Borsa Istanbul - A Look at the Horizon After Historic Highs in 2021

By: Korkmaz Ergun, Chief Executive Officer, Borsa Istanbul Feb 2022

The pandemic has brought many changes to the way we work. In your view, what changes are here to stay that will shape the workplace of the future?

We left behind a tough year in 2021, with the lingering pandemic that has been affecting our lives for almost two years. In the meantime, we experienced encouraging new developments in Turkish capital markets.

Despite all the difficulties, we were able to offer our companies and investors many new products and services while providing uninterrupted service in all our markets. Our public offerings, number of investors, trade volumes and indices reached historic high levels.

This period changed the way we work widely across the globe. Until 2020, we could not imagine a world where so many companies switched to remote working practices with almost all of their conferences and meetings taking place online.

As with many other companies in Turkey and abroad, as the first few cases of Covid appeared in March 2020, we swiftly moved to launch a remote working program at Borsa Istanbul and encouraged our employees to work from home. It is still in effect and 50% of our staff are working remotely at the moment.

Going forward, we see remote working becoming increasingly part of our company culture for the foreseeable future, even after Covid is over. We have adopted a new practice of allowing our colleagues to work remotely from home once a week if they want to.

During the pandemic, we preferred to meet via digital applications and platforms because it is highly time and cost efficient. I believe that in the future, conferences and meetings will continue to be held online frequently. Colleagues from abroad are now able to attend conferences that we are organising more easily. I think online gatherings will be here to stay, and hybrid conferences might also be popular in the coming years.

In Turkey, it is legally mandatory for companies listed on Borsa Istanbul to organise both physical and electronic meetings in order to provide their shareholders with the electronic means to enable their attendance at meetings via the Electronic General Meeting System (e-GEM). Developed by our Central Securities Depository (namely MKK, a subsidiary of Borsa Istanbul Group), e-GEM enables shareholders to exercise their shareholding rights and allows issuers to handle all aspects of the meeting process. This tool, along with the Electronic Board of Directors System (e-BDS), became very important and provided great convenience during the pandemic.

What do you see as the biggest challenges and opportunities for your exchange in the year ahead?

Retail investor interest in Turkish capital markets has soared throughout the pandemic. In the last two years, the number of retail investors with a balance in the equity market nearly doubled and reached 2.4 million by the end of 2021. We also witnessed a record number of IPOs in 2021 - 52 to be exact. These IPOs led many to become first time equity investors. With our new proactive approach to the whole process, we are keen to keep the number of IPOs high in 2022 as well.

The new retail investor phenomenon is both an opportunity and a challenge for us. It is a much-welcomed opportunity because of the liquidity provided by retail investors. Due to the high liquidity, Turkish companies increasingly prefer to utilise capital markets for their financing needs, which in turn supports employment, export and growth prospects in the country. On the other hand, the rise in the number of retail investors emphasised our responsibility to protect them from misinformation and manipulation. As the sole stock exchange in Turkey, our main responsibility is to provide a safe, reliable and world class trading environment for investment with transparent rules and regulations. We encourage our investors to consider capital markets for their long-term investments. We aim to improve the financial literacy of all investors, especially new ones, and to equip them with the proper knowledge to manage their investments. We believe investors will remain engaged with the capital markets as their level of awareness increases, the partnership culture takes root, and the use of dividend income rises.

During the past year, we prepared and published a lot of content on our website and social media channels to foster financial literacy in capital markets. We have been conducting online training programs on a regular basis since the beginning of the pandemic, and we are very keen on ensuring investor protection. Offering a safe and reliable trading experience in line with international standards is our commitment to our issuers and investors. It is also our strength and value proposition. The challenge is to keep this promise despite the ever-changing business conditions of the future. Yet we also see this as an opportunity. Our capital markets have strong institutions, regulations and tools in place that give us confidence for the future.

What was your most memorable moment in the past year as a leader?

In 2021, we reached a record high number of IPOs, with 52 companies going public, and the amount of capital obtained from the public offerings reached 22 billion TRY. By way of comparison, we had six IPOs in 2019 and eight in 2020 and raised 1.3 billion TRY in total in both years. As the former director and executive vice president of the Borsa Istanbul Listing Department, every time we rang the bell and welcomed a new company, I was particularly pleased.

We proactively started a new series of meetings with companies that are not traded on Borsa Istanbul. I believe that this direct contact with companies, equipped with the proper know-how and a solution-oriented approach made a big difference. We basically made sure to let those companies know that we are there to work towards solving their problems as much as possible. Our aim is to ensure that more and more companies are financed through public offerings in upcoming years. The long-term financing needs of our companies for investment and growth are primarily and most efficiently met by capital markets and Borsa Istanbul.

What are three key industry themes you will be focused on in 2022?

Success does not necessarily come from ground-breaking innovation, but sometimes through robust implementation. We are putting operational excellence and business continuity at the centre of our strategy while preparing for 2022 and beyond.

We will continue to focus on unleashing the potential of our markets through new products and services, including commodity-based products, new derivative contracts, index and data services.

We are working towards building closer relations with the investor community. As with our issuers, we would like to become a solution partner for our investors and work with them to resolve any issues they may have in our markets. We are keen to attract more international investment and issuance.

International and regional cooperation is an important priority for us, as we work towards developing and sustaining robust relationships with our international counterparts. We are increasingly becoming a solution partner to other exchanges in the region with regards to exchange technology.

On digitalisation, we are focusing on developing and trading blockchain-based products, as well as cloud solutions, artificial intelligence, data analytics and cyber security applications. With the help of big data analytics we are working on developing new data packages and products for various user categories.

On sustainability, as one of the founding members of the Sustainable Stock Exchanges (SSE) initiative in 2009 and as one of the first 11 members of the Derivatives Exchanges Network, established by SSE in 2021, we are keen on facilitating and promoting sustainable finance in our jurisdiction, together with all our shareholders. We have already taken numerous steps in this direction, including our refined sustainability index, ESG reporting guidelines and our training program that aims to develop capacity in listed companies. On the social side, we are providing a capacity building program and laboratories in universities and we sponsor a world class, SSCI-indexed academic journal, namely the Borsa Istanbul Review. On the green side, green bond and sukuk regulation will be announced soon and we are working on launching a carbon market. With these steps and more, we will continue to develop green products and services, promote sustainability practices, and support our market participants in their efforts.

Tell us one thing that will change in 2022 and one thing that won’t?

Unfortunately, it has become clear from the data that Covid will not be completely gone this year and uncertainty in the global markets will continue in 2022.

What I believe will change, in a positive manner, is climate awareness. The climate crisis is increasingly acknowledged by regulators, companies and individuals. I believe Turkey will become an important player in the field of sustainability in the near future. We will increase our efforts with regards to capital markets, together with our regulators, companies, investors and other stakeholders.


The views, thoughts and opinions contained in this Focus article belong solely to the author and do not necessarily reflect the WFE’s policy position on the issue, or the WFE’s views or opinions.