6
7 GARANT‹
37
30
17
84
135.4
4,435.7
160.7
4732
8 GLOBAL
52
6
1
59
2.4
11.8
0.7
15
6 F‹NANS
9 UNICORN
10 ERGO‹SV‹ÇRE
11 ‹
4
5
0
9
0.8
1.3
0
2.1
165
10
34
209
9.7
22.9
122
154.7
2
41
12
55
31.0
6,462.1
502.2 6,995.3
215
46
13
274
242.7
5,803.5
161.9 6,208.2
13 ING
58
15
6
79
9.3
860.5
14 TEB
55
27
10
92
80.3
978.9
15 VAKIF
0
11
1
12
0
454.3
16 Z‹RAAT
0
22
1
23
0
1,757.9
17 BENDER
3
0
0
3
3.2
0
18 HSBC
0
13
0
13
0
1,111.4
ATEAN
19
AYBARS
0
0
0
0
0
0
0
0
20 ASHMORE
0
3
0
3
0
32.0
0
32
STANDARD
21
ÜNLÜ
0
3
0
3
0
11.4
0
11.4
12 YAPI KRED‹
2.2
872.1
86.8 1,146.1
312.3
766.7
9.9 1,767.9
0
3.2
0 1,111.4
22 GED‹K
0
4
0
4
0
4.8
0
4.8
23 ‹STANBUL
3
0
0
3
1.7
0
0
1.7
1,725
353
154
2,232
635.5
28,541.5
1,560
30,738
417
18,765
1,026
20,209
Total (TL)
(USD)
Source: CMB
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FUTURES AND OPTIONS EXCHANGE INC.
Futures and Options Exchange (FOE Inc.) was established, in accordance with the Article
40 of the CML, by the decision of the Council of Ministers numbering 2001/3025 published
in the Official Gazette numbering 24558 on September 10, 2001, upon the suggestion of the
related minister, based on the decision of the CMB numbering 9/1101 on August 17, 2001.
The exchange is established with the purpose of forming and developing the markets in which
futures and options contracts and the capital market instruments composed of all kinds of
derivative instruments are traded, and ensuring the functioning of these markets under conditions of free competition with security and stability, within the framework of principles of
honesty and transparency and organized in the form of joint stock corporation in parallel
to developments in the world. The exchange became a legal entity on July 4, 2002 when its
Articles of Association was registered at the Turkish Trade Registry. The principles of trading,
membership, settlement and operation are stated in the Regulation for Futures and Options
Exchanges, published in the Official Gazette numbering 25415 on March 27, 2004.
Authorization for starting its operations was given to the Exchange on March 5, 2004. Following the necessary works conducted by the CMB with the Exchange, the Exchange had
become operational as of February 4, 2005.
The basic content of designed future contracts were approved by the CMB. Accordingly, it
was decided that futures contracts based on Aegean Standard 1 Base Quality Cotton, Anatolian Red Hard Base Quality Wheat, Turkish Lira/ US Dollar parity, Turkish Lira/ Euro parity,
treasury bills having 91 and 365 days term, ISE 30 and ISE 100 Indexes1 would be traded on
the Exchange. In addition to the future contracts above, future contracts based on gold and
Benchmark Treasuries were approved to trade on the Exchange in 2006.
Trading session, which was between 10:00-15:00 initially, upon requests from the market
participants, was extended in the mid of December 2005 and determined as 9:15-16:40
(12:00-13:00 lunch break). The realized trades are settled by the ISE Settlement and Custody
Bank Inc.
In 2005 the Exchange realized a trade volume of TL 3 billion (including position closures2).
With regard to the relative share of underlying instruments, currency futures constituted the
largest share in terms of total trading volume, total trading value and total number of open
positions. In 2008, like in 2007, equity index futures constituted a large share in terms of total
trading volume (Table 4.18).
Table 4.18. Trading Volume of Futures and Options Exchange
Contract
Volume (Unit)
Index
Volume (TL)
Open Position*
40,334,968
188,231,237,133
123,014
Interest
420
3,274,300
0
Bond
420
3,274,300
0
14,110,292
19,628,771,064
86,152
27,155
99,318,003
0
Currency
Commodity
Gold
21,641
84,926,183
216
Total
54,472,835**
207,962,600,500**
209,382
(*) As of December 31,2008
(**) Including position closures
Source: Turkdex
1
2
As a difference with other futures contracts, ISE 100 Index Futures was opened for trade later, in November 2005.
It refers to open positions which are closed by the exchange system in maturity date of the concerned contracts since
they are still not closed by the market participants.
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Annual Report
In 2008, the Exchange realized a trade volume of TL 207,962,600,500 with a total number
of 54,472,385 contracts. These figures indicate an increase of 119% and 76% respectively
over the previous year.
With regard to trading volume, it was highly fluctuated in the year. Trading volume, which
was only 3,714,795 units in the first month of the trading in the Exchange, reached to
6,271,767 units in October but decreased again to 3,792,245 units in December (Graph
4.14).
Graph 4.14. Trading Volume (Unit)
Source: Turkdex
In 2008 there were fluctuating movements in trading value numbers of the Exchange. The
trading value, which was TL 20,155 million in the first month of the year, decreased to TL
10,732 million at the end of the year (Graph 4.15).
Graph 4.15. Trading Volume (TL)
Source: Turkdex
There have been fluctuations with regard to the number of open positions held by the end
of the months. The number of open positions which was 279,229 units by the end of the
first month was reached to 435,980 units in June then decreased to 298,619 units by the end
of the year (Graph 4.16).
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63
Graph 4.16. Changes in the Total Number of Open Positions
Source: Turkdex
CENTRAL REGISTRY INC. AND INVESTOR PROTECTION FUND
With Article 10/A of CML (as an amendment by Law No: 4487 of December, 15 1999)
Central Registry Institution (CRI), a private legal entity, was prescribed to keep the records
of capital markets instruments and the related rights in dematerialized form. According to
Regulation on the Principles for Establishment, Operation and Supervision of the Central
Registry Institution, which was promulgated on June 21, 2001 by the decision of the Council of Ministers, the CRI was established as a joint-stock corporation. In this regard, the
CR was established in form of joint-stock corporation and its Articles of Association was
published on the Turkish Trade Registry Gazette on September 26, 2001. Its shareholders
are Takasbank, ISE, TSPAKB and IGE.
With the framework of CML and the related regulations, the CRI is empowered to keep the
records, with respect to issuers, intermediaries and owners, of capital markets instruments
and the related rights in dematerialized form, to monitor the consistency of these records
and to represent and manage the Investors Protection Fund. Until the end of 2002, various
projects for establishing the technical and legal infrastructure have been carried out. The
Communiqué on the Principles of Holding Records for Dematerialized Securities became
effective on December 22, 2002 in order to determine the main features of the dematerialized system.
Accordingly, works for dematerialization process have been initiated. Within the context of
dematerializing stocks and mutual fund participation certificates, in order for the members
to make preparations and inform the customers about the transition to dematerialized
system, the principles with respect to membership were approved by the CMB on July 22,
2004 and parallel to this, some amendments were made in the above mentioned Regulation
and the Communiqué for the CRI.
In this context, as necessary works completed, for the stocks of the corporations traded in
ISE, the dematerialized system within the CRI became effective as of November 28, 2005.
According to data provided by the CRI, by the end of 2007 within the CRI the number of
stocks whose record kept was 49,441,862,101 (TL 318,539,588,717 in market value), the
number of accounts opened was 17,722,035 and the number of accounts with security balance was 1,069,552 (figures also contain non-public shares).
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Annual Report
With the CMB Decision on 15.10.2004, starting from 25.04.2005 the dematerialization
process of mutual funds has been initiated with selective institutions. With the CMB Decision on 16.12.2005 all mutual fund participation certificates except liquid funds have been
dematerialized by the end of 31.12.2005, liquid funds participation certificates have been
dematerialized by the end of 31.3.2006 as well. By the end of 2007, the number of dematerialized mutual fund (287) participation certificates was 851,618,837,384 and there were
2,955,690 accounts which had mutual fund participation certificates (figures include only
the outstanding certificates).
Article 46/A of CML (as an amendment by Law No:4487 of December 15, 1999) prescribes
the establishment of Investors Protection Fund with the objective of meeting the liquidation expenses and carrying out the functions provided for in Article 46/B in accordance
with the principles envisaged in CML, with respect to intermediary firms for which a gradual liquidation or bankruptcy decision is made by CMB and reserving the provisions of
the Bank Law with respect to those banks in the scope of paragraph (a) of Article 50 of the
CML whose operations are stopped by the decision of the relevant authority, to compensate the cash payment and stock delivery obligations for their customers arising from stock
transactions due to capital market operations and transactions in which they engaged. The
Investors Protection Fund became operational with the establishment of the CRI, which is
envisaged by CML to represent and manage the Fund.
As the initial asset of the Investors Protection Fund, 10 million TL was granted by the ISE
in 2001. Usual sources of the Fund are annual dues to be paid by the intermediary institutions, administrative pecuniary fines imposed by the CMB, the ISE and TSPAKB, temporary dues for which the amount is to be determined by the CMB and also the yield of the
Fund assets invested. The Fund’s assets are invested in government bonds, T-Bills, deposits
or reverse repos. The total value of the Fund’s assets reached TL 156,072,890 by the end of
2008.
The cash payments arising from stock transactions for their customers due to capital market operations and transactions of intermediary institutions for which a gradual liquidation or bankruptcy decision is taken, are made by the Fund within a limited amount, determined by CML and increased by revaluation rate each year. The maximum amount for
each customer to be paid from the Fund’s assets is TL 51,674 for the year 2008.
ISTANBUL GOLD EXCHANGE
Istanbul Gold Exchange (IGE), established on July 26, 1995, currently involves two markets, namely the Precious Metals Market and the Precious Metals Lending Market.
The trading volume in terms of TL/Gr transactions in the IGE Precious Metals Market
decreased from 429 thousand in 2000 to 145 thousand in 2001 with the effects of economic
crisis and after 2002 it began to increase in amount.
In 2008 the trading amount realized with 4,567 TL/KGr. which indicates 87% decrease in
TL terms but 14% increase in US Dollar terms. The trading volume decreased by 84% to
165.2 million TL in TL/KGr. units and increased by 43% to 9.3 billion US Dollar in $/Ons
units according to previous year. The differentiation of the change amount in different money units was caused because of the increase in TL/$ exchange rates during the year.
Annual Report
65
Table 4.19. Istanbul Gold Exchange
Year
Amount of Transactions (Kg)
TL/Gr
$/Ounce
Year
Trading Volume
TL/Gr
$/Ounce
1997
178,121
113,367
291,488
287
1,215
1998
265,532
173,748
439,280
684
1,640
1999
277,734
213,740
491,474
1,052
1,908
2000
299,740
129,430
429,170
1,681
1,160
2001
57,888
83,884
144,742
499
741
2002
47,837
95,149
142,986
749
942
2003
77,643
155,016
232,659
1,320
1,782
2004
58,839
221,425
280,264
1,068
2,909
2005
19,907
306,145
326,052
369
4,344
2006
7,875
224,421
232,296
227
4,409
2007
36,131
292,251
328,382
1,015
6,507
2008
4,567
332,462
337,029
165.2
9,300
Source: IGE
THE ISE SETTLEMENT AND CUSTODY BANK INC.
ISE Settlement and Custody Bank Inc., namely Takasbank, is one of the most crucial institutions for the Turkish financial markets. It is an investment bank providing clearing,
settlement and/or custody3 services for the ISE markets (Stock Market, Bond and Bills
Market), Futures and Options Exchange and for the portfolio assets of mutual funds and
investment trusts. In addition to these services, Takasbank provides the ISE members with
a range of banking services such as credit services for cash within Takasbank Money Market (TMM) and credit services for securities, including Securities Purchasing Loans (SPL)
and Securities Lending/Borrowing Facility (SLBO).
The total number of institutions benefiting from the services provided by Takasbank is
810. 1.9 million stock certificates with a total nominal value of TL 40.2 billion had been
deposited in non-fungible custody. Some figures reflecting the 2008 activities of Takasbank
are given in Table 4.20.
3
For the stocks traded in the ISE, dematerialized system became operational within the CRI as of November 28, 2005 and
the records of stocks held in fungible custody at Takasbank before are now held in dematerialized form at the CRI.
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Annual Report
Table 4.20. Takasbank Statistics (2008)
Number of Institutions Benefiting From Services
810
Stocks Deposited in Fungible Custody (Nominal Billion TL)*
31.3
Stocks Deposited in Fungible Custody (Million Unit)*
27.4
Mutual Fund Shares Deposited in Custody (Billion Unit)
415.3
Portfolio Values of Mutual Funds and Investment Companies (TL Billion)
24.57
Portfolio Values of Pension Mutual Funds (Billion TL)
Mutual Fund Participation Certificates (Million Unit)
Stocks Deposited in Non-Fungible Custody (Nominal TL Billion)
Stocks Deposited in Non-Fungible Custody (Million Unit)
6.39
8.8
40.2
1.9
Number of Institutions Using Stock Market Settlement System
- Intermediary Firms
89
- Banks
12
- Mutual Funds/Investment Trusts
378
- Pension Funds
121
- Portfolio Management Companies
Securities Settlement (TL Billion)
Cash Settlement (Billion TL)
Settlement of Bonds&Bills (TL Billion)
Cash Settlement (TL Billion)
Coupon Payments for Government Securities (TL Billion)
Redemption Payments (TL Billion)
27
96.96
38.46
2,243.58
637.25
0.51
17.21
Electronic Fund Transfer (EFT)
- Incoming (TL Billion)
475
- Outgoing (TL Billion )
472
Takasbank Securities Lending Market Trading Volume (2008- TL Million)
Takasbank Securities Lending Market Trading Volume (2008- Million Unit)
Takasbank Securities Lending Market Daily Average Trading Volume
(2008- TL Million)
Takasbank Securities Lending Market Daily Average Trading Volume
(2008- Million Unit)
Takasbank Money Market Daily Average Trading Volume (TL Million)
Takasbank Money Market Trading Volume (TL Billion)
1,333.40
333.83
5.30
1.30
151
38
(*) Material securities kept in dematerialized form in CRI .
(**)Since dematerialized system became operational for the stocks traded on ISE as of November 28, 2005, data
for the stocks and number of accounts at Takasbank’s custody system are as of this date.
Source: Takasbank
Annual Report
67
THE ASSOCIATION OF CAPITAL MARKET INTERMEDIARY
INSTITUTIONS OF TURKEY
The Association of Capital Market Intermediary Institutions of Turkey (Association) is a
self-regulatory organization having attributed of a civil institution possessing a legal entity.
The Association has been established according to the amendments in the article 40/B and
40/C of the CML, which are added to CML numbered 2499 with the law dated 15.12.1999
and numbered 4487. The Status of the Association became effective by the publication on
the Official Gazette numbered 24315, on February 11, 2001.
The aim of the Association is to ensure the functions given by the law and the status
by developing the capital market and intermediary activities, making the members
of the association work in corporation and in care and discipline as required by capital
market, protecting the economic benefits of the members, preventing unfair competition,
illuminating the members on professional issues. According to the article 40/B of the CML,
the Association has been charged and authorized to make investigations to provide the
development of the capital markets and intermediation activities, to create professional
rules for making Association members work in care and discipline as capital market
require, to prevent unfair competition, to take necessary actions in these subjects, to
make regulations in subjects released by the law or determined by the CMB, to carry out
supervising, to cooperate with member institutions in related matters in order to give
disciplinary punishments as foreseen in Associations’ status, to inform the members by
monitoring the professional developments, administrative and legal regulations.
The Association, which is a self-regulatory institution, carried out every kind of education
and surveillance activity for the investors and social stakeholders in year 2007 extensively,
also it organized educational activities for helping the staff of intermediary institutions
for preparing licensing examinations. In addition to these activities it took a major role to
transmit the opinions and suggestions of intermediary institutions to the CMB about many
fields of the CMB’s activities.
INTERMEDIARY INSTITUTIONS
In total there are 145 intermediary institutions, 104 of which are brokerage houses (16 of
them are temporarily closed) and 41 are banks, operating in Turkey by the end of 2008.
In 2008, activities of 6 brokerage houses have been temporarily stopped, and 1 of these
brokerage houses have been granted operating permission again. At the end of 2008, 16
brokerage houses are still temporarily closed. The information about the licenses of the
brokerage houses, investment banks, commercial banks as of the end of 2008 is given below (Table 4.21).
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Annual Report
Table 4.21. Licenses of Intermediary Institutions
Brokerage
Houses
Type of License
Intermediation of Sale and Purchase of
Capital Market Instruments
104
Investment Banks
Commercial Banks
9
(off-the-exchange)
32
(off-the-exchange)
Public Offering
55
4
-
Portfolio Management
51
3
-
Investment Consultancy
59
4
-
Repurchase and Reverse Repurchase
Transactions
58
9
31
Margin Trading, Short Selling, and
Lending and Borrowing of Securities
97
-
-
Intermediation of Purchase and Sale of
Derivative Instruments (TDE)
68
2
16
The brokerage houses are operating countrywide by 169 branches, 52 liaison offices and 33
agencies established with banks as of the end of 2008.
Secondary trading activities of intermediary institutions are given below (Including offthe-exchange trading activities).
Table 4.22. Transactions of Intermediary Institutions
2006
In Equity Market
-Brokerage Houses
2007
2008
TL Billion
$ Billion
TL Billion
$ Billion
TL Billion
$ Billion
650
454
776
596
665
514
1,065
5,567
744
3,889
1,128
5,643
867
4,339
1,225
6,050
946
4,674
7,282
5,087
7,547
5,802
7,940
6,134
In Bonds and Bills
Market (Including
Repos and Reverse
Repos)
-Brokerage Houses
-Bank
Total Transaction
Volume
Note: The transactions have been recorded for both parties above.
Annual Report
69
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71
ACTIVITIES OF THE CMB IN 2008
Although the developments for Turkish capital markets dates back to the
Ottoman Empire, an efficiently functioning and healthy capital market
could only be established in 1980s. The CMB launched new instruments
and institutions with the aim of regulating, supervising and developing of
capital markets, based on the CML, which became effective in 1981. At first,
the regulation of primary markets was focused, while the establishment of
secondary markets was also carried out. In this regard, “Istanbul Securities
and Foreign Exchange Bourse” was reopened under the name of “Istanbul
Stock Exchange” at the end of 1985.
Turkish capital markets developed rapidly under the regulations adopted at the beginning
of 1980s and therefore the indicators of both primary and secondary markets improved
substantially.
The CMB attributed great importance to improve communication with investors, issuers
and other institutions in 2008. In this context, a system has been established for receiving
and evaluating the complaints and proposals of the related parties, and it has been benefited greatly from this system on making regulations. Especially, it has been worked with
the ISE, the IGE and the TSPAKB in close cooperation.
