Borsa Istanbul restructure to boost interest in stocks, capital markets

Published 03.10.2019 00:00

Borsa Istanbul's (BIST) existing structure of "Star Market" and "Main Market" will be divided into two categories within itself and updated as Star 1, Star 2, Main 1 and Main 2 as of Nov. 4, with the aim of having shares of similar size, depth and liquidity levels within the same market and group. In a comment on the latest structural change at the Borsa Istanbul, Treasury and Finance Minister Berat Albayrak said the BIST market structure regulation would increase interest in the stock and capital markets. "We completed the BIST market structure update as one of our NEP targets," Minister Albayrak said on Twitter, referring to the New Economic Plan. "With the regulation that will be put into operation on Nov. 4, the interest of our citizens in the stock market and capital markets will increase and they will be able to get more shares from the development and prosperity of our country," he added.

In this context, real estate investment trusts, venture capital investment trusts and securities investment trusts in the Collective Investment Products and Structured Products Market will be taken to the Star and Main Market.

Meanwhile, while only publicly traded market value used to be taken into consideration when creating markets before, the market/group selection will now cover total market value, free float ratio, number of individual investors, institutional fund investment amount and liquidity criteria.

The new application aims to include shares of similar size, depth and liquidity levels within the same market and group. In this way, the BIST will have the flexibility to determine the most appropriate transaction principles on a group basis with general rules.

With the entry into force of the regulation, the Capital Markets Board (SPK) will abolish the ABCD grouping arrangement for shares.

Star 1 to cover firms with market value over TL 750 million

In the study covering 352 companies traded in the Star and Main markets in the stock market, the Star 1 group will include companies with a market value of more than TL 750 million and market liquidity at the international level.

Star 2, on the other hand, will include companies above the threshold values in all the criteria.

Some 172 of the companies within the scope of the study will be included in the "Main 1" and will form the body of Borsa Istanbul. The companies that do not meet the criteria for Star markets and Main 1 will be grouped in Main 2.

Companies will have to meet all the criteria of their market group.

The new practice will have two exceptions. The first of these is that if the companies with a market value of more than TL 500 million in the actual circulation of shares are not included in Star 1, they will be covered under Star 2 in terms of size regardless of other criteria.

In the second exceptional case, among the shares in Main 1, shares in actual circulation amounting over TL 15 million in the market value and those with total net dividend return of the last three years standing at over 15% will be classified under Main 1.

The last one-year average values will be used in the calculations. The study will be updated with the indices in December. In the following process, updates will be made in line with the index periods, and companies will be allowed to switch between groups.

The new share market structure will be commissioned on Nov. 4 with all related transaction principles.

Borsa Istanbul Deputy General Manager Mehmet Gönen stressed the importance of increasing the number and diversity of investors to create deeper and more liquid markets in line with the objectives of the Istanbul Financial Center. "We expect that the new market regulation will encourage companies to better explain themselves to investors," Gönen said. "In the study period, we held meetings with the Capital Markets Board, Turkish Capital Markets Association (TSPB) and companies, receiving the opinions of all stakeholders. Our efforts will continue with the aim of gaining the trust of more investors," he added.

Share on Facebook Share on Twitter