Equities are negotiable instruments issued by a corporation and representing a capital share of the corporation.
Holding the equity of a corporation means being a partner of that company.
Safe and accurate flow of information is essential in the trading of equities.
Confidence, transparency and investor protection are the fundamental principles of Borsa İstanbul markets. Shareholders can reach any information about the companies traded on Borsa İstanbul via the Public Disclosure Platform.
Related PagesEquity Market
Frequently Asked Questions
Investing in Equities
Exchange traded funds (ETFs) are mutual funds traded on equity-exchanges, which are based on an index and aim to reflect the performance of its base index to the investors.
ETFs are issued based on an index, and invest in the securities on its base index in proportion to their weight in the index. Therefore, for example, an investor willing to invest in BIST-30 index invests in an ETF rather than purchasing the equities of the index separately, and has the opportunity to invest in that index, and benefits from the proceeds of the index.
Exchange traded funds are portfolios created by authorized intermediary institutions through the purchase of securities on the base index using the cash collected from investors. ETFs reflect the returns on the equities or other instruments (gold, bond, foreign exchange, etc.) on the base index.
The basic characteristic of ETFs is that their participation certificates can be traded on Borsa İstanbul just like equities. Exchange traded fund shares can be traded on the Borsa İstanbul Fund Market through intermediary institutions like equities.
Related PagesEquity Data
Warrants are capital markets instruments that give the holder the right, but not the obligation, to buy ('call' warrant) or to sell ('put' warrant) an underlying asset at a specified price (the 'strike' price or 'exercise' price) on or before a predetermined date where such right is exercised by registered delivery or cash settlement. The holder of a warrant buys not the underlying security itself, but the right to buy or sell such underlying security, against the payment he makes.
-are securitized options;
- listed on a stock exchange and traded in the relevant market segment.
- traded in the secondary market.
- settled in the same way as other securities.
-are financial instruments of type called “structured products” are not issued for financial needs of the issuers
-are solely under the responsibility of the issuer.
-entitle the holder to buy (from) or to sell (to) the issuer an underlying security, a basket of securities, or an index, on or before a particular date, at a predetermined price, against the premium he pays.
-represent a right, and not an obligation, for the holder.
The basic principles regarding the issue, issuers, registration, and trading of warrants are regulated by the Capital Markets Board of Turkey (CMB) by its Communiqué Series III No: 37 Regarding the Registration with the Capital Markets Board of Turkey and Trading of Intermediary Institutions’ Warrants at the Stock Exchange. According to the said Communiqué, warrants are traded on Borsa İstabul.
The procedures and principles regarding the listing and trading of warrants on Borsa İstabul are stipulated by İMKB's Circular no.318, dated Jan 5, 2010.
Warrants may be traded on Borsa İstabul provided that they are supported through market making activity by their issuers or the brokerage companies contracted by the issuers. In order to provide a liquid and well-regulated market, the market maker is required to give quotations continuously.
Warrants are included in the class of structured products, which carry the qualities of a securitized option. Warrants are written on a financial product or indicator. Such financial products, are called “underlying instruments”.
If the underlying instrument of a warrant is a single equity or a basket of equities, we use the term “underlying asset”, whereas in the case of warrants written on an index, the term “underlying indicator” is used.
The “underlying asset”, may be a single equity or a basket of equities. Such equities must be traded on İMKB, and included in İMKB 30 Index.
Example: A call warrant issued by Z bank, entitling the holder to buy the shares of ABC Incorp. at TL 6.00 on 20.12.2014.
Example: A put warrant issued by Z bank, entitling the holder to sell the shares of ABC Incorp. at TL 5.00 on 20.12.2014.
Warrants written on an index, on the other hand, provide cash flow to the holder, on the basis of the underlying index value on a particular date. Such indices are equity indices calculated by İMKB.
Example: A call warrant issued by Z bank, which entitles the holder to buy İMKB-100 Index at 80,500 points on 20.12.2014.
Example: A put warrant issued by Z bank, which entitles the holder to sell İMKB-30 Index at 70,500 points on 20.12.2014.
In contrast to equities, warrants do not offer the following rights:
-Share in liquidation
-Taking part in the company management
-Voting and right to information.
The buyer of a warrant does not buy the equity itself, but the right to buy or sell such security.
Risks of Investing In Warrants:
- Warrants have an expiry day and therefore a limited life.
- Due to leverage, buying warrants may be to one’s advantage or disadvantage, and therefore it should be taken into consideration that leverage may lead to high return as well as loss.
- As a result of the price fluctuations in the market, the invested money may be entirely lost. However, with warrants, the risk is limited to the amount paid for the warrant, the commission and other fees.
- It should be considered that the technical and fundamental analyses for warrant trade are subjective and the anticipations of such analyses may not be realized.
The issuer’s risk management policy against the risks associated with issuing warrants must be included in the prospectus. In accordance with the Communiqué, the prospectus is announced in the web sites of the issuer and the market maker. Investors should carefully examine the issuer’s risk management policy before making investment decisions.
Price of the Underlying Asset
There is a positive correlation between the price of the underlying instrument and a call warrant, while this correlation is negative in the case of put warrants. As the price of the underlying asset increases, the price of call warrants increases and the price of put warrants decreases.
There is a negative correlation between the exercise price of a warrant and call warrants, while this correlation is positive in the case of put warrants. As the exercise price increases, the price of call warrants decreases and that of put warrants increases.
Days to Maturity
There is a positive correlation between the days to maturity and both call and put warrants. As the days to maturity increase, the price of both call and put warrants increases.
There is a positive correlation between the volatility of the underlying asset and both call and put warrants. As the volatility of the underlying asset increases, the price of both call and put warrants increases.
Market Interest Rate
There is a positive correlation between the interest rate and call warrants, while this correlation is negative in the case of put warrants. As the interest rate increases, the price of call warrants increases and that of put warrants decreases.
There is a negative correlation between the dividend distributed by the company on whose equities the warrant is written and the price of call warrants, while this correlation is positive in the case of put warrants. As dividends increase, the price of call warrants decreases and that of put warrants increases.
Factors Influencing the Warrant Price
|Warrant Price (CALL)||Warrant Price(PUT)|
|Price of underlying asset||+||-|
|Days to maturity||+||+|
|Market interest rate||+||-|
Trading of warrants on Borsa İstanbul is regulated by a Circular issued by İMKB in accordance with the CMB arrangements.
Warrants are traded on the Warrant Market established within Borsa İstanbul