Besides, investors and other stakeholders have been given the opportunity to submit their
requests for information and any complaints via the CMB’s web site around the clock.
The Executive Board held 33 meetings and made 1,317 decisions in various subjects under
its competence in 2008.
REGULATION
One of the primary functions of the CMB is making regulations. The CMB, within the
framework of authority delegated by the CML, has made many regulations during 2007
concerning the capital markets institutions, instruments, markets and investor protection.
These regulations are summarized below:
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Annual Report
Regulations
1. With the amendment in the Regulation on Foundation and Working Principles of Pension Funds which published Official Gazette No.26754, dated January 1, 2008; the following sentence added to the regulation, “from the fund participation shares, the number of
months which the participants stay in the system multiplied by a minimum amount of
wages and insurance premium paid monthly in the context of Law Article 6 except the
amount of alimony debt amounts up to the minimum wage amount shall not be distained,
shall not be subject to precautionary measure, shall not be included into the bankruptcy
process.”
2. Amendment in the Regulation on the Establishment and Working Principles of Exchanges and Establishment and Working Principles of Derivatives Exchanges. By the
amendment it is obliged to the exchanges to set new surveillance units to monitor market
abuses (Official Gazette No.26931, dated July 9, 2008).
3. Amendment in ISE Bond and Bill Market Regulation article 17 and ISE Regulation article 23 which regulates cancelling the transactions for misorders (Official Gazette No.26961,
dated August 8, 2008).
4. With the amendment in the Regulation on Foundation and Working Principles of Pension Funds, which published Official Gazette No.27093, dated December 12, 2008; Fund
board members should never having been subject to legal prosecution due to laundering
proceeds of crime and financing of terrorism.
Communiqués
1. With the Communiqué on Principles Regarding Registered Capital System (Serial: IV,
No: 38), parallel to EU Legislations, maximum registered capital permission given by the
Board is valid for maximum 5 years including the year permission is taken. If not reached
to the maximum registered capital, at the end of the period given by the general assembly,
board of directors must take the Board’s approval for a new maximum registered capital
and submit for approval of the general meeting for maximum 5 years time to increase capital. By the new regulation, the authorization given to board of directors must be periodically renewed by general assembly to increase capital. If the authorization is not renewed,
the corporation will be respected as, gone out of the system (Official Gazette dated January
23, 2008 and numbered 26765).
2. Communiqué Serial:V, No: 98 on Amending the Communiqué on Principles Regarding Portfolio Management Operations and Institutions Which are Authorized to Offer
Portfolio Management Service has been amended as determining essential elements in
custody contracts instead of approving them by Board. (published in the Official Gazette
dated February 02, 2008 No:26780)
3. With the Communiqué Amending Communiqué on Principles Regarding Intermediary Activities and Intermediary Institutions (Serial:V, No:99), clauses relating to some of
notification obligations of brokerage houses to the Board is changed and brokerage houses
become obliged to Association with regard to some notifications. (published in the Official
Gazette dated March 4, 2008, No:26806).
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73
4. With the Communiqué on Principles Regarding Issuers’ Exemption Conditions and
Deregistration from the Board (Serial: IV, No: 39), parallel to EU Legislations, simplifying the obligations of corporations is purposed (Official Gazette dated March 8, 2008 and
numbered 26810).
5. With the Communiqué Principles to be Followed by the Joint Stock Corporations Subject to Capital Markets Law (Serial: IV, No: 41), publicly traded companies are obliged to
take valuation report for related party transactions, to establish a department for shareholder relations and also to employ licensed employees to improve consistency to capital
markets legislation (Official Gazette dated March 19, 2008 and numbered 26821).
6. With the Communiqué Serial: VII, No: 35 on Amending the Communiqué on Principles Regarding Mutual Funds, special conditions has been added concerning the founder’s guarantor situation and additional provisions has been added concerned the title of
guaranteed and protected funds. (published in the Official Gazette dated March 21, 2008
No:26823)
7. With the Communiqué Amending the Communiqué on Principles Regarding Licensing and Registration for the Professionals Engaged in Capital Market Activities (Serial:VIII,
No:56) it is regulated that; the persons whose examinations were invalidated and therefore
are not accepted to any examination for 3 years may object to this decision in 7 days in
writing to the Board after they are notified; the objections are examined and concluded by
the Objection Committee; the objections to the results and the questions of the examination can be made in 7 working days in writing to the Board after the results and the questions are announced on the Internet (Official Gazette dated April 3, 2008 and numbered
26836).
8. Regarding financial reporting in capital markets, Communiqué Serial:XI, No:29 on
Principles of Financial Reporting, which necessitates listed companies, intermediary institutions and portfolio management companies to prepare their financial statements according to International Financial Reporting Standards, was issued to fully comply with
European Union regulations (published in the Official Gazette dated April 9, 2008).
9. With the Communiqué Amending Communiqué on Regarding the Principles on Capital Adequacy of Brokerage Houses (Serial:V, No:100), the duration of letter of quarantine
is regulated. (published in the Official Gazette dated June 11, 2008, No:26903).
10. Communiqué Serial: VII, No: 36 on Amending the Communiqué on Principles Regarding Mutual Funds has made regulations relating board members and directors of
founder and fund that they shall never having been subject to legal prosecution due to
laundering proceeds of crime and financing of terrorism. (published in the Official Gazette
dated June 11, 2008 No:26903)
11. Communiqué Serial:VI, No: 21 on Amending Principles Regarding Real Estate Investment Companies has made regulations about;
- At least one partner shall be leading shareholder,
- Minimum capital ratio of the leading shareholder shall not be transferred during two
years following the public offering,
- Corporations whose shares have been offered to the public or which are considered to
have been offered to the public shall not apply to the Board for transformation,
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Annual Report
- “Flat ownership” and “certificate of permission for building using” shall be taken for
buildings and similar structures in the portfolio,
-REITs is allowed to lend securities in their portfolios,
- Qualifications of shareholders have been amended again.
(published in the Official Gazette dated July 27, 2008 No:26949)
12. With the Communiqué Amending Communiqué on Principles Regarding Intermediary Activities and Intermediary Institutions (Serial:V, No:102), updating in regulations is
provided after changes in some laws (published in the Official Gazette dated July 31, 2008,
No:26953).
13. With the Communiqué Amending Communiqué on Principles Regarding Establishment and Operations of Futures Intermediary Institutions (Serial:V, No:103), updating in
regulations is provided after changes in some laws (published in the Official Gazette dated
July 31, 2008, No:26953).
14. With the Communiqué on Principles Regarding Asset Finance Funds and Asset Backed
Securities (Serial:III, No:35), asset-backed securities which are designed as an off-balance
sheet assets and asset finance funds who will issue asset backed securities are arranged (Official Gazette dated August 27, 2008 and numbered 26980).
15. Communiqué Serial:VIII, No: 58 on Amending the Communiqué On Principles
Regarding Appraisal Companies and Their Listings by the Board has made regulations
about;
- Assistant of expert title has been defined,
- In certain conditions, banks and insurance companies may be exempt from requirement
that responsible real estate appraisal expert shall have 51% capital of the company,
- Signing only one contract for collective appraisals shall be acceptable in case of housing
finance,
- Specific standards has determined as regards of announcement and advertisement of Appraisal Companies
(published in the Official Gazette dated September 11, 2008 No:26994)
16. With the Communiqué Amending Communiqué on Principles Regarding Public Disclosure by Intermediary Institutions (Serial’s, No:105), some regulations come into effect
with regard to obligation of brokerage houses regarding public disclosure (published in the
Official Gazette dated October 14, 2008, No:27024).
17. With the Communiqué Amending Communiqué on Principles Regarding the Internal
Auditing Systems of Brokerage Houses (Serial:V, No:104), regulations relating to measures
taken by brokerage houses in case of emergency like earthquake, flood and fire come into
effect. (published in the Official Gazette dated October 21, 2008, No:27031).
18. With the Communiqué Amending Communiqué on Principles Regarding the Internal
Auditing Systems of Brokerage Houses (Serial:V, No:106), detailed regulations relating to
qualifications required of inspectors of brokerage houses come into effect (published in the
Official Gazette dated November 1, 2008, No:27041).
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75
19. With the Communiqué Amending Communiqué on Principles Regarding Record
Keeping and Documentation in Intermediary Activities (Serial’s, No:107), it is enabled that
the brokerage houses can send account statement in electronic form (published in the Official Gazette dated December 2, 2008, No:27072).
20. With the Communiqué Amending Communiqué on the Documents to be Prepared
by Intermediary Institutions for Trading in Derivatives (Serial:V, No:108), some changes in
regulations relating to record keeping and documentation in derivative transactions come
into effect (published in the Official Gazette dated December 02, 2008, No:27072).
21. With the Communiqué Amending Communiqué on Principles Regarding Record
Keeping and Documentation in Intermediary Activities (Serial:V, No:109), the enforcement date of record keeping and documentation for distance access of customer orders to
The Exchange is suspended for one year (published in the Official Gazette dated December
02, 2008, No:27072).
Rulemaking Decisions of the Board
1. Decision about amended amounts of heavy pecuniary fines placed in CML (Board Decision dated January 8, 2008 and numbered 1/5).
2. Decision stipulating that the licenses given in accordance with the capital markets legislation can be revoked temporarily or permanently under certain circumstances (Board
Decision dated January 17, 2008 and numbered 2/66).
3. Decision about announcing the questions and answers of the examinations organized
between September 2002 and January 2008 on the Internet site of the Board, and also announcing the questions and answers of subsequent examinations in one week after the date
of examination on the Internet site of the Board (Board Decision dated January 29, 2008
and numbered 3/131).
4. Minimum dividend ratio has been determined as 20%; if decision of profit distribution
is taken by publicly held companies traded on the Stock Exchange then public disclosure
about the decision has to include profit distribution form in its attachment. Besides, if
the first dividend amount is less than %5 of the company’s paid/issued capital, the dividend need not be distributed, it can be kept within the company. And also trust companies
should calculate distributable profit by taken into account unrealized capital earnings and
the value of decreasing securities (Board Decision dated February 8, 2008 and numbered
4/138).
5. Decision stipulating that; the applicants who passed the Real Estate Appraisers Examination and the Residence Real Estate Appraisers Examination but whose professional experience is not sufficient, can work in real estate appraisal companies full time as the “Assistant
Real Estate Appraisers” or the “Assistant Residential Real Estate Appraisers” and can prepare appraisal reports under the supervision of an appraiser without having the authority
to sign the report alone until they complete required experience period; and provided that
at least one year professional experience condition is satisfied, upon request the Residential
Real Estate Appraisers License is given to the applicants who passed the Real Estate Appraisers Examination but cannot get the Real Estate Appraisers License because they lack
the three years experience (Board Decision dated March 20, 2008 and numbered 8/366).
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6. For applications made to the Board, approval of merger agreement by second general
assembly meeting, because of lack of quorum will not constitute unconformity to Communiqué Serial I, No:31 of the second paragraph of Article 5, if at least one of the joint stock
companies has obligation to prepare consolidated financial statements, announcement text
and other announcements are properly done in the time as the legislation envisaged and the
first general assembly meeting is performed from the date of 6 months of the financial statements based for merger (Board Decision dated March 20, 2008 and numbered 8/322).
7. To identify corporate governance practices and information sharing processes with investors effectively, shares of the corporations which are traded in ISE and included in National 100 Index, a research has been done by the Board in the sources of information to
which investors can easily reach. In our study seen that, many of the corporations explanations not include detailed information as corporate governance compliance report format
specifies, the information given in the report are fairly standard and the results reached at
the study are valid for the corporations whose shares are traded in ISE but not included in
the study. Because of publishing corporate governance reports are mandatory, contents of
the reports should carry certain standards and they should include detailed information as
compliance report format is important to lighten public. So all corporations whose shares
are traded in ISE should continue to inform its shareholders effectively, should prepare
corporate governance compliance reports as the required care and sensitivity and should
put these reports on their web sites (Board Decision dated March 20, 2008 and numbered
8/325).
8. Partners of corporations, whose stocks are not traded on a stock exchange, do not have
any income except dividend as their stocks do not trade in any market. So, by taking into
account that offsetting losses of previous years starting from net income can result in not
distributing profit for the year in which the offset is done, the decision that profit distribution of the corporations whose stocks are not traded on a stock exchange may be done
without depending on the order in Board Decision dated December 30 and numbered
66/1630. It may be offset from one or several of extraordinary reserves, legal reserves and
capital reserves arisen from equity restatement due to inflationary accounting without depending on any order till all the losses from previous years are offset (Board Decision dated
March 20, 2008 and numbered 8/326).
9. Decision about principles to be complied by corporations whose field of activity is sports
or management of the revenue from the mentioned corporations and that are or will be
publicly held (Board Decision dated March 28, 2008 and numbered 9/412).
10. Decision on formats of financial statements which are prepared according to the Communiqué Serial:XI, No:29 (Board Decision, 17.04.2008) and explanations on these financial statement formats (Board Decision, 02.05.2008).
11. a) Provided that the calculation procedure determined elaborately in internal statute,
hedge funds shall exempt from performance based fee calculation for qualified investors portfolios mentioned 16th article of the Communiqué Serial:V, No:60
b) Provided that the valuation procedures determined in internal statute, hedge funds
are allowed to be party of swap contracts (Board Decision dated March 28, 2008 and
numbered 9/394).
12. For the accounting period of 2007, research done by the Board on financial statements,
date of the profit distribution decisions of board of directors and public disclosures of cor-
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77
porations whose shares are traded in ISE in 2007, has shown that there are some corporations violating Turkish Commercial Code Article 362 and the Boards’ legislations as,
a) Not submitting, the board of directors proposal on profit distribution or the financial
statements to shareholders for at least 15 days before the ordinary general assembly
meeting
b)Announcing board of directors profit distribution proposal before financial statements are disclosed to the public
c) Taking decision on the ordinary general assembly meeting about profit distribution
without announcing board of directors profit distribution proposal to the public.
So, the Board determined that not to take a criminal action in the framework of Article
47/A CML about the corporations violating related provisions of the legislation, but in the
next periods, these corporations should give necessary attention and diligence to Article 362 of TCC and the Boards legislation for financial statements and profit distribution
that otherwise the relevant legislation in violation of the provisions in case of recurrence
of responsible capital market legislation envisaged in the application of sanctions will be
decided on points to these corporations (Board Decision dated October 15, 2008 and
numbered 27/1069).
13. Decision about announcing some issues to the public as a result of the evaluation of
requests and suggestions received by the Board about implementation of Communiqué
Principles to be Followed by the Joint Stock Corporations Subject to Capital Markets Law
(Serial: IV, No: 41)(Board Decision dated November 28, 2008 and numbered 31/1241),
14. According to the Board Decision dated on 28.03.2008, the Board has decided to resume
the application date of new fee schedule of CRA which was determined as 01.09.2008 and
the implementation of the current fee schedule have been decided to continue.
15. Decision regarding amendment of “Articles of ISE Settlement and Custody Bank Inc,
(Takasbank)” and evaluation of public offering of ISE Settlement and Custody Bank Inc
shares held by ISE within demutualization process have been decided by the Board in
2007. The amendment have been accepted at Takasbank general shareholders' meeting on
28.03.2008.
16. “Offsetting Margin” has been decided as an additional margin according to the recourse of Istanbul Gold Exchange (Board Decision dated March 3, 2008 and numbered
9/399).
ONGOING REGULATORY AND OTHER ACTIVITIES
The ongoing regulatory activities and other operations are given below in main headings:
Revision of the CML in line with current developments and EU Aqcuis,
Studies related to making the Capital Market Licensing, Education and Registration Center operational,
The replanning of the intermediary activities according to MiFID Directive of EU,
Regulating the capital adequacy measurements of the brokerage houses on a more
sensitive-based approach and the studies on Basel-II regulations,
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Regulations related to over-the counter transactions of brokerage houses
Studies on enhancing the role of the brokerage houses in preventing money laundering and terrorism financing based on FATF recommendations,
Regulation of Communiqué on Principles Regarding Registration and the Sale of
Borrowing Instruments4,
Regulation of Communiqué on Principles Regarding Registration and the Sale of
warrants and covered warrants5,

