“İstanbul: Regional Hub, Global Actor” Forum Series -1: Washington, 2013
The first “İstanbul: Regional Hub, Global Actor” Forum, which was organized by Borsa İstanbul and attended by Deputy Prime Minister H.E. Ali Babacan, was held in Washington, D.C. today.
In the panel entitled “İstanbul: International Financial Hub”, Borsa İstanbul Chairman & CEO, Dr. İbrahim M. Turhan, underlined the great opportunities for İstanbul, both in Turkey and the neighboring region, adding that, “Istanbul owns most of the 5 characteristics of a financial center which are capacity, connectivity, competitiveness, capital, specialty. We are aware of what we have to do in the areas of competitiveness and capital. The restructuring of the capital market business model and reconsideration of the regulatory framework and tax regulations with this point of view and in compliance with the strategic objectives set forth in the MTP is of crucial importance”.
Dr. Turhan used Kazakhstan as an example for “regional opportunity”, saying, “In Kazakhstan, there are a few companies, but they are large companies compared to their domestic market. However, they will be neglected if they go to big markets. İstanbul stands somewhere in between. Sometimes, it’s advantageous to be mid-sized”.
In concert with the World Bank, Borsa İstanbul will host the first Global Islamic Finance Development Center outside the US.
An international forum entitled “İstanbul: Regional Hub, Global Actor”, was held by Borsa İstanbul in Washington, D.C. on Friday, October 11, 2013.
The Forum was realized in cooperation with the İstanbul Financial Center Initiative, as part of the efforts to make İstanbul an international financial center, which is the mission of Borsa İstanbul. The Forum was opened withkeynote speaker Deputy Prime Minister H.E. Ali Babacan’s speech.
As part of the Forum, a panel entitled “İstanbul: International Financial Center” was held, which the Borsa İstanbul Chairman & CEO Dr. İbrahim M. Turhan participated in. The panelists were NASDAQ OMX Vice President Meyer Sandy Frucher, World Bank Financial Systems Global Practice Manager Abayomi A. Alawode and Islamic Financial Services Board (IFSB) Secretary General Jaseem Ahmed.
“There are Great Opportunities for Borsa İstanbul”
At the panel, Borsa İstanbul Chairman & CEO, Dr. İbrahim M. Turhan, said that the properties of a financial center can be formulated as “4Cs and 1S”, the capital letters of 5 words which are capacity, connectivity, competitiveness, capital and specialty. It can be strongly supported that Istanbul, the center of Turkish economy, with its economic and demographic capacity and communication and IT infrastructure, together with its human resources, cultural and social prosperity ensures the first C, capacity. Transportation facilities, being chosen as one of the centers of the global internet network, being the place from where multinational companies and international corporations manage their regional operations, geographic position and the concurrent time zone provide the second C, connectivity. Regarding specialty, the structural transformation which we have completed in this year; bringing all exchanges and the markets to be established in the future under one roof, the full harmonization of clearing and settlement procedures with the trading system and the advances we have achieved regarding the Islamic finance constitute the superiorities of İstanbul. We are aware of what we have to do in the areas of competitiveness and capital. The restructuring of the capital market business model and reconsideration of the regulatory framework and tax regulations with this point of view and in compliance with the strategic objectives set forth in the MTP is of crucial importance."
Dr. Turhan used Kazakhstan as an important example for “regional opportunity”, saying that, “In Kazakhstan, there are a few companies, but they are large companies compared to their domestic market. However, they will be neglected if they go to big markets. İstanbul stands somewhere in between. Sometimes, it’s advantageous to be a mid-sized exchange”.
Borsa İstanbul is Central to theİstanbul International Financial Center Project”
Dr. İbrahim Turhan said, “On behalf of the capital markets sector, I would like to thank our government, the Turkish Grand National Assembly, our regulatory and supervisory authorities, especially the Capital Markets Board of Turkey, for their efforts on our behalfand their constructive approach. As Borsa İstanbul, we are taking a new initiative in order to fulfill our responsibility. Borsa İstanbul is central to the İstanbul International Financial Center Project. Within this framework, we will do our best for the success of this project, in cooperation with other stakeholders; the Banks Association of Turkey, the Association of Capital Markets Intermediary Institutions of Turkey, Participation Banks Association of Turkey, as well as a broad range of related parties including real estate companies and other public institutions”.
