1. Hüseyin ERKAN Chairman & CEO Istanbul Stock Exchange (ISE)
HOW CAN WE INCREASE THE ATTRACTIVENESS OF THE REGION AS AN AREA FOR INVESTMENT?
Hüseyin ERKAN
Chairman & CEO
Istanbul Stock Exchange (ISE)
Conference on the Prospects for Capital Markets in Southeast Europe
Sofia, 16 September 2008
İMKB Vadeli İşlemler Piyasası Müdürlüğü

2. Key Trends in Global Markets
High volatility in the financial markets
More strict regulatory standards
Increasing role of governments (liquidity injection)
Closer coordination among international institutions
International risk surveillance
More accurate and timely disclosure (Financial Stability Forum day plan of G-7 Countries)
Sovereign Wealth Funds (Gulf & Far East Countries)
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3. Trends in Stock Exchanges’ Industry
Demutualization
OM Group
Euronext
Mergers and Acquisitions
NASDAQ- OM
NYSE-Euronext
Consolidation
With the sustained economic growth, Turkey has a big potential among the number of companies and investors.
Exchanges vs Dark Liquidity Pools
Fragmentation
* MiFID *ECN
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4. Emerging Markets vs Developed Markets
Market Capitalization
Traded Value
Emerging markets
Source: WFE
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5. Strong Potential for Growth in Emerging Markets
Until now, emerging market exchanges enjoyed rapid growth based on the expansion of cash equities market
Increasingly, emerging markets exchanges are exploring revenue diversification opportunities as the market structure becomes more mature and competition amongst exchanges intensifies
With the sustained economic growth, Turkey has a big potential among the number of companies and investors.
Source: Credit Suisse
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6. Improving Alliances ISE and ASE are about to launch a common index
ETFs on this index will be traded in both exchanges
Creating fair, efficient and transparent market environment with little or no barriers to trade between the exchanges operating in the same region
Organizing joint training and staff exchange program

7. ISE’s International Standing
President of the “Federation of Euro-Asian Stock Exchanges” (FEAS)
Coordinator of the “OIC Member States Stock Exchanges Forum”
Participation to Regional Exchanges
Baku Stock Exchange (5.5%)
Kyrgyz Stock Exchange (24.52%)

8. FEAS - FEDERATION OF EURO-ASIAN STOCK EXCHANGES
29 Countries 32 Member Exchanges
8 Affiliate Members
TURKMENISTAN
TURKEY
UKRAINE
UNITED ARAB EMIRATES
UZBEKISTAN
BULGARIA
CROATIA
EGYPT
GEORGIA
IRAN
IRAQ
MEMBER EXCHANGES
OMAN
PAKISTAN (2)
PALESTINE
ROMANIA
SERBIA
MONTENEGRO
ALBANIA
AZERBAIJAN (2)
ARMENIA
BAHRAIN
BELARUS
BOSNIA HERZEGOVINA (2)
JORDAN
KAZAKHSTAN
KYRGYZ REPUBLIC
MACEDONIA
MOLDOVA
MONGOLIA
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9. FEAS Region Statistics

10. How FEAS Serves to the Needs of Member Stock Exchanges ?
Promotes mechanisms for reliable, transparent and continuous trading and settlement
Creates greater awareness and visibility for the region’s stocks and investment opportunities
Helps to promote the listing of home market investment grade companies in the regional markets and encourages them to be included in regional indexes (i.e. Dow Jones)
Provides network and updated information to the new members in the region, with meetings, web applications & publications (with the joint work of FEAS, ISE, WFE and OECD)
“Best Practices for the Development of Stock Exchanges in Transition Economises”
“Alternative Sources of Finance for SMEs”

11. How FEAS Serves to the Needs of Member Stock Exchanges ?
Create linkages among:
The regions’ intermediaries
The regions’ data providers
The regions’ settlement and custody institutions
Create a centeralized training hub for FEAS members in order to encourage research and regulatory implementation via bilateral exchange program
Promote Corporate Governance

12. FEAS Task Forces MEDIA (Awareness, Information and Marketing)
REGIONAL INDICES (Dow Jones Indexes)
CORPORATE GOVERNANCE (Common Principles)
AFFILIATE MEMBERS (Regional CSD Membership)
FEAS DATA CENTER
XBRL (Extensible Business Reporting Language)
RESEARCH & DEVELOPMENT

13. Turkey: Gateway to Europe, Asia and the Middle East
Turkish economy has a growing potential in different sectors
Property projects
Telecommunication & Technology
Infrastructure Projects (utilities, ports, highways)
Turkey stands to be a corridor in the middle of the GCC countries, Europe and Asia
Net FDI to Turkey in is US$ 20 billion in each year (1/3 of the net FDI comes through the ISE)
The Turkish capital markets are highly liquid and appeal to foreign investors (high level of investor confidence)
Enhanced market infrastructure
Legal framework in harmony with the international standards
Technological infrastructure is strong and competitive

14. Investment Opportunities in Turkey
Investors' Preference
What Turkey Offers
A well-developed banking sector
46 local commercial and investment banks
4 participation banks
Free movement of funds
Investment-friendly policies
100 % foreign ownership allowed
Tax treaties with 86 countries
Booming property market
Profitable investment opportunities
Development of the energy industry for the region
Growing need for infrastructure development
Project financing for fast growing companies 
World's 5th largest bond market
A wide-range of capital market investment
ETF market is growing
instruments
New regulations for structured warrants and
asset backed securities are on the way
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15. Clearing settlement: T+3,....,T+15
132 Members (Total)
91 Brokerage Houses
12 Inv. & Develop. Banks
29 Commercial Banks
132 Members (Total)
91 Brokerage Houses
12 Inv. & Develop. Banks
29 Commercial Banks
Clearing settlement: T+3,....,T+15
Clearing settlement T,... ,T+90
Stock Market Price Margins:  10% per session
104 Members (Total)
104 Brokerage Houses
Clearing settlement T+2
ISE Settlement & Custody Bank (Takasbank)
Central Registry Agency

16. ISE’s Market Performance
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17. ISE Markets Total Trading Volume (Billion USD)
6 times
Turkey’s GDP

18. ISE Stock Market Trading Volume (Million USD)
stocks
per day

19. Scale of ISE Companies (as of August 29, 2008)

20. Stock Market Capitalization By Sector (as of August 29, 2008)
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21. Market Capitalization 2008/7 (Billion USD)
Source: WFE

22. Market Traded Value 2008/7 (Billion USD)
Source: WFE

23. Number of Listed Companies 2008/7
Source: WFE

24. Foreign Participation in the IPOs
Total Revenue (Million USD)
Foreign Participation (Million USD)
Foreign Participation
(%)
1998
383.35
280.96
73%
1999
90.72
10.06
11%
2000
2,806.22
1,930.01
69%
2001
0.24
0.02 8%
2002
53.95
20.63
38%
2003
11.37 - 0%
2004
482.58
181.61
2005
1,743.96
1,284.05
74%
2006
930.50
579.36
62%
2007
3,298.31
2,019.57
61%
2008/7
1,900.00
1,150.00
Source: ISE
Foreign participation in IPOs is about 66% on average in the last 3 years
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25. Foreign Participation in the ISE Stock Market (as of % of free float market capitalization)
Source: CRA

26. Istanbul attracts and appeal to Major International Financial Institutions
Citigroup
Deutsche Group
Merrill Lynch
Morgan Stanley
Lehman Brothers
Credit Suisse
UBS
EFG Eurobank
Credit Agricole Cheuvreux
Unicorn Investment Bank

27. Comparison of ISE-100 with MSCI Indices (2005/8=100 USD based)
Source: Bloomberg, Morgan Stanley

28. ISE National 100 Index vs. ISE Corporate Governance Index
The firms having a CG rating at the ISE-100 index has a
total weight of % in the ISE-100 index
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29. P/E Ratios
Source: Bloomberg
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30. Future Outlook Road map for co-operation and common projects
Cooperation among SEE countries’ stock exchanges should be supported by both the governments and the regulatory bodies
Regional transformation should be carried out with an international perspective on legal, fiscal, social and regulatory framework as well as in compliance with MIFID