With FBIST Bill ETF Futures Contract, Borsa İstanbul Derivatives Market (VIOP) and Finansinvest introduce the first futures contract written on an Exchange Traded Fund (ETF). A first on Borsa İstanbul Derivatives Market (VIOP), ETF Futures Contract started being traded on Borsa İstanbul Derivatives Market on May 5, 2015.

The first futures contract written on an Exchange Traded Fund (ETF) has been launched as a result of the cooperation of Borsa İstanbul and Finansinvest. Following the bell-ringing ceremony participated by Borsa İstanbul Executive Vice President Çetin Ali Dönmez and Finansinvest CEO Özgür Güneri, the new investment instrument FBIST Bill ETF Futures Contract started being traded. FBIST Bill ETF Futures Contract is the first fixed-income exchange traded fund futures contract written on FBIST Bill ETF. The instrument can be simply defined as an interest rate futures contract written on a basket of bills, and will allow the more efficient management of interest risk. Finansinvest plans to be the market maker for this new contract and aims to ensure efficient price discovery.

Investing in Interest Rate and Bills on the Derivatives Market (VIOP)

Finansinvest CEO Özgür Güneri noted that the underlying instrument FBIST Bill ETF is Turkey’s first fixed income exchange traded fund traded on Borsa İstanbul Equity Market, adding, “FTSE İstanbul Bill B Type Exchange Traded Fund written on FTSE Turkish Lira Government Bond Index allows investors to simultaneously invest in the discounted and fixed coupon Government Domestic Borrowing Instruments issued by the Republic of Turkey Treasury Undersecretariat, provided that they fulfill the index criteria. As it is traded on Borsa İstanbul, it allows trading several treasury bills in a single transaction, just like a stock, and also with leverage”.

Güneri emphasized that the changes in interest rates influence both investors and businesses positively or negatively, and explained the advantages of futures contracts as follows: “Fund managers, retail or institutional investors that have bills or bonds in their portfolios, real sector companies that have got or planning to get loans, or to put it shortly, everyone that can be exposed to interest rate risk can partly or entirely hedge themselves against fluctuations in interest rates by using FBIST Bill ETF Futures Contract. This service has many advantages, and we are proud to offer it with the support of Borsa İstanbul”.

Borsa İstanbul Executive Vice President Çetin Ali Dönmez said, “As you are aware, as part of İstanbul International Financial Center vision, we work in close collaboration with market participants to increase the diversity of financial products and services. Within this framework, we are pleased to introduce FBIST ETF Futures Contracts written on an exchange traded fund of fixed income securities, as a first on Borsa İstanbul Derivatives Market”.

Dönmez said that Borsa İstanbul is working on new products to be introduced for trading in the future. With regard to the new contracts that will allow the efficient management of interest rate risk, Dönmez said, “We are also preparing to offer futures contracts on overnight repo trades, which address the shorter part of the yield curve. The launch of this product will facilitate the management of especially the risks arising from the overnight repo market. We believe that this will respond to the risk management needs of not only the banking sector, but the real sector as well, and make the markets more predictable”.

Thanks to its wide product range, central counterparty guarantee in managing companies’ risks, and increasing liquidity, Borsa İstanbul Derivatives Market (VIOP) takes determined steps toward becoming the region’s preferred trading platform.