Dr. Turhan said that İstanbul needs liquidity and centralization of liquidity, in order to become a financial center, adding that, “Turkish capital markets rank 6th or 7th among emerging markets, but considering all markets together, we rank 4th. If you allow the markets to fragment, you will lose concentration. Therefore, we have persuaded all sides and merged them together. When you propose a win-win scenario for everyone, thenpeople make use ofthose opportunities”.
NASDAQ OMX Vice President Frucher: “The Strategic Partnership between Borsa İstanbul and NASDAQ will not be limited to Turkey”
NASDAQ OMX Vice President, Meyer Sandy Frucher, indicated that the cooperation between Borsa İstanbul and NASDAQ is not limited to supply of technology only.
Frucher said that they had been chasing this opportunity for a couple of years, stating that, “Turkey is a fast developing country. Technological infrastructure is the impulsive force. Constructing a building and constructing an intelligent building are different things. If you construct an intelligent building, intelligent people will come. Therefore, the infrastructure needs to be connected with the global markets. If you want to attract capital inflow, you need to offer them an environment where they can profit”.
Frucher said that they see Borsa İstanbul experimenting withprojects that have not been introduced even at NASDAQ, and added that they believe these efforts may lead to İstanbul becoming a regional financial center. “We believe that the strategic partnership agreement between Borsa İstanbul and NASDAQ will not be limited to Turkey, and will contribute to the financial system in the region”.
“It is more realistic to set the target as a regional center”
World Bank Financial Systems Global Practice Manager, Abayomi A. Alawode, said that many cities endeavor to become financial centers, and that this has become a trend these days.
Alawode emphasized that İstanbul differentiates itself from its rivals, saying, “You say that you want to become a regional center. This makes you different from the rest. Most cities say that they want to become “international” centers. I think this is important. It is much more realistic to make a gradual transition than claim to become an international center all of a sudden”.
Alawode said that İstanbul’s geographical location is an advantage, however, there are certain steps to be made towards becoming a financial center. First, you need to improve you internal financial system. Currently, banking seems to dominate the financial sector, while insurance is limited. More companies must come to the market and the efforts towards this purpose are clear”.
“Turkey has created the ideal economy”
IFSB Secretary General, Jaseem Ahmed, said that Islamic finance is a very important advantage for Turkey in its mission for becoming a regional financial center. Ahmed emphasized that Turkey’s legal work on Islamic finance is noteworthy.
Ahmed reminded the audience that only a few countries have made similar steps on Islamic finance, and added, “Doing this, Turkey has created the ideal economy for itself”.
Future“İstanbul: Regional Hub, Global Actor” Forums are projected going to be heldin London, Davos, Gulf Regionand Singapore.
Borsa İstanbul Hosts the World BankGlobal Islamic Finance Development Center
At a press conference held prior to the panel, Borsa İstanbul Chairman & CEO Dr. İbrahim M. Turhan said that with the cooperation of the World Bank, Borsa İstanbul would host the first Global Islamic Finance Development Center to take placeoutside the US.
Dr. Turhan said that Borsa İstanbul’s product and service diversity will play a key role in making İstanbul an international financial center, and added that they view Islamic finance as one of the key components of product and service diversity. Dr. Turhan went on to say:
“Islamic finance may provide the answer for economy theorists in search of a new paradigm following the 2007 financial crisis. The Islamic Finance Development Center, established within Borsa İstanbul in accordance with the agreement signed with the World Bank on August 5, 2013, is an indication of the rising interest in Islamic finance. The Center will work on liquidity and risk management, regulatory and supervisory framework, corporate governance, and market development, and is expected to significantly contribute to the region and economic theory. The Center is the World Bank’s only representative office on Islamic finance other than that in Washington”.
Dr. Turhan added that the Center’s operations will be carried out with the support of Borsa İstanbul, the Treasury Undersecretariat, Banking Regulation and Supervision Agency, Capital Markets Board of Turkey, and the Central Bank of the Republic of Turkey under the World Bank’s leadership.