London Stock Exchange teams up with Turkey’s Borsa Istanbul

One of the world's biggest stock exchanges, London Stock Exchange Group (LSEG) has entered into a partnership agreement for trading derivatives and index products with Turkey's Borsa Istanbul (BIST), expanding its sphere into emerging markets.

Under the terms of the deal, LSE's derivatives market will offer trading in futures and options on Turkey's flagship BIST 30 index on leading Turkish stocks. Besides, LCH.Clearnet will provide central counter-party services to LSE's derivatives market and its clearing members, the stock exchanges said in a release yesterday.

The BIST 30 index futures currently trade, on average, more than 170,000 contracts per day on Borsa Istanbul.

London trading in the products is expected to begin in the second half of 2015, subject to regulatory approvals and customer readiness.

In addition, FTSE and Borsa Istanbul plan to launch, by the end of 2015, an index partnership which will enable the Turkish market platform to benefit from FTSE's unique technical expertise, top global positioning, and leading customer footprint, and significantly enhance the accessibility for international investors to Turkish markets.

LSEG CEO Xavier Rolet said, ''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.''

''With a near-trillion-dollar GDP, export-oriented economy, and dynamic corporations, its capital markets exhibit enormous potential,'' Rolet stressed.

Turkey, with its vision to become one of the world's top 10 economies by 2023, is rapidly developing its capital markets into a major financial hub, alongside the Istanbul International Financial Centre, a 45-million square feet of financial infrastructure facilities, which is under construction.

For LSEG, the deal with Borsa Istanbul is an important step in enhancing its position as the world's most international capital market.

''The index partnership will build on the group's powerful track record of working with ambitious exchanges around the world to develop cutting-edge index products,'' Rolet said.

In June 2014, LSEG acquired US indexes firm Frank Russell Group for approximately $2.7 billion to expand its reach across the Atlantic (See: LSE group acquires US stock market indices provider Frank Russell).

Borsa Istanbul's chairman and chief executive officer Ibrahim Turhan commented, ''As we in Istanbul build the infrastructure of the Turkish capital markets, LSEG is an inspiring partner for us, both as a model for a successful strategy in the sector, as well as a key operating partner for many of our business operations.''

London-headquartered LSEG is the world's fifth-largest stock exchange after New York, Nasdaq, Japan and Euronext.

Founded in 1801, the group operates a broad range of international equity, bond and derivatives markets including LSE, Borsa Italiana, Europe's leading fixed income market MTS, and pan-European equities platform Turquoise, providing unrivalled access to Europe's capital markets to international businesses and investors.

BIST is the sole stock exchange in Turkey which combines the former Istanbul Stock Exchange (IMKB), the Istanbul Gold Exchange and the Derivatives Exchange of Turkey. The new exchange began its operations in April 2013 and has a market capitalisation of over $412 billion. Its major shareholders include the Turkish government with 49-per cent stake and IMKB with 41 per cent.

BIST is also a shareholder in regional peers in Bosnia, Azerbaijan, Kyrgyzstan and Montenegro. Two days ago, BIST raised its stake in Bosnia Sarajevo Stock Exchange from 5 per cent to nearly 10 per cent.

Turkey's $822-billion economy is among the top 20 economies in the world. The country with a population of 77 million has performed reasonably well in the past decade and was one of the fastest growing economies in the world in the aftermath of the financial crisis, posting around 9 per cent growth in 2010 and 2011.

It notched 2.8 per cent in the first three quarters of 2014, and it is estimated that the economy would grow 3.3-3.5 per cent for the whole year, compared to 4-per cent expansion in 2013.