Turkish derivatives will soon be tradeable on the LSE

Turkish derivatives will soon be tradeable on the LSE

The London Stock Exchange is to begin trading Turkish futures and options, following a deal with Borsa Istanbul. The agreement will help to open up the Turkish market to more investors; it will also help to deepen the LSE’s derivatives market, which it has been trying to build up in recent years.

Under the terms of the partnership agreement London Stock Exchange Derivatives Market will offer trading in futures and options on the BIST 30 Index and other top Turkish stocks from the second half of 2015. In addition, the two exchanges are also planning to launch an index partnership covering all indices for Turkish securities, based on IOSCO regulatory standards. CCP clearing services will be provided by LCH. Clearnet and its clearing members.

The Turkish economy has had a meteoric rise over the last few years, but the country has also been also rocked by political instability caused by a divisive national election campaign, political scandals and public protests early last year. Nevertheless, the exchange ended 2014 as one of the top five markets in the world, based on the performance of its BIST-100 Index, which gave investors an average yield of 26.43% over the course of the year. The flagship BIST 30 Index futures currently trade, on average, more than 170,000 contracts per day on Borsa İstanbul.

“Turkey is currently one of the most exciting emerging markets in the world, and will be in a key position to help shape the global economic agenda, through its Presidency of the G20 in 2015,” said Xavier Rolet, LSE chief executive. “With a near-trillion-dollar GDP, export-oriented economy, and dynamic corporations, its capital markets exhibit enormous potential. London Stock Exchange Group is the natural trading and index partner for Borsa İstanbul as the Turkish capital markets rapidly develop into a major regional financial hub, alongside the Istanbul Financial Centre initiative.”

The Istanbul Financial Centre project is a $2.6 billion government-sponsored push to make Istanbul a hub for international financial services. The ten-year plan encompasses major infrastructure improvements, including a new subway line and infrastructure for power, water, data and security.  It has also been supported by reforms to Turkey’s Capital Markets Law, which uses the same definitions of financial instruments found in the European Commission’s MiFID legislation.