Revision of the Communiqué on the Principles Regarding the Non-Voting Shares 6,
Studies on regulations about taking explanations, documents and information
from internet with electronic sign7,
Risk based revision of financial statements,
Updating the legislation related to public disclosures in order to increase effectiveness in public disclosure and providing harmonization with EU Acquis8,
Revision of regulations related to mandatory tender offers,
Monitoring and developing the applications of Corporate Governance Principles,
Preparation of regulations that will enable issuance of asset covered bonds,
Studies on the applications submitted to the Board for issue of capital markets instruments to be resulted effectively and quickly, and standardization of applications and preparation of electronic application process in the scope of prevention
of application delays,
Developing and improving prospectus standards,
To ensure more closely monitoring of public disclosures and explanations done
through media by the corporations shares traded in stock exchange,
Regulation of corporate mergers and divisions in harmonization with EU Legislation and without impeding global competition,
Regulation of rent certificate,
Studies on restriction of capitalization issue,
Studies to evaluate, presence of guarantee, mortgage, etc… given for the favor of
third persons on the assets of publicly held companies,
4
Communiqué on Serial:II, No:22 Principles Regarding Registration and the Sale of Borrowing Instruments came into
effect by publishing in the Official Gazette dated January 29, 2009 and numbered 27125.
5
Communiqué on Serial:III, No:36 Principles Regarding Registration and the Sale of warrants is came into effect by
publishing in the Official Gazette dated January 21 and numbered 27117.
6
Communiqué on Serial:I, No:36 Principles Regarding the Non-Voting Shares came into effect by publishing in the
Official Gazette dated January 21, 2009 and numbered 27117.
7
Communiqué on Serial:VIII, No:61 Principles Regarding Sending Information, Document and Explanations to
Public Disclosure Platform came into effect by publishing in the Official Gazette dated May 30, 2009 and numbered
27243.
8
Communiqué on Serial:VIII, No:54 Principles Regarding Public Disclosure of Metarial Events and Communiqué on
Serial:VIII, No:57 Principles Regarding Public Disclosure of Metarial Events of the Corporations Whose Issued Securities are not Traded on an Exchange came into effect by publishing in the Official Gazette dated February 6, 2009 and
numbered 27133.
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Determining the standards on disclosure of prospective financial information,
Studies on public offering and financing SMEs by capital markets,
Updating the Communiqué on Principles Regarding Registration with the Board
and Sale of Foreign Capital Market Instruments and providing harmonization with
EU Acquis,
Determining the conditions on public offerings for which a prospectus will not be
prepared or published,
Reviewing European Union’s Draft Directive on rating agencies and amending our
regulations on rating agencies when necessary,
Regarding National Program, updating regulations on financial statements of nonlisted companies after Turkish Accounting Standards Board issues related regulations.
Updating regulations on auditing according to the 2008 version of the International Standards on Auditing.
Training of educators to organise courses on practises of International Financial
Reporting Standards.
Improving the Remote Data Transfer System, which aims increasing the efficiency
in oversight of auditing firms.
Studies on secondary legislation (Asset Backed Securities, Asset Covered Bonds
and Mortgage Finance Companies) related to “housing finance law” which is widely known as “mortgage”,
Studies on the establishment of venture capital funds,
Studies on the establishment of real estate investment funds,
Formation of legal infrastructure related to the establishment of variable capital
investment trusts with the Draft Law which has been prepared in compliance with
EU legislation and practices.
Ongoing operations about the registration of Treasury Bonds in Central Registration Agency
The Capital Markets Board – Istanbul Stock Exchange market surveillance system
project
It is decided that with all aspects “Public Announcement Project” is operated by
ISE. The project, which started at 2005 has been completed.
Ongoing operations about "give up" system in Turkish Derivatives Exchange
Ongoing Operations regarding the listing of single stock futures
Operations of registration of stocks of publicly held non-listed companies in ISE
Ongoing operations about foundation of a growth enterprises market in Istanbul
Stock Exchange
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REGISTRATION
According to the CML, capital market instruments to be issued or to be offered to the
public are required to be registered with the CMB. In a registration system where public
disclosure is essential, applications made for the issuance of capital market instruments are
evaluated on the basis of whether or not prospectus and circular concerning the corporation
and capital market instrument to be offered to the public contain necessary information
prescribed by legislation. The examination of application for issuance is implemented by
taking the legal and financial aspects into consideration. In addition to that, an investigation
is made at the company’s main office and production facilities for all of the initial public
offering applications and some of the other applications where it is deemed necessary.
In the event it is decided that the explanations are not sufficient and do not reflect the truth
fairly such that an exploitation of the public may occur, the CMB may deny registration of
the capital market instruments by stating the reason for such a denial. The registration of
the capital market instruments by the CMB, however, is not an official assurance.
In that respect, in 2008, applications regarding the registration of stocks (issued by publiclyheld companies, investment trusts, real estate investment trusts, venture capital investment
trusts), bank bills (issued by the non-depositing banks) and mutual fund participation
certificates that are to be issued or to be offered to the public are reviewed by the CMB. In
the table below, the figures are given regarding those applications and their results:
Table 5.1. Registration Applications and Realizations
Applications
Number of
Applications
Actual Registration
Stocks
Publicly-held Companies
Real Estate Investment Trusts
Venture Capital Investment Trusts
Securities Investment Trusts
Mutual Fund Participation Certificates
Pension Funds
Commercial Papers
Bonds
123
105
13
5
80
14
1
3
122
108
13
5
73
12
1
4
Total
344
338
AUTHORIZATION
Authorization of Intermediary Institutions
In order to provide both the capital markets functioning in stability, transparency, security
and protection of rights and benefits of the investors, the necessary conditions that the
intermediary institutions have to have are determined by the CMB. In this context; permission for operation of brokerage houses and banks, establishing field offices, changing of
the structure of the partnership, amendments of the article of incorporation of brokerage
houses are subject to the permission of the CMB.
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The information about the activities that can be performed with the permission of the CMB
and the institutions enabled to perform these activities at present are presented below.
Table 5.2. Activities Subject to Authorization of the CMB and the Institutions that can
Carry out These Activities
Brokerage
Houses
Non-depositing
Banks
(Investment
Banks)
Commercial
Banks
Intermediation for Trading Securities
√
√ Off-theexchange
√ Off-theexchange
Intermediation for Public Offering
√
√
Repurchase and Reverse Repurchase of
Securities (Repo-Reverse Repo)
√
√
Portfolio Management
√
√
Investment Consultancy
√
√
Margin Trading, Short Selling and
Lending and Borrowing of Securities
√
Intermediation for Sale and Purchase of
Derivative Instruments
√
Type of Activity
√
√
√
The applications to be authorized for the above mentioned activities are investigated by the
CMB experts and are submitted to the Executive Board in order to be decided.
The information about applications of intermediary institutions in 2008 is given in the table
below.
Table 5.3. Applications of Intermediary Institutions
Type of Application
Number of
Applications
Number of Concluded
Applications
Permission for Operation
19
19
Establishing Field Offices
25
23
Change of the Structure of
the Partnership
60
58
Amendments to the Article
of Incorporation of the
Brokerage Houses
40
36
144
136
TOTAL
Authorization of Collective Investment Schemes
To provide more effective public disclosure and more transparent operation of the collective investment schemes, the CMB’s permission is required for the following processes.
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Establishment, amendments to the bylaws, changes in the founders or type of
fund as well as merger and termination of Mutual Funds.
For investment trusts and real estate investment trusts, establishment, amendments to the article of association, increases in the registered capital and obtaining
portfolio management licenses.
For portfolio management companies, establishment, obtaining the portfolio
management license and the investment consultancy license.
The statistics regarding the applications of the collective investment schemes in 2008 are
given in the table below.
157
-
149
*Pension mutual funds are included.
**Venture capital investment trusts are included.
TOTAL
3
5
9
-
6
-
-
7
Capital Increase
-
-
-
-
Founder
Change
2
-
-
2
Termination
3
1
-
3
Merger
-
-
-
Number of
Application
-
-
Kind Change
46
92
Applications
Finalized
8
-
-
3
5
-
-
-
-
-
-
Applications
Finalized
INVESTMENT TRUSTS**
-
50
Registration
Registered
Capital Increase
Portfolio
Management
License
Investment
Consultancy
License
95
Number of
Application
Establishment/
Registration/
Transformation
Type of
Application
MUTUAL FUNDS*
Table 5.4. Applications of Collective Investment Schemes
24
-
-
3
12
-
-
1
-
1
7
Number of
Application
22
-
-
3
12
-
-
1
-
1
5
Applications
Finalized
REAL ESTATE
INVESTMENT TRUSTS
10
-
7
-
1
-
-
-
-
-
2
Number of
Application
9
-
7
-
1
-
-
-
-
-
2
Applications
Finalized
PORTFOLIO
MANAGEMENT
COMPANIES
200
-
7
6
25
-
2
4
1
51
104
Number of
Application
189
-
7
6
24
-
2
4
-
47
99
Applications
Finalized
TOTAL
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Authorization of Publicly-Held Companies
Both publicly-held companies whose shares are traded on the exchanges and other publicly
held companies whose shares are not traded have to get the permission of the CMB with
the aims of making the procedures of capital stock increases easier and protecting the shareholders of publicly held companies, for the transactions given below:

Adopting
the registered capital system and increasing the registered capital
within that system,

Mergers,
acquisitions and divisions,

Amendments
to the articles of associations,

Collecting
proxies or acquiring shares by tender offers, applications for
exemptions from mandatory tender offer obligation,

Employee
stock ownership plans of multinational companies regarding the
employees of their subsidiaries located in Turkey,

Paper
imports for printing common stocks,

Registration
of the companies with the CMB,

Deregistration
of the companies with the CMB,
In that respect, the figures regarding such applications to the CMB for 2008 are given in
the table below.
Table 5.5. Applications of Publicly-Held Companies
Subject
Number of
Applications
Realizations
Adopting Registered Capital System and Increasing
Registered Capital
38
39
Mergers, Acquisitions and Divisions
12
12
Tender Offers and Requests for Exemption from
Mandatory Tender Offer Obligation
30
26
121
128
20
18
8
9
Amendments to the Articles of Association
Employee Stock Ownership Plans of Multinational
Companies
Registration of Companies
36
25
Permissions for Paper Imports
Deregistration of Companies
-
-
Registration of the part of the Capitals of Listed Firms
that are not Yet Registered with the CMB
-
-
Capital Decrease
-
-
265
257
Total
Authorization of Independent Auditing Firms
Independent auditing firms are responsible for examination of the issuers and capital market institutions’ financial statements which are disclosed to the public or required by the
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CMB with respect to the compliance with generally accepted accounting principles, definitions, standards and principle of fairly reflection of the accuracy and reality of information,
and preparation of audit reports.
Applications of firms, which demand for operating in independent auditing business in
capital markets, are examined by the CMB and firms, which acquire the qualifications,
are taken to the list of entitlement to provide such service. In 2008, 5 auditing firms’ applications for authorization and 2 auditing firms’ applications for unauthorization were
approved. There are 94 auditing firms in the list by the end of 2008.
Authorization of Rating Agencies
According to Communiqué on Principles Regarding Ratings and Rating Agencies in Capital Markets (Serial: VIII, No: 51); rating activities include credit rating and the rating of
conformity to corporate governance principles. In this Communiqué credit rating is defined as an independent, unbiased and fair evaluation and classification of the creditworthiness of corporations and capital market institutions and the default risk as to the timely
payment of interest and repayment of principal in accordance with the terms of obligations
by the rating agencies, and rating of conformity to corporate governance principles is defined as an independent, unbiased and fair evaluation and classification of corporations’
and capital market institutions’ conformity to “Corporate Governance Principles” issued
by the Board.
At the end of the 2008, 4 rating agencies in Turkey are recognised as credit rating agencies
in capital markets and 2 rating agencies in Turkey are recognised as corporate governance
rating agency in capital markets. Moreover 3 international credit rating agencies and an
international rating agency doing ratings of conformity to corporate governance principles
in capital markets are recognized by the Board.
SURVEILLANCE
In order to assure protection of investors, fair, effective and transparent operation of
markets as well as to decrease systematic risk, surveillance of capital markets is performed:

By taking prompt action to correct violations of laws and regulations detected via
closely monitoring the publicly held corporations, capital market institutions, risks
and transactions,

By renewing the legislation in the light of enforcement problems and monitoring
activities.
In this context, information regarding oversight and surveillance done by the CMB throughout 2008 is given in the following sections.
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Surveillance of Publicly-Held Companies
Review of Financial Statements
Publicly-held companies whose shares are listed on the exchange are obligated to disclose
their quarterly financial statements and submit a copy to the CMB as well, whereas other
publicly held companies fulfil this obligation for only annual financial statements. In addition, annual and semi-annual financial statements of companies whose shares are traded
on the ISE and annual statements of other publicly-held corporations are subject to independent auditing and independent auditing reports are also disclosed.
The projects on efficient supervision on listed companies and intermediary institutions
had been approved in October 2006 by the CMB and The Agency For International Business and Cooperation which is under the Dutch Ministry of Economic Affairs. And the
projects had realized in two years time by contribution of the CMB and Dutch Financial
Markets Authority (AFM).
The Project on efficient supervision on listed companies and intermediary institutions aims
to establish and make use of a risk based supervision system on the financial statements of
listed companies that is in line with the EU Legislation.
Oversight of Disclosure of Material Information
Material information is required to be disclosed to public in cases of significant developments and events that may affect decision-making process of investors and prices of capital
market instruments. In this context, corporations and/or issuers of securities shall reveal
material information in conformity to principles preset by the CMB such as important
information regarding their capital structure, fixed assets, operations, financial health and
affiliates.
In this scope, the disclosure of material information by publicly-held companies are monitored, penalties for companies that do not fulfil this obligation are determined and the
implementation of these penalties are secured. When an unusual price movement of stocks
of publicly-held companies is detected, first the case is scrutinized on the basis of whether this price movement stems from the disclosure of a material information or not, then
companies that do not or partially disclose information are examined, and finally penalties
are given to those companies found faulty. On the other hand, the material information of
other publicly-held companies is disclosed on the CMB’s Weekly Bulletin.
Attendance at Shareholders’ Meetings
Among oversight activities, in compliance with provisions of article 46/j of CML, capital
market experts attended to 2007 annual shareholders’ meetings of 13 companies listed on
the ISE as observer to state the problems and wrongful acts, and filed the observations
made for each shareholders’ meeting.
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Surveillance of Collective Investment Schemes
The periodical tables and reports of the collective investment schemes are monitored
continuously and in case of incompliance with the regulations, the necessary measures are
taken and the required sanctions are imposed.
A system of the electronic monitoring of mutual funds’ and investment trusts’ portfolio
structures has been developed. In 2001, the necessary technical adjustments have been
made to receive the information at the date of transaction (T) which was previously received
at the date of clearing (T+2). With this system, the information submitted to the CMB was
also analyzed in 2007 and necessary measures were taken in case of incompliance to the
regulations.
Surveillance of Intermediary Institutions
Surveillance of Financial Structure
According to the Communiqué on Principles Regarding the Capital of Brokerage Houses
and Capital Adequacy, brokerage houses are required to submit the capital adequacy statements and the data of their activities every 15 days to the CMB. In accordance with the
Board decision, capital adequacy statements and the data of activities have been submitted
weekly since 17.10.2008. For the surveillance of the brokerage houses’ financial structures,
the mentioned statements have been examined throughout the year 2008 and the necessary
warnings have been made and actions have been taken for the purpose of ensuring capital
adequacy requirements. Owing to these surveillance activities, brokerage houses have been
ensured to have a strong capital structure by arranging their asset structures.
Monitoring
The fulfilment of the requirements which are stated in the relevant Communiqués for the
partners and the employees of brokerage houses are monitored by the Association. Taking
into account that the changes in the employees of the brokerage houses are submitted to
the Association, the CMB and the Association works in coordination regarding this issue.
Changes in organization, location, technical equipment, accounting and record-keeping
system of the brokerage houses and their field offices are reviewed by the Board.
Brokerage houses’ and banks’ registration requirements of their capital market activities
licenses according to the current regulations are followed.
Throughout the year 2008, on-site examinations were conducted at 16 intermediary institutions in accordance with surveillance and monitoring activities.
Oversight of Audit Firms
Regarding the audit activity in capital markets, recognition criteria, principles of operations, qualification requirements for auditors and audit contracts are overseen by the CMB.
In order to enhance efficiency in auditing sector, quality control inspections are conducted
within audit firms.
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The project called the Remote Data Transfer System, which was started to improve the
efficiency of oversight of auditing activities, was completed, so various reports can be generated electronically.
In 2008, 12 quality control inspections were completed.
Oversight of Rating Agencies
The oversight of rating agencies is conducted by the CMB regarding recognition criteria,
operational principles, organisational requirements, documentation and rating contracts
in line with the new regulation on rating activity and rating agencies.
Market Surveillance
The Market Surveillance activities have been made according to the Board decision in
04.04.2008. According to the decision, the Exchanges and other organized markets which
are under regulation of our Board, it is essential that the Exchanges provide that the transactions are made in a transparent, regular and fair environment and provide market surveillance activities which consist of monitoring price and volume movements and monitoring transactions and orders and also which determine violations of their own internal
regulations and Capital Markets Law Articles 47/A-1, 47/A-2 and 47/A-3. In this respect,
it is decided that the front detections of the violations of the Capital Markets Law Articles
47/A-1, 47/A-2 and 47/A-3 are done by the Exchanges, and according to the detections
if some results are achieved that there may exist market abuses in the transactions, the
subject is sent to the attention of the Board, the efficiency and adequacy of the Exchanges’
market surveillance systems are checked by the Board, the Exchanges and other organized
markets send 6-month reports about their surveillance systems and surveillance activities
in one month following the 6-month period, the notifications, complaints and applications about market surveillance activities and notes from other departments and Media
Monitoring Group are sent to the related Exchanges and other organized markets and
notifications about the results of these detections by the Exchanges are sent to the attention
of the Board.
The operations for improving the market surveillance activities and increasing the efficiency and productivity of these activities, by Capital Markets Board and Istanbul Stock
Exchange, are almost done and began to test in ISE surveillance department. Moreover, the
surveillance systems tests have been completed and ready to use in Futures and Options
Exchange.
ENFORCEMENT
The objectives of the CMB’s enforcement are to prevent violations, corruptions and other unlawful practices causing disadvantages for the interest of market participants and
for the efficiency, integrity and reliability of capital markets and to apply the provisions
of CML. With this objectives, operations of publicly held companies, brokerage houses, mutual funds, pension funds, investment companies, portfolio management companies, independent auditing firms, rating companies, exchanges and other organized
markets and other institutions operate in capital markets (such as the Central Registry
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Agency, the ISE Settlement and Custody Bank Inc., the Association of Capital Market
Intermediary Institutions of Turkey) are supervised according to Capital Markets Law,
communiqués and other regulations.
Subjects of enforcement activities are determined with yearly enforcement program,
complaints of investors, feedbacks and notices from others departments of the CMB and
other governmental institutions. Subsequently, assigned experts may make inquiries on
records and entries as well as on-site investigation. Findings are reported to the Executive Board to give a verdict on whether the case involves any violation of legislation. In
case the Executive Board reaches such a verdict, prompt action is taken under the provisions of CML. The CMB’s enforcement process is shown below as a diagram.
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In this context while enforcement process executed, totally 1,754 particular documents
are registered by the Enforcement Department, 477 from outside the CMB and 1,277 from
inside the CMB in 2008. Of the outside documents, 32 are related with complaints and
denouncements, 163 are the request of information from brokerage houses, companies,
governmental organizations, 282 are related with responses of our papers or with giving
information to the CMB.
On the other hand, the Enforcement Department sent a total of 2,989 papers to the other
departments of the CMB, investors, capital market institutions, and other governmental
organizations in 2008. 1,377 of them are inside the CMB, 232 of them are the responses for
the requested information, 159 of them are the request of information, 1,033 of them are
related with the warnings of the CMB for related parties about the results of enforcement
activities, and 153 of them are the papers to give information to the governmental organizations and companies.
121 new investigations have been started related to 115 complaints and denouncements
come directly to Enforcement Department or the group of investor request and 89 manipulation cases informed by the ISE and the planned investigations within the enforcement
program in 2008. As a result of current year new investigation and continued previous year
investigation, totally 192 reports have been finalized and 22 proposals and short reports of
enforcement results have been submitted to the Executive Board in 2008. In the distribution of the proposals and reports by subject, manipulations take first place with 36% and
publicly held companies take second place with 26%. Most of publicly held companies’
supervisions are related with covered fund or profit transfers. Under the “other” heading
in proposals and short reports the main subjects are related to administrative pecuniary
punishments and cancellation of trading prohibitions.
Table 5.6. Subjects of Enforcement Activities
2007
2008
Reports
Proposals
and Short
Reports
15
17
32
1
-
27
Unregistered
Public Offerings
Insider Trading
Brokerage
Houses
Unlicensed
Capital Markets
Activities
Publicly Held
Companies
Manipulation
Reports
Proposals
and Short
Reports
Total
12.8
17
4
21
9.77
1
0.4
5
-
5
2.3
6
33
13.2
53
4
57
26.5
4
3
7
2.8
8
1
9
4.2
4
2
6
2.4
10
-
10
4.6
Total
%
%
62
13
75
30.0
76
2
78
36.2
Independent
Auditing Firms
-
-
-
0
-
-
-
0
Capital Market
Institutions
7
1
8
3.2
11
4
15
6.98
15
73
88
35.2
12
7
19
8.8
135
115
250
100.0
192
22
214
100.0
Other
TOTAL
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93
In 2008 the main part of enforcement activity consists of market manipulation cases, which
started heavily on the denouncements of the ISE. And also, the other sources of information
and the findings of the supervision by the CMB may cause to start an enforcement process
about market manipulation cases. The number of manipulation cases informed by the ISE
is 89 in 2008 and together with previous years denouncement the total number reaches
219. 76 of them have been finalized in 2008. Information about market manipulation cases,
which started with the ISE denouncements, is given in Table 5.7 below.
Table 5.7. The Denunciations of the ISE About Manipulation Cases
2007
2008
The number of cases continued from previous
year
116
130
The number of cases denunciated from the ISE
in current year
82
89
198
219
TOTAL
The number of cases resulted in current year
68
76
The number of cases transferred to next year
130
143
As a result of enforcement activities, warning, administrative pecuniary punishment and
legal prosecution can be applied. In addition to legal prosecution, one of the important
sanctions about market manipulation is to prohibit the perpetrators of the market
manipulation cases from trading on the stock exchanges and to remove their stocks from
the CMB registration. However, this prohibition can be cancelled by the CMB executive
board if trading prohibition time expires.
In 2008, as a result of enforcement activities, 85 persons or legal entities were prohibited
from trading on stock exchanges of whom 34 had been prohibited before. Also, with
the rulemaking decision of the Board dated 28.09.2007, the trading prohibition of 41
persons and legal entities that their time expired were cancelled. Hence, the number of
prohibited natural persons or legal entities is 262 at the end of 2008.
Table 5.8. The Number of Prohibited Persons or Legal Entities
2007
2008
354
249
77
54
The number of cancelled prohibitions in current year
182
41
The number of prohibited at the end of the year
249
262
The number of prohibited from previous year
The number of prohibited first time in current year
Sanctions including the above-mentioned ones that were applied in 2008 are given in Table
5.9. In the year 2008, 73 (34%) of 214 enforcement reports, proposals and short reports
were resulted without applying any sanction.
After investigations, in 105 cases the Executive Board decided to apply Public Prosecutors’
Office to implement a legal prosecution for the violation of various provisions of the CML
against related legal entities and/or persons, in 129 cases it was decided to write legal
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Annual Report
warning to the legal entities or persons for conforming to the CML, in 64 cases it gave
administrative pecuniary punishments.
Table 5.9. Sanctions as a Result of Enforcement Activities
Legal Warning
Persons
2007
2008
171
129
115
72
Brokerage Houses
22
21
Companies
34
22
0
14
Others
Legal Prosecution and Trading Prohibition
164
190
Legal Prosecution
33
105
Legal Prosecution and Repeated Trading Prohibition
74
23
Legal Prosecution and Trading Prohibition
57
62
89
64
Persons
46
24
Brokerage Houses
33
35
Companies
10
2
0
3
424
383
Administrative Pecuniary Punishments
Independent Auditing Firms
TOTAL
All departments of the CMB applied a total of TL 3,704,008 administrative pecuniary punishments for 64 persons and entities in 2008 (Table 5.10). The decomposition of TL value
of pecuniary punishments is as follows: 46% brokerage houses, 45% persons, 6.8% public
companies and 2.2% audit firms.
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95
Table 5.10. Administrative Pecuniary Punishments Causes and Amount
CAUSES AND PERSONS CONCERNED
Persons
Communiqué Serial: V, No:6 on
Principles Regarding Record Keeping and
Documentation in Intermediary Activities
Communiqué Serial: V, No:46 on Principles
Regarding Intermediary Activities and
Intermediary Institutions
Communiqué Serial: V No:55 on Principles
Regarding Investment Advisory Services
Regarding Portfolio Management Activities
Communiqué Serial: V No:65 on Margin
Trading, Short Sales
Communiqué Serial: VIII No:39 on
Principles Regarding Public Disclosure of
Material Events
Communiqué Serial: X No:16 on
Independent Auditing in Capital Markets
Communiqué Serial: IV, No.8 on Principles
Regarding Proxy Voting and Tender Offer
2007
AMOUNT
NUMBER
(TL)
46
1,945,932
2008
AMOUNT
NUMBER
(TL)
24
1,657,476
1
10,000
4
139,800
3
39,532
1
50,000
-
-
-
-
-
-
3
50,980
12
196,524
30
1,594,620
3
237,344
1
21,960
-
-
1
23,672
-
-
Contravention of Accounting Regulations
5
54,900
-
-
Unapplied Decisions of the Board
-
-
6
1,184,076
33
1,106,468
35
1,712,256
2
40,278
1
23,672
2
32,940
-
-
11
522,340
3
155,198
7
85,880
12
219,588
3
71,960
-
-
6
329,400
Brokerage Houses
Communiqué Serial: V, No:6 on
Principles Regarding Record Keeping and
Documentation in Intermediary Activities
Regarding Capital and Capital Adequacy Of
Brokerage Houses
Regarding Intermediary Activities and
Intermediary Institutions
Communiqué Serial: V No:65 on Margin
Trading, Short Sales
Regarding Internal Auditing Systems of
Brokerage Houses
Material Events
Companies
Communiqué Serial: VII No:10 on
Principles Regarding Mutual Funds
2
23,670
19
1,313,798
10
271,368
2
253,396
3
55,756
1
241,560
Communiqué Serial: VIII No:35
Material Events
Contravention of Accounting Regulations
-
-
1
11,836
4
152,796
-
-
1
40,000
-
-
2
22,816
-
-
Independent Auditing Firms
Communiqué Serial: X No:22 on
Independent Auditing
Valuation
TOTAL
-
-
3
80,880
-
-
2
69,900
-
-
1
10,980
89
3,323,768
64
3,704,008
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Annual Report
One other task of Enforcement Department staff is to investigate some cases on behalf
of the Financial Crimes Investigation Board (FCIB). In 2008, the FCIB demanded 8 new
investigations from the CMB, and 7 investigations were resulted and reported to the FCIB.
At the end of 2008, the information about the investigations on behalf of the FCIB is given
in Table 5.11 below.
Table 5.11. The Enforcement Activities on Behalf of The FCIB
2007
2008
The number of cases continued from previous year
22
25
The number of cases demanded in current year
13
8
TOTAL
35
33
The number of cases resulted in current year
10
7
The number of cases transferred to next year
25
26
ACCOUNTING AND AUDITING STANDARDS
International Financial Reporting Standards
To comply with European Union regulations The Serial:XI, No:29 Communiqué was issued
in 2008. Through this legislation, listed companies, intermediary institutions and portfolio
management companies are obliged to prepare their financial statements in accordance
with International Financial Reporting Standards. So that, full compliance with international regulations is established regarding financial reporting.
On the other hand, to ensure identical application in Turkish capital markets, financial
statement formats and related explanations were published.
Auditing Standards
International Auditing and Assurance Standards Board (IAASB), which has been formed
within International Federation of Accountants, publishes International Standards on Auditing (ISAs) that are currently applied by approximately 70 countries all over the world.
Also there is a principle decision of European Union Commission on the application of
ISAs, which was received favourably by the member countries, in order to harmonise national auditing standards of EU countries with the international standards.
In this context, the Communiqué Serial:X, No:22 on Independent Auditing in Capital Markets, which is competent with the ISAs, was published in Official Gazette on 12.06.2006 as
being the most comprehensive regulation on auditing in Turkey.
Although the Communiqué Serial:X, No:22 is competent with ISAs, because IAASB published new versions of ISAs, it needs to be updated accordingly. To do that, required work
will continue in 2009.
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97
CASES, WRITTEN APPLICATIONS TO THE PUBLIC PROSECUTORS AND
ADMINISTRATIVE MEASURES
In the article 49 of the CML, the implementation of a legal prosecution due to the offences
identified in Article 47 of the CML is conditional upon the written application to be submitted to the Public Prosecutor’s Office by the Board.
Also in the same article, it has been regulated that, Public Prosecutors who have been
informed that the provisions of CML have been violated may request an investigation by
informing the Board. By this legal prosecution system, violation of the CML has not been
considered enough for the prosecution but the application of the CMB as the supervisory
and regulatory authority has been regulated as a preliminary condition for prosecution.
After evaluating the findings which arise from Board’s own investigation and audit within
the concept of the integrity of the event, balance of interests, general meaning of the Law
and public interest, the Board applies to the Prosecutor. This system, unique to the laws
with technical issues such as the Banking Law, provides a system that on one hand the
Board is entitled to consider cases in a public interest oriented way, on the other hand judging process would be faster and more efficient by bringing the well examined and reported
cases before the Public Prosecutors and thus by not occupying the Courts with unnecessary cases. In this framework, the commencement of a legal prosecution due to the offences
identified in Article 47 of the CML is conditional upon the written application to be submitted to the Public Prosecutor’s Office by the Board. Besides, Public Prosecutors who have
been informed in any wise may request an investigation by informing the Board.
In the crimes committed in financial markets, usually there has been more than one connected actions that violate the Law. However, investigations for the actions identified in
article 47 of the CML, have been carried on as mentioned above, and the offences which
also violate the Turkish Penal Code and other laws, has been investigated according to the
general rules or the provisions of the related specific laws.
On the other side, actions of annulment against administrative acts of the Board and full
remedy actions with the allegation of damages caused by these kinds of acts or actions
have been brought to courts. Furthermore, several compensation cases have been brought
against the Board before the civil courts. In order to protect the rights of investors, the
Board has filed declaratory actions and implemented declaratory decisions.
According to the Article 46/I-(i) of the CML, the Board takes necessary measures to ensure
the prevention of natural or legal persons that are determined by the Board to have directly
or indirectly participated in acts enumerated in the provisions of subparagraph A of Article
47 of the CML from engaging temporarily or permanently in transactions on exchanges
and other organized markets.
With the aim of ensuring the security and stability in the securities markets, pecuniary
punishments have been imposed by the Board, concerning natural and legal persons who
are determined to have acted in violation of the regulations, standards and forms or general
and particular decisions made by the Board based on the CML.
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Annual Report
Cases against the Acts of the Board
Administrative Cases
As of the end of 2008, information about actions which have been commenced with the
request of stay order and/or annulment or full remedy actions in last 3 years, have been
Table 5.12. Administrative Cases against the Board Acts in the Last 3 Years
(According to the Topics)
Number
of
Pending
Cases
Year
2006
1,003
24
12
876
91
809
194
2007
391
32
21
171
167
321
70
245
23
16
116
90
107
138
1,639
79
49
1,163
348
1,237
402
2008
TOTAL
Administrative
Pecuniary
Punishment
Imar
Bank (full
remedy
actions)
Number
of
Cases
Transaction
Prohibition
The
Others
Number of
Adjudicated
Cases
Table 5.13. The Administrative Cases against the Board Acts which have been Adjudicated
Year
Adjudicated
Against
CMB
(definite)
Against CMB
(indefinite)
In favor
of CMB
(definite)
In favor of CMB
(indefinite)
Lack of
Competence
2006
809
0
28
341
425
15
2007
321
0
5
180
130
6
2008
TOTAL
107
0
9
56
24
18
1,237
0
42
577
579
39
Civil Cases
As of the end of 2008, information about cases commenced in the civil and commercial
courts against the non-administrative actions and acts of the Board in last 3 years have
been given in the table below.
Table 5.14. Civil Cases against the Board in last 3 Years
Year
Number of Cases
Number of Pending
Cases
Number of
Adjudicated Cases
2006
3
1
2
2007
9
1
8
2008
7
4
3
TOTAL
19
6
13
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99
Cases Commenced by the Board
Penal Actions/Written Applications to the Public Prosecutor
Following examination and auditing of the relevant departments of the Board, with the
decision of the Decision Making Body of the Board, the number of applications which has
been made to the Public Prosecutors by the Board, in the framework of the Article 49 of
the CML and Article 279 of The Turkish Penal Code, against the real and legal persons
determined to have acted in violation of the regulations in 2008 is 72.
As of the end of 2008, information about the written applications to the Public Prosecutor
and the cases commenced upon these written applications in which the Board has participated in as an intervener in last 3 years have been given in the table below.
Table 5.15. The Written Applications by the Board to the Public Prosecutor and the Cases
which have been Commenced Upon These Written Applications in last 3 Years
Year
Number
of Written
Applications
Distribution based on Topic
Insider
Trading
Manipulation
Others
2006
63
3
48
12
2007
42
4
23
2008
72
2
28
TOTAL
177
9
99
Distribution based on Trial Period
Investigation
by the Public
Prosecutor
Pending
Cases
Adjudicated
Cases
0
28
35
15
1
31
10
42
17
50
5
69
18
109
50
The Board has appealed to the Supreme Court against acquittal decisions.
Graph 5.1. Written Applications by the Board to the Public
Prosecutors in the Period of 2006-2008 (According to the Topics)
As of the end of 2008, information about the cases which have commenced as a result of
the written applications of the Board to the Public Prosecutor and the ones that have been
adjudicated, have been given in the table below.
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Annual Report
Table 5.16. Cases which have Commenced as a Result of the Written Applications of the
Board to the Public Prosecutor and have been Adjudicated in last 3 Years
Year
Adjudicated
Condemnation
Prepayment
Decision
of not
prosecuting
Acquittal*
Prescription
2006
35
15
0
4
15
1
2007
10
6
0
0
4
0
2008
5
1
0
2
1
1
TOTAL
50
22
0
6
20
2
(*) The Board has appealed to the Supreme Court against acquittal decisions.
Civil Cases
As of the end of 2008, information about declaratory actions, actions in persona and etc.
which have been commenced in the civil and commercial courts in last 3 years have been
Table 5.17. Civil Cases Commenced by the Board in last 3 Years
Year
Number of
Cases
Number of
Pending Cases
Number of
Adjudicated
Cases
2006
31
3
28
2007
7
1
6
2008
5
1
4
TOTAL
43
5
38
Bankruptcy Cases
Although it has a character of civil case, as it shows procedural differences, the cases that
have been commenced with the request of bankruptcy of corporations or intermediary
institutions have been preferred to be given under a separate title. As of the end of 2008,
there has been one case in last 3 years.
ACTIVITIES FOR HARMONISATION OF LEGISLATION
WITH THE EU ACQUIS
After October 3rd 2005 when it was accepted to start negotiations between the European
Union and Turkey, the screening meetings were held which serve as preparation before the
negotiation process and these meetings formed the framework about the latest situation of
the related EU acquis and what needs to be done in the Turkish legislation. In this respect,
the CMB’s main responsibilities for the harmonization of legislation are Free Movement of
Capital, Financial Services, Company Law and Economic and Monetary Policy.
Our work has continued actively on the topics that are mentioned above, in the last period.
As a result of the rapid change in financial markets and the continuous renewing of the EU
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101
legislation related to capital markets, it has been necessary to follow these developments
regularly and to finalize the necessary work in an appropriate and timely manner. In this
context, the European Union Affairs Group whose sole intention is working on EU issues
has been formed in March 2002. As efforts to harmonize our regulations with the EU acquis
coordinated by the Group responsible only for the EU affairs continued within the Board,
the collaboration with the relevant EU institutions and the process of getting assistance
funded by the EU have been commenced. Thus, works regarding the EU have been carried
out in a more effective and coordinated manner. At the same time, as well as the experts
of the EU Affairs Group, the experts of other departments of the Board have attended
courses and meetings regarding EU issues. Capital markets legislation has been translated
into English and has been submitted to the benefit of users through the web page of the
Board. All these activities have contributed to strengthening of the institutional capacity
of the Board.
Activities for Harmonization of the Legislation and Co-ordination with
Other Institutions
The CMB has been conducting its harmonisation work with the EU acquis in coordination
with other institutions. In this regard, the studies conducted by the CMB in coordination
with other institutions in 2008 are summarized below:
The CMB has been participating in the sub committees of “Internal Market and Competition” and “Economic and Monetary Issues, Capital Movement and Statistics” that have
been formed between EU and Turkey for the purpose of analytical analysis of the EU acquis depending on the decision taken by the EU Council. In these subcommittee meetings
that are generally held once a year recent changes in the EU acquis, and the work that has
been conducted in Turkey for the purpose of adoption and implementation of the EU acquis is evaluated and presentations are made. In this respect there has been participation
by the Board to the “Internal Market and Competition” subcommittee in February 2008
and “Economic and Monetary Issues, Capital Movement and Statistics” subcommittee in
June 2008.
In line with the Board’s remit, the Board has contributed to the drafting stage of the Strategy
Paper and Position Paper of the Republic of Turkey with respect to negotiations on Company Law and Free Movement of Capital Chapters.
“National Programme” as a national commitment document instrumental for transposing
the EU Acquis, and setting the deadlines for legislation harmonisation, responsible authorities and the procedure to be followed is promulgated in the Official Gazette in 31.12.2008.
The Board’s contribution on areas related to its responsibilities has been provided for the
preparation of the National Programme. Harmonisation work is being held in compliance
with the National Programme. Within this framework, taking into consideration of the
drafts prepared during the Twinning Project conducted with Germany in 2006-2007, new
Capital Markets Law drafting work continued in 2008.
The CMB participated in the works on the preparation of Turkey’s Contribution to 2008
Regular Report and transmitted comments and explanations regarding the subjects under
the CMB’s responsibility in Regular Report 2008 to the Secretariat General for EU Affairs
to be sent to the EU Commission. Also, the contribution to the 2008 Pre-Accession Eco-
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Annual Report
nomic Programme about relevant issues under the CMB’s responsibilities -has been sent to
the coordinating authority.
In addition, new EU legislation -regarding capital markets are being followed continuously
and are taken into account while drafting legislation. In this context, a series of legislation
regarding publicly held companies, institutional investors, intermediary institutions, investors, exchanges, other capital market institutions and markets have already been issued
up until now. EU Acquis that falls within the jurisdiction of the Board and the activities
of the Committee of European Securities Regulators (CESR) are regularly reviewed and
the developments are reported to the Board personnel via detailed monthly “EU Bulletin”
e-mails.
Activities to Benefit from the EU Funds
Activities are being carried out in order to benefit from the EU funds and other assistance
made available by the EU Member States for the alignment and implementation of the EU
Acquis.
In that respect, the Twinning Project named as “Assisting Capital Markets Board of Turkey
to comply fully with EU capital markets standards” which has been prepared in order to
benefit from 2004 EU’s Pre-Accession Financial Assistance and approved by the EU Commission in November 2005, has been carried out with the German Federal Ministry of Finance in 2006-2007. This Twinning Project being fully funded with the EU funds approximately with a EUR 2 million budget has an overall objective of improving the availability
of investment via capital markets through better regulation. Within the framework of the
project, activities are conducted in five components. In addition, an EU funded technical
assistance project concerning the Improvement of CMB’s Information Technology Capacity was accomplished within a period of six months in 2006-2007.1
Following the completion of the Twinning Project, a new Twinning Project proposal regarding the strengthening of the administrative capacity and information technology capacity
of the CMB has been prepared in the framework of 2008 EU’s Pre-Accession Financial
Assistance and this proposal has been approved by the EU Commission. This Project with
an estimated budget of EUR 4,706,000 aims the completion of legislation harmonisation
and reinforcing the capacity of the Board. The Project is anticipated to start in the fourth
quarter of 2009 and will last for 2 years. The project components are made up of “Drafting
and Training in the Field of Accounting”, “Improving Administrative Capacity of CMB and
Establishing Implementing Measures,, “Development of a Licensing and Training Centre”
“Strategic Information System Plan – SISP”, “Electronic Data Gathering and Application
System – EDGAS” and “Advance Surveillance System – ASUR”.
With regard to benefitting from EU Member State funds, in 2008 a Netherlands financed
Project titled “Creating An Effective Supervision System on Financial Reporting of the
Listed Companies and on the Conduct of Business Rules of Intermediary Institutions”
has been carried out in co-operation with the Netherlands Financial Markets Authority
(AFM). For developing the “supervision system on financial reporting of the listed companies” part of the Project, work has been performed in order to devise a supervision system
1
See section 5.13.7 for further information on Technical Assistance Project.
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103
based on risk analysis and other related methods. In relation to this component of the
Project in November 2007 and May 2008 study visits by the working groups have been
made to the AFM other than the sessions held in Ankara. Furthermore, IFRS training has
been arranged for CMB staff.
Within the scope of the activities held for the second component of the Project titled “offsite supervision system on conduct of business rules of intermediary institutions” activities for developing an off-site supervision model reliant on risk analysis for intermediary
institutions have been performed. In relation to this component of the Project in July 2008
study visits by the working groups have been made to the AFM in addition to the sessions
held in Ankara.
In addition to the Netherlands financed and co-operated Project work aiming to improve
the supervision of intermediary industry and listed companies, the Board has prepared a
new Project proposal for benefitting the Netherlands 2008 MATRA Pre-Accession Programme and G2G.NL. This Project proposal has also been approved by the AFM and
EVD (The Agency for International Business and Cooperation). In November 2008 the
first meeting was held with AFM representatives for the new Project titled “Improving the
CMB Enforcement System by Implementing a Risk Based Approach in Market Abuse Investigations”. The purpose of the Project fully funded by the Netherlands is to increase the
pace and efficiency of enforcement activities.
Short term technical assistance co-operation of the CMB and the Technical Assistance EU
Commission, Information Exchange Office - TAIEX continued in 2008 in order to receive
technical assistance available to the candidate countries for alignment of legislation with
the EU acquis and formation of the administrative infrastructure. Within the procedure
based on arranging seminar/workshop, study visit and expert visit for the fields technical
assistance is sought by the candidate country and approved by the TAIEX Office, workshops on “Transparency” and “Takeover” were held in Ankara in October and November 2008. Also, a study visit regarding “Safekeeping of Mutual Funds Portfolios and Risk
Management Process” was made to the United Kingdom in January 2008. Moreover, new
applications for technical support are made to the TAIEX Office.
Consultative Group and Committee of European Securities Regulators
The Consultative Group was founded in 2001 by the capital markets regulatory authorities
of the candidate countries for the purpose of information exchange and collaboration in the
implementation of the EU regulations and Directives. The Board has become a member to
the Consultative Group on 27 September 2002. The main aim of the Consultative Group
is to share the experiences of the members of the Group on the implementation of the EU
regulations and Directives and to act as a forum on full harmonization to EU standards
and to enable members of the Group. Consultative Group meetings are held twice a year
at chairman level and the representatives of the CESR, Committee of European Securities
Regulators, attend the meetings to give information on recent technical and legal developments in the EU capital markets. Besides this, steps to be taken for the integration of the
candidate countries’ financial markets to the EU capital markets are being discussed. At the
expert level meetings, workshops on specific EU regulations are organized and the issues on
the harmonization with the EU Directives are discussed in details. In this context, the CMB
participated the Consultative Group meeting at chairman level held in May 2008 in Paris.
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Annual Report
INTERNATIONAL RELATIONS
Increasing cross border movement of capital in a globalized world has increased the importance of international relations. In this context, benefiting from international practices
and experiences and enhancing cooperation with other regulatory authorities constitute an
important part of the CMB’s activities.
The CMB has attached great significance to multilateral and bilateral international relations. To this end, CMB acted in order to improve its relations with the international organisations in which it is a member and other foreign organisations which carries capital
markets related activities (OECD, World Trade Organisation, World Bank, IMF etc.), and
as a member of the International Organization of Securities Commissions (IOSCO), the
CMB has actively participated in the work of IOSCO.
Today information sharing has also great importance for the security of capital markets. In
parallel with the globalization trend, the CMB has been carrying out negotiations in order
to sign memoranda of understanding on cooperation and the exchange of information
with foreign capital market authorities.
International Organization of Securities Commissions
The IOSCO is an organization constituted by the regulatory/supervisory authorities in securities markets to ensure coordination and cooperation in the related areas, to promote
common standards of regulation and supervision of global capital markets and to enhance
international cooperation and information sharing. The IOSCO also works in coordination with the other international organizations related to financial markets and it is the most
active international organization in its field.
The CMB became member of the IOSCO in 1988, since then it has been participating in
the IOSCO operations. In that regard, the CMB has been actively participating in the work
of the committees and working groups listed below and has been contributing to the constitution of policies in line with the realization of IOSCO goals and objectives.
 Presidents’ Committee

Emerging Markets Committee (EMC)

Emerging Markets Committee Advisory Board (EMC Advisory Board)

European Regional Committee (ERC)

EMC Working Groups

Implementation Committee
 Screening Group

Monitoring Group
In order to enhance the work with IOSCO, the Board has set up an International Relations
Department in June 2002 which has undertaken the following duties:

Coordinating the cooperation and relations with the IOSCO committees/working
groups and the IOSCO General Secretariat;

Working to guide the activities of Working Groups of IOSCO EMC and developing
new mandate proposals,
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105

Submitting comments on the work of the CMB with respect to compliance with the
IOSCO principles; and international practices and,

Keeping the CMB professional staff informed of the projects carried out within
IOSCO and their results.
In that context, the CMB’s IOSCO related activities in 2008 are summarized below.
The Methodology for Assessing Implementation of the IOSCO Objectives and
Principles of Securities Regulation
IOSCO Objectives and Principles of Securities Regulation (Principles) have been approved
by the IOSCO Presidents’ Committee in 1998. Accordingly the objectives of Principles are
set out as follows;

The protection of investors

Ensuring that markets are fair, efficient and transparent;

The reduction of systemic risk.
The 30 principles that are recommended to be followed by securities regulators are organized under the 9 main headings listed below:
Principles Relating to the Regulator
Principles for Self-Regulation
Principles for the Enforcement of Securities Regulation
Principles for Cooperation in Regulation
Principles for Issuers
Collective Investment Schemes
Market Intermediaries
Secondary Markets
Clearing and Settlement
The Methodology for Assessing Implementation of the IOSCO Objectives and Principles
of Securities Regulation (Assessment Methodology) that was drawn up by the Implementation Committee with the objective of enabling securities regulators to assess the level
of implementation of the Principles in their respective jurisdictions was approved by the
Presidents’ Committee at the 28th Annual Conference of IOSCO in Seoul in October 2003.
For each principle the Assessment Methodology contains;
Key issues,
Key questions
Benchmarks,
Explanatory notes,
The level of implementation of the Principles in the related jurisdiction is determined by
applying the benchmarks to the responses provided to the key questions.
In late 2003, the IOSCO has initiated a technical assistance program to help the members
apply the Assessment Methodology. The CMB also participated in the pilot phase of that
program. The Self Assessment Report, prepared with the assistance of the IOSCO experts
in the context of the program, and the Action Plan including necessary changes in both
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regulations and practices and their timings to ensure the full compliance of our regulations
to the IOSCO Principles were completed in 2005. Since September 2005 this Action plan
has been taken into consideration in the regulatory activities of CMB.
In this context, the work on assessing the CMB regulations and the activities by the scope
of the Action Plan has been continued in 2008.
Emerging Markets Committee (EMC)
In 2008, one of the important activities of the EMC had been identifying and meeting
the training needs of EMC members. In 2003, as a result of a proposal by the CMB as
the EMC Chair, it was decided that regional training seminars be organized each year
by volunteer EMC members. In that context, regional training seminars were held in
2008 and information concerning these seminars is given below.
Table 5.18. Regional Training Seminars Organized in 2008
Date
Place
Latin America
Region
22-24 October 2008
Santiago/Chile
Asia Pacific
18-24 October 2008
Kuala Lumpur/Malaysia
Europe
12-13 June 2008
‹stanbul/Turkey
Europe
27-28 March 2008
Warsaw/Poland
The Seminar on ‘Enforcement Aspects of Takeover Regulation’, in which recently finalized
study examining takeover practices in member countries within the work of the Emerging
Markets Committee Working Group IV had been discussed in terms of theoretical, practical approaches and by case studies had taken place during 12-13 June 2008 in Istanbul, by
the host of the CMB.
Besides the participants and speakers from approximately 32 different countries’ supervisory authorities and sector representatives, wide range of participants from Turkey also attended to the Seminar. In addition to the management and staff from the CMB, participants
from both the private and the public sector like representatives from the Istanbul Stock
Exchange, the Association of Capital Market Intermediary Institutions of Turkey, Central
Registry Agency, The Association of Real Estate Investment Companies (GYODER), Turkish Institutional Investment Managers’ Association (TKYD), Association of Banks (TBB)
and Takasbank participated in this seminar and made contributions.
Besides, during the Seminar in two separate sessions, the Board’s staff and Turkish academicians had participated as speakers and shared their perspectives in relation to the existing regulatory trends in Turkey and the theoretical approach.
In addition to training activities, the working groups within EMC continued their activities
in line with the Action Plan that was adopted in 2003 with the objective of improving the
effectiveness and efficiency of the activities thereof. The CMB participated actively in all of
the projects carried out by these working groups.
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Emerging Markets Committee Advisory Board (EMC Advisory Board)
CMB was elected as a member of the EMC Advisory Board -which acts in the EMC and
carries consultative functions- at the IOSCO Emerging Markets Committee meeting that
was held on 3-6 December 2007 by the host of the Dubai Financial Services Authority.
Within the scope of this membership, CMB participated in the meeting that was held in
February 2008 and had the opportunity to share views with the IOSCO General Secretariat,
the Chairmen of the Technical Committee, EMC and the EMC Working Groups.
Other IOSCO Activities
In 2008, the CMB had participated in other IOSCO working groups mentioned below:
Presidents’ Committee: Within the context of the IOSCO general (annual) meeting,

the CMB had participated in the meeting held in Paris in May during the IOSCO Annual Conference.

Emerging Markets Committee: The CMB had participated in the meeting held in
Paris in May during the IOSCO Annual Conference.

EMC Advisory Board: The CMB had participated in the meeting held in Amsterdam
in February.

European Regional Committee: The CMB had participated in the meeting held in
May during the IOSCO Annual Conference.

Emerging Markets Committee Working Groups: The CMB had participated in the
meetings held in Paris in May during the IOSCO Annual Conference.

Implementation Committee: The CMB had participated in Madrid meeting of the
Implementation Committee, which acts with the objectives of developing methodologies for assessment and implementation of IOSCO Objectives and Principles of
Securities Regulation, in May.

IOSCO Multilateral MoU Screening Group and Monitoring Group: The Screening Group is responsible for examining the applications of the regulatory authorities
to become signatories to the Multilateral MoU aiming exchange of information and
cooperation. Within this context, the CMB had provided attendance to the meetings
in Bern (January), Madrid (April) and Hong Kong (July) in 2008. The Monitoring
Group which is responsible for the adoption of the Multilateral MoU and for undertaking all the necessary amendments comes together each year during the Annual
IOSCO Conference. The CMB had participated in this meeting held in May.
On the other hand, in relation to the activities about the projects of the working groups,
such as responding the surveys, commending on the draft reports, the CMB has contributed to the IOSCO activities. The meetings that had not been participated were followed up
via the examination of all sent reports and meeting notes.
Moreover, the staff of the CMB had been informed by the information sharing (intranet)
system about the ongoing IOSCO studies and published reports.
Meetings
The CMB participated in the following meetings with regard to IOSCO activities in the
year 2008.
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Table 5.19. Board’s Attendance at IOSCO Meetings
Meeting
IOSCO Annual Conference
- Emerging Markets Committee (EMC) Working
Group
- Emerging Markets Committee (EMC)
- European Regional Committee (ERC)
- Presidents’ Committee
- IOSCO Multilateral MoU Monitoring Group
EMC Advisory Board
Implementation Committee
Screening Group
Date
Region
May 2008
Paris
February
2008
May 2008
January,
April, July
2008
Amsterdam
Madrid
Bern, Madrid,
Hong Kong
Activities related to Organisation for Economic Cooperation and
Development (OECD)
OECD Committee on Financial Markets
Committee on Financial Markets, which is a committee of the OECD, holds regular meetings twice a year (usually on March and October) and presents its work on structuralinstitutional regulations related to financial markets and market developments to its members. The CMB attends the referred meetings which gives the opportunity to improve the
dialogue between the member states.
Membership to OECD Committee on Financial Markets is not institutional based but country based. During these meetings, the OECD member countries explain the developments in financial markets in their countries and obtain information about the developments in other member countries.
The CMB participated in the Committee on Financial Markets meetings which was held
in Paris in April 2008.
OECD Corporate Governance Steering Committee
The CMB participates actively in OECD Corporate Governance Steering Committee. The
Committee acts to improve corporate governance practices.
The CMB participated in the Corporate Governance Steering Committee meetings which
were held in Paris in March and in April 2008. The CMB also participates actively in reports and surveys of the Committee’s work.
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109
OECD Investment Committee
OECD Investment Committee had continued the studies on updating of the OECD Codes
of Liberalisation of “Capital Movements” and “Invisible Operations”, which was started in
2007, and the CMB participated in this study in relation to the capital markets activities.
The CMB also participated in the meetings of the Committee that was held in March and
in April.
World Trade Organisation (WTO) and The General Agreement on Trade
in Services (GATS)
GATS-The General Agreement on Trade in Services was inserted to GATT-General
Agreement on Tariffs and Trade (signed in 1947) during the 1986-1994 Uruguay Round
Negotiations and assigned to the World Trade Organisation which has officially started
its activities on 01.01.1995. GATS is the first multilateral agreement on trade in services.
The Republic of Turkey had signed the GATS in 1994 as one of the founder members and
the agreement was approved by the Grand National Assembly of Turkey on 25 February
1995.
GATS is a multilateral investment and trade agreement which enlarges and puts the current
legislation into action to liberalize all trade services.
GATS has 11 basic service categories that also cover financial, fiscal and banking services.
Representation in GATS is not institutional based but country based. In this context, the
CMB has been participating in WTO Financial Services Committee meetings and this
contribution continued in 2008.
In addition, the CMB also contributed to the work of revising the country commitments
on financial services within the context of WTO service negotiations.
Memorandum of Understanding
In the year 2008 the ongoing progress of cooperation between regulatory and supervisory
authorities and the initiatives to sign MoU’s has continued. All the bilateral MoU’s that
have been signed by the Board are given in the table below:
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Table 5.20. Bilateral MoU’s Signed by the Board
Country
Organisation
Date
HM Treasury
England
Financial Services Authority
August 1999
London Stock Exchange
France
Commission des Operations de Bourse (Autorité des Marchés
Financières)
Germany
BAWe (BaFin)
May 2000
Sweden
Finansinspektionen
June 2001
Italy
Commissione Nazionale per le Società e la Borsa
June 2001
May 2000
USA
Commodity Futures Trading Commission
June 2001
Australia
Australian Securities and Investment Commission
June 2001
Greece
Capital Markets Commission
October 2001
Portugal
CMVM – Comissão do Mercado de Valores Mobiliários
October 2001
Malta Stock Exchange
June 2001
Malta
Malta Financial Services Center (Malta Financial
Services Authority)
April 2002
Albania
Albanian Securities Commission
Romania
Romanian National Securities Commission
September 2003
October 2003
Bulgaria
Financial Supervision Commission
Croatia
CROSEC - Croatian Securities Commission
Dec 2004
Macedonia
MSEC - Securities and Exchange Commission
April 2005
Holland
AFM - Netherlands Authority for Financial Markets
June 2005
Bosnia
Herzegovina
Securities Commission of the Federation of
Bosnia and Herzegovina Republic of Srpska
Securities Commission
Dubai
Dubai Financial Services Authority
Montenegro
Securities Commission of the Republic of Montenegro
February 2006
Israel
Israel Securities Authority
February 2006
Taiwan
Financial Supervision Commission
China
China Securities Regulatory Commission
Syria
Syrian Commission on Financial Markets and Securities
April 2005
October 2005
November 2005
June 2006
November 2006
January 2008
The signatory works of MoU’s with other countries are still in progress.
Other Activities
The CMB participates in conferences which are related to current issues about the capital
markets. Also the Board aims to amend or improve the market conditions and seeks to
provide harmonization of our legislation with those of the European Union.
The CMB supports the participation of its staff in educational or training programs which
are organized by the foreign capital market authorities. Within this context, to provide
training facilities to the staff, the CMB works on cooperation and dialogue with the capital
markets authorities of various developed markets are still in progress.
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111
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2006 JANUARY
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2006 MAY
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2006 SEPTEMBER
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2007 JANUARY
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2007 MAY
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2007 SEPTEMBER
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2008 JANUARY
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2008 MAY
EXAM
PARTICIPANTS
DESERVED
LICENSES
SUCCESS %
2008 SEPTEMBER
TERM
2,791
11,094
254
10.48
3.46
5.98
3.86
283
148
376
2,423
2,475
9,736
8,174
174
6.20
312
2,807
10,103
3.09
230
8.62
973
2,668
10,086
9.65
265
10.20
746
2,597
10,645
7.01
297
9.37
912
7.55
3,169
12.15
11.01
12,081
263
245
2,164
9,626
1,060
8.78
16.26
10.80
9.98
307
1,107
1,888
874
ADVANCED
LEVEL
8,089
BASIC
LEVEL
Table 5.21. Licensing Examinations
10.35
89
860
13.746
142
1,032
5.05
55
1,089
14.48
126
870
13.46
107
795
14.81
124
837
16.57
120
724
17.54
110
627
20.10
117
582
DERIVATIVE
INSTRUMENTS
5.92
125
2,112
8.80
227
2,579
2.65
71
2,680
3.73
92
2,468
4.83
118
2,441
4.59
97
2,114
4.52
83
1,838
5.07
68
1,342
6.07
39
642
REAL ESTATE
APPRAISERS
25.00
14
56
29.51
18
61
64.44
29
45
73.17
30
41
87.88
29
33
83.33
30
36
85.37
35
41
66.67
22
33
57.14
20
35
CLEARING AND
OPERATION
7.18
31
432
6.84
39
570
1.92
13
676
6.64
44
663
9.14
55
602
4.68
23
491
5.22
18
345
6.78
12
177
9.09
10
110
CREDIT RATING
25.66
58
226
40.27
60
149
5.84
8
137
28.70
33
115
23.66
22
93
19.54
17
87
30.19
16
53
53.66
22
41
19.23
5
26
CORPORATE
GOVERNANCE
RATING
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10.57
95
899
2.50
16
641
4.24
22
519
4.92
13
264
IND. AUD.
.IN CAPITAL
MARKETS
2.48
10
403
6.00
38
633
1.27
7
552
-
-
-
RES. REAL
ESTATE
APPRAISERS
6.15
959
15,585
5.95
1.064
17,876
3.71
691
18,608
8.97
1,541
17,175
7.80
1,342
17,206
7.97
1,500
18,815
9.62
1,624
16,886
11.11
1,557
14,010
12.06
1,372
11,372
TOTAL
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113
LICENSING AND REGISTER RECORDING
The Communiqué of the Board on Principles Regarding Licensing and Registration for
the Professionals Engaged in Capital Market Activities (Serial:VIII, No:34) was published
in the Official Gazette and entered into force on August 11th, 2001 and the Licensing and
Registration Group was formed by the approval of the Chairman of the Board on September 10th, 2001.
The general purpose of the licensing examinations is to determine the professional qualifications, capabilities, knowledge and experiences of the professionals working as specialists, managers, derivative instruments staff, real estate appraisers, credit rating specialists,
corporate governance rating specialists, residence appraisers and independent auditors in
capital markets, and to give the licenses.
The first licensing examinations were organized in September 2002 by the Board.
Eight different type of examination was organized by the Board in 2008, namely; the Capital
Market Activities Basic Level, the Capital Market Activities Advanced Level, the Derivative
Instruments, the Real Estate Appraisers, Credit Rating Specialists, Corporate Governance
Rating Specialists, Independent Auditing in Capital Markets and Residential Real Estate
Appraisers. Clearing and Operation Officers should only take and pass the Clearing and
Operation Transactions part of the Capital Market Activities Basic Level Examination to be
able to obtain the Clearing and Operation Officers License.
The Residential Real Estate Appraisers Examinations was organized for the first time in
January 2008.
In order to be able to pass the examinations it is required that the scores taken in every
subject must be at least 60 on the scale of 100 and the arithmetic mean of the scores must
be at least 70.
The licensing examinations in 2008 were organized three times, in the months of January,
May and September. The Examination Guide which contains detailed information about
licensing examinations is updated and announced on the Internet site of the Board for
every examination period. Furthermore, the information related to the subjects and the
sub-subjects, the timetable and the number of questions for the sub-subjects of the examinations are given under the title of “Licensing Examinations” at the Internet site of the
Board.
Applications for the licensing examinations can be made through the Internet site at http://
spk.anadolu.edu.tr, to which can also be reached through the Internet site of the Board. In
2008, the licensing examinations were organized in Ankara, Istanbul, Izmir, Adana, Antalya and Bursa.
The applicants whose applications are accepted are announced at the same Internet site of
the Board one month before the date of examination. The results of the examinations are
also announced at the Internet site of the Board more or less two weeks after the examination dates. The date of announcement is given on the examination entrance form.
The candidates who took at least one of the examinations in September 2002-May 2004
period can benefit from the grace period. The grace period will end at the date at which
the results of September 2009 examinations are announced. Those who do not deserve the
license as of that date cannot work in the areas subject to licensing any more. As of May
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2004, those who do not benefit the grace period or do not have the license are not allowed
to start to work in the areas subject to licensing.
In the 19 examinations organized in the period September 2002-September 2008, totally
25,766 licenses were given (15,902 Basic Level Licenses, 5,329 Advanced Level Licenses,
1,838 Derivative Instruments Licenses, 892 Clearing and Operation Officers Licenses,
1,110 Real Estate Appraisers Licenses, 246 Credit Rating Specialist Licenses, 248 Corporate Governance Rating Specialist Licenses, 146 Independent Auditing in Capital Markets
Licenses and 55 Residential Real Estate Appraisers Licenses).
The number of candidates who took the examinations of January, May and September
terms of 2006, 2007 and 2008, the number of licenses deserved and the success ratios are
given in the following table. Since the Independent Auditing in Capital Markets Examination was first organized in September 2007 and the Residential Real Estate Appraisers
Examination was first organized in January 2008, the data related to these examinations are
given as from those months.
INVESTOR APPLICATION
The Group of Investor Requests was established based on in house Circular dated January
15th, 2003. The main duties of the Group are as follows:
To evaluate investors’ complaints and proposals and conclude the investors’ requests by preparing answers in due time and sufficiently,
To form a set of standards in replies and convey complaints and proposals to the
related departments in case it is needed,
To convey the complaints to the Enforcement Department that require on-site
examination and not solved with the existing documents and information,
To keep records of investors’ requests and follow requests conveyed to the related
departments.
Since the Law of Information Request, which came into force in April 2004, requires public
institutions to establish information units, it was decided by the in house Circular dated
June 9th, 2004 that the Group of Investor Requests will also function as information request office.
The Group consists of four rotating experts, one permanent Chief Expert, one permanent
Expert and one permanent administrative staff under the chairmanship of one Chief Expert and in coordination of one Vice President.
Requests are handled in two groups: complaints and proposals are replied within 30 days in
the framework of Law on Using the Right of Petition, or conveyed to the related institutions
to be concluded. Other requests within the context of the Law of Information Request are
concluded within 15 business days or conveyed to the related institutions. Brief information on requests made in 2006, 2007 and 2008 are shown in the following table.
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115
Table 5.22. Activities of Group of Investor Requests
Requests
Within the Context of the Law of Petition
Within the Context of the Law of Information
Request
Total
2006
2007
2008
2,999
2,127
1,706
887
904
1,145
3,886
3,031
2,851
INFORMATION SYSTEMS AND TECHNOLOGICAL INFRASTRUCTURE
The development, running, management and modernizing of the information systems,
which are required for the CMB to carry out the activities obliged by the law more effectively, quickly, confidently and appropriately to the international standards, are among the
duties of the Department of Data Processing, Statistics and Information.
The objectives that the Department of Data Processing, Statistics and Information considers whilst performing the activities are as follows:
To ensure the experts getting the information they need in a precise and secure
way,

To maintain the information technology infrastructure of the CMB continuously
running and updated,
To form a consistent database about the operations of the CMB,
To lessen the operational overload of the experts of the CMB, to enable them to
give more time to their surveillance and enforcement function,

To offer the public quick and reliable information,
To form a trustworthy capital market infrastructure, to ensure the implementation
of information security standards across the capital markets institutions,
To have a part in establishment of Disaster Recovery Center of the Istanbul Stock
Exchange, the ISE Settlement and Custody Bank, the Istanbul Gold Exchange, the
Turkish Derivatives Exchange, the Central Registry and the Association of Capital
Market Intermediaries of Turkey as providing the reasonable required infrastructure.
The activities of the Department of Data Processing, Statistics and Information that have
been performed in 2008 can be summarized as follows:
Projects in Improvement and Maintenance Stage
The improvement and maintenance activities of the applications, which were completed in
the former years and put into daily use, are carried out in 2008. These activities either stem
from the user request and error notices or the result of the usual monitoring operations of
Software and System & Network Groups.
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Institutional Information Management Platform
Institutional Information Management Platform (GözDeSis) is an application software developed for assisting the CMB to make the enforcement and surveillance activities obliged
by the Law more effectively. GözDeSis processes, stores and delivers the information that is
needed by the experts during the surveillance and enforcement functions.
GözDeSis stores the information of all legal bodies and real people related to the CMB, all
the applications made by them and their results, enforcement activities related to them, financial information, capital structure and participation information of intermediary institutions, mutual funds, investment trusts, independent auditing institutions and portfolio
management companies in the database and produces reports by making various processes
on them. Information of legal cases and people prohibited from trading is entered to the
database by using this system and this information is published on the web site of the CMB
instantaneously. All the mentioned information is entered to the system by users of the
Board.
As an addition to the mentioned information above, there exists information coming mainly from the ISE, the ISE Settlement and Custody Bank and the Central Registry Agency.
Being used only for reporting, this information is imported from the relevant institutions
via leased lines daily.
Approval mechanism is executed on the information entered to the system by the users.
According to the mechanism, that is implemented to increase the accuracy and consistency
of the information stored in the database, all kinds of information entered to the system
should be accepted as accurate before being used by other modules of the application. The
accuracy must be approved by an authorized user or if the authorized user does not approve, it must be fixed by the user entering the data. As a principle, individuals making the
approval and entrance are different. Approval mechanism is valid for not only entering a
new record but also for all updating and deleting operations.
Enforcement Support Platform
This application matches the orders placed at the ISE and the collected distribution lists
of the intermediary institutions as well as exchange order account book and the customer
registry information formed by the ISE Settlement and Custody Bank.
The parties involved in the trades are investigated by means of the software and an infrastructure related to the surveillance of manipulation and insider trading is formed. Because of the
high importance of the quick matching of orders, the need for this software is excessive.
Before May 2003, the trading in the ISE was being done in the name of intermediary institutions and it was impossible to know the legal bodies or real people giving the order.
Enforcement Support Platform was developed firstly to solve this problem in April 2002.
Along with the obligation of indicating the client numbers in the orders since May 2003,
the matching of exchange order account book and client register information was requested by the relevant department in August 2003. Thereupon, a new module was added to the
platform. Along with the commencement of getting the client registry information from
the Central Registry Agency instead of the ISE Settlement and Custody Bank since January
2006, the platform was revised according to this change.
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The last version of Enforcement Support Platform is capable of matching with both the
client numbers and distribution lists. This software is used heavily by our Board’s experts
especially during the manipulation investigations.
Mutual Funds and Investment Trusts Daily Reporting System (FonOrt)
This application is developed basically for monitoring the portfolios of mutual funds, investment trusts and pension mutual funds at the ISE Settlement and Custody Bank and
controlling whether these portfolios are assessed accurately or not. Daily portfolio data is
automatically transferred to the system from the ISE Settlement and Custody Bank and
stored at the relevant database. By means of this application, the portfolio information related to the mutual funds, investment trusts and pension mutual funds could be reported.
Currently, the system has an enormous data related to the mutual funds and is capable of
arranging detailed reports and analysis.
The data related to the mutual funds and investment trusts are published in the CMB Web
Site by using this application’s database. The data of the system are all external. Reports
defined by the authorized personnel could be produced by using the system.
The system is dynamic as the market is dynamic, therefore new information is added to the
system and new types of reports are developed continuously.
Companies Platform
Companies Platform is a work flow and information management system designed to be
used during the operations relevant to public companies. Being integrated with document
management system, this platform was developed to facilitate the follow-up of jobs, to
form a consistent database, to enable the preparation of expert reports and similar documents automatically by the system to some extent, to share all of the documents and to
determine the bottlenecks in the course of application process.
In the scope of this platform, all of the applications related to the public companies, their
stages, results, all kinds of documents that are written during investigations and the information about legal entities and real people are stored in a shared database.
Intermediary Institutions Platform
Intermediary Institutions Platform was developed for the purpose of making detailed
analysis about intermediary institutions by using the computer system effectively, supporting enforcement activities by getting early warnings and protecting investors. The system
makes various computations on the data taken from the ISE Settlement and Custody Bank,
the ISE and the Central Registry Agency and gives warnings about the intermediary institutions exceeding the limitations determined by the experts.
Daily stock and bank transfers, daily trades at the ISE of the intermediary institutions and
similar information are taken in the content of the project. The application connects to the
ISE Settlement and Custody Bank, the ISE and the Central Registry Agency everyday in a
predetermined hour and takes the files belonging to the previous workday. Various calculations are done on each file and daily statistical information is written to the database. All
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of these operations are executed automatically, without any intervention of the users. Users
can see the raw data and the intermediary institutions exceeding limitations historically.
Capital Adequacy Platform
Capital Adequacy Platform is designed for strengthening the financial structure of intermediary institutions, portfolio management companies and banks.
This platform basically represents the financial situation of institutions. The goal of this
system is to ensure the institutions to obey the CMB’s financial criteria, to strengthen their
financial structure and to minimize their risk window so that their clients invest via a more
trustworthy and stable firm. The reports generated by the processing of files sent by the
institutions take an important place in the surveillance and enforcement efforts of the relevant departments. In 2008, new project started based on the purpose of getting the capital
adequacy data via electronic signatures over internet and thus to improve the security and
confidentiality of the whole system. Thus, it will be possible to eliminate the paper traffic
by getting the reports, which are already being set to CMB by postal service and present a
heavy burden on archiving facilities at CMB, with electronic signature. The development
activities of this project are continuing.
CMB Internet Media Analysis System
It is aimed to follow the subjects which are published on the internet related to the CMB
and to use the obtained results in the enforcement activities of the CMB by this system.
Both the web pages of the newspapers and the news and stock exchange sites published
only on the internet are being examined systematically. In case of discovery of predefined
keywords in the examined web pages, these pages are recorded to the system and offered to
the users by means of a user interface for further investigation.
Electronic Archiving Platform
Electronic Archiving Platform was launched as a common platform for accessing the documents produced internally in the CMB and to transfer the archived documents to electronic media. The objective of the system is to accelerate the official operations and to increase
the efficiency.
This system is intended to be used by all departments and groups of the CMB. First of all,
the system analysis activities were done and users’ expectations were identified. According
to the requirements, implementation phase was completed and the system was put into
practice at the CMB.
Work Tracking System
Work Tracking System is designed to portion out the jobs and documents and tracking
these jobs electronically. The system is used in the Department of Enforcement, Department of Corporate Finance, Department of Intermediary Activities, Department of Institutional Investors, Department of Legal Consultancy and Department of Data Processing,
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Statistics and Information. By means of this system, it is possible to track the work overload
on each personnel, the jobs completed in a given time frame and the stages of continuing
jobs. This information is taken into account in the course of distributing the jobs among
the personnel.
Case Tracking System
The Case Tracking System is designed for the purpose of storing, processing and the reporting the various information about the all types of cases followed by the Department of
Legal Consultancy.
Projects in the Development Stage
Some of the projects of the Department of Data Processing, Statistics and Information begun in 2008 or earlier and are still in the development stage. Following is the information
about the activities of these projects which are taken place in 2008.
Surveillance Platform
The objective of the Surveillance Platform which is a joint project between the CMB and the
ISE is to build a computer based market surveillance system to monitor securities trading
activities in real time as well as to detect and investigate anomalies in trading promptly.
Warning module of Surveillance Platform is composed of 32 warnings processing the orders and transaction data in securities trading market in the ISE on a real time basis. On
the other hand, Analysis module consists of over 300 predefined and graphics supported
analyses that enable the investigation of warnings.
It is planned to monitor and survey the securities trading market more efficiently and quickly by the Surveillance Platform. Within this framework, the warnings and analyses that
were impossible to be implemented until today will have the opportunity to be executed.
Also, access to more information quickly, possibility of detailed analysis, improvement in
visuality by means of graphics features, efficiency in tracking of warnings, the capability
of experts defining and grouping warnings, definition of stock based parameters together
with detailed and comprehensive documentation will be provided. The major issue targeted in the project scope is enhancing the market’s confidence.
Surveillance Platform was initiated in May 2001 and is being developed by the CMB’s and
the ISE’s resident personnel and resources. System analysis, design, coding and test phases
of the project have been completed. The system was put into practice in 2008. It will be
continue on development and maintenance according to requests of stakeholders of CMBT
in 2009.
Public Disclosure Platform
Being developed by the joint efforts of the CMB, the Scientific and Technical Research
Council of Turkey (TUBITAK) and the ISE, the Public Disclosure Platform aims to gather
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financial statements and material events belonging to public companies and intermediary
institutions, that in the scope of the platform, by utilizing electronic signature technology.
Accurate and effective management of financial statements and material events, quick and
secure public disclosure and assistance to Board’s enforcement activities are among the
goals of the platform.
The disclosure of financial statements and material events to public at accessible points
by everybody synchronously will be ensured and an infrastructure devoted to secure data
communications of capital market institutions will be founded with this platform.
The first stage of the project, that planned to be composed of two stages, begun in November 1999 and completed in August 2001. The second phase, which stipulated as the
expansion of the first stage to all the related companies and including of all types of notices
to the system, was begun in September 2002 and the certain acceptance of this Project was
finalized in January 2007. The companies included in the project have begun to send material events to the system by November 1, 2004.
This Project was assigned to ISE with decision of CMBT in March 2008. With this decision, ISE will be performing factors of this Project. The project is planned to be put into
practice in 2009.
Crisis Management
The operational continuity is a methodology which provides the continuity of the critical
operations of institutions in case of a disaster. The two main constituents of the operational
continuity plan are “Emergency Plan” and “Disaster Recovery Plan”. The emergency plans
include the whole functional areas of the organization whereas the disaster recovery plan is
a function related to information technologies. The studies about the disaster recovery plan
were begun based on the Board decision (28.12.2007, 47/1300) regarding Crisis Management. The mentioned disaster recovery plan that covers all the actions needed to be taken
in case of a disaster is being prepared.
On the other hand, a study was started and a “Disaster Recovery Center” was established in
order to minimize the effects of a possible disaster in capital markets. This study included
the ISE, the ISE Settlement and Custody Bank, the Istanbul Gold Exchange, the Turkish
Derivatives Exchange, the Central Registry Agency and the Association of Capital Market
Intermediaries of Turkey and aimed to enable them to recover without any loss of information and with a minimum loss of time and operational continuity in case of a disaster. The
matters related to the usage of this center were determined and announced to the involving
institutions.
In this scope, it is aimed to backup the information relating to the information system of
the ISE, the ISE Settlement and Custody Bank, the Istanbul Gold Exchange, the Turkish
Derivatives Exchange, the Central Registry Agency and the Association of Capital Market
Intermediaries of Turkey in the Disaster Recovery Center. The mentioned institutions determine the level and the scope of information they will store in this center.
In present situation, the backup belonging to the ISE is stored in a suitable safe in the CMB
building in Ankara periodically. The Central Registry Agency and the ISE Settlement and
Custody Bank have brought their systems and completed the installations.
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Remote Data Gathering Project
Remote Data Gathering is a software project that was launched in the last quarter of 2006.
The objective is to make the data communication of the CMB with the related institutions
more productive and to lessen the operational overload on Board personnel. Unedr the
existing system, the data of capital market institutions which have to be monitored by the
CMB is recorded to the institutional systems by Board’s employees. This process increases
the work load of the Board employees. With the project intended to solve this problem,
the necessary data will be recorded to the CMB’s system by the institutions themselves, all
responsibility will belong to the institutions and thus the work load of the CMB’ personnel will be decreased and the efficiency of the operations will be improved. The project
was finished at the end of 2007 and was put into practice in the first quarter of 2008. The
improvement and maintenance activities of the project are continuing. These activities are
based on the requests that come from the Department of Accounting Standarts which is
the department that uses the system.
Trading Prohibition Project
This system is designed to make the trade prohibition process of the CMB more effective
and put into test use in 2008. In this system, erroneous data entry will be avoided by the
automatic calculation of prohibition period and an automatic warning system at the end of
this period, thus the whole process will be more effective. It is planned to put this system
into official use in 2009.
Hardware and Infrastructure
The entire hardware and network infrastructure were renewed according to the latest technology when the main office of the CMB in Ankara moved to its new building in August
2003. It’s a necessity to maintain this infrastructure running, up to date and reliable all the
time for our Board’s operational continuity. The activities of System-Network Management
and Help-Desk Groups of our department were directed to ensure this goal. The activities
carried on by the mentioned groups have continued in 2008.
Internet Platform
In the CMB internet site, the activities of the CMB related to Turkish Capital Markets and
the subjects aimed to inform the public are published. This site is reached from the http://
www.spk.gov.tr link. The site can also be used by the institutions acting in capital markets
to transfer data to our Board. The site was completely renewed and put into practice in
2008.
The CMB internet site includes the following subjects:

Capital markets legislation,

Capital markets news and announcements (monthly and weekly bulletins, communiqués, draft communiqués, press announcements, other announcements)
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
Capital markets institutions and companies (the ISE, the Istanbul Gold Exchange,
the Turkish Derivatives Exchange, the ISE Settlement and Custody Bank, the Central Registry Agency, the Association of Capital Market Intermediary Institutions of
Turkey, publicly held companies, intermediary institutions, mutual funds, investment trusts, portfolio management companies, independent auditing companies,
real estate appraisal companies, rating institutions)

Legal cases and people prohibited from trading (list of people prohibited from trading, information about legal processes)

Investors corner (subjects aimed to inform investors)

Application for information request

Publications (research reports, documents related to various seminars and lectures, annual reports of Board’s activities)

Internet addresses of the related sites

The widest dynamic information related to mutual funds.
As well as the above matters, the weekly and monthly bulletins, new announcements and
improvements are sent to the members by electronic mail via membership system taking
part in the web site.
Information Security Management System
It is very important for our Board to access the necessary information on a timely, secure
and precise way to ensure the fair and orderly functioning of the markets and protecting
the rights of investors. The secrecy, integrity and availability of information are directly
connected with the service quality and professional image of the CMB. Being aware of the
importance of the information security, the Department of Data Processing, Statistics and
Information has founded the Information Security Management System conforming the
international standard ISO/IEC 27001 and been evidenced materially by the Turkish Standards Institution. Moreover, Information Security Forum has been established to execute
the monitoring and auditing functions and to ensure the smooth operation of the system.
Information Security Management System has been founded to protect and manage the
information assets of the CMB systematically. This system makes up awareness about the
information security such as information assets are protected against unauthorized access,
secrecy and integrity of the information is ensured, prevention of giving access to unauthorized persons, intentionally or carelessly and availability of information to authorized
ones when needed.
Information Systems Auditing
Based on the Board decision (14.12.2006, 52/1499) of examination of the information
systems of the ISE, the Istanbul Gold Exchange, the Turkish Derivatives Exchange, the ISE
Settlement and Custody Bank, the Central Registry Agency and the Association of Capital
Market Intermediary Institutions of Turkey, the examination of the information systems of
the ISE Settlement and Custody Bank, the Turkish Derivatives Exchange, the Istanbul Gold
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Exchange and the Association of Capital Market Intermediary Institutions were carried out
in 2007. The examination of the information systems of ISE and Central Registry Agency
were performed in 2008 and the report were presented to the Board. The board decisions
taken based on these reports were sent to the related departments and institutions so as to
inform them.
European Union Funded Projects
In order to utilize from the European Union funds in the studies of the CMB, consultancy
service was taken in 2004 and terms of reference were prepared for the three projects owned
by the Department of Data Processing, Statistics and Information. Hence the project named “Technical Assistance for Further Development of the Capacity at the Capital Markets
Board of Turkey” was started in December 2006. It was aimed to improve the technical
infrastructure of the CMB by this project. The project was completed in the third quarter of
2007. Three feasibility studies were made as a result of the project. As a result of the acquired
information, a new application was done for the implementation of these projects and the
preliminary acceptance was taken. Afterwards, these three projects were combined with the
twinning project of the CMB. Terms of Reference documents with regard to these projects
will be prepared in 2009. Brief explanation for the mentioned projects is given below.
Strategic Information System Plan
The information technology strategy of the CMB for the next three years was determined
by this project. In the scope of the plan, the vision related to the information technologies
of the CMB was decided and the investment needs related to human resources, software,
hardware and training were designated in accordance with this vision. The relations with
the capital market institutions were scrutinized and the coordination of the information
technology operations of the coming years was discussed. The objective of the project is to
support the effective and proper use of the information Technologies across all the departments and groups of the CMB.
Advanced Surveillance System
Being an addition to the existing “Surveillance Platform”, which is the joint project of the
CMB and the ISE, it is aimed to investigate the anomalies in the securities trading market
with more advanced techniques and to increase the capacity of the Surveillance Platform
by this project. The feasibility report of the project was completed.
Electronic Data Gathering and Application System
The main purpose of this system is to enable the capital market institutions to perform
the information sending and application processes via internet using electronic signature
technologies. The feasibility report of the project was completed.
Strengthening the Capacity of Information Technology Audit
There has been an application to European Union funds for the project named “Technical
Assistance for Strengthening the Audit Capacity of the Capital Markets Board of Turkey”
in order to get technical support for the preparation of the legislation necessary for the
establishment of information security standards across the capital markets which is one
of the strategies of the CMB. Preliminary acceptance was taken for the mentioned project.
This project was combined with the twinning Project of CMB.

Annual Report 2008 - Capital Markets Board of Turkey

Transcription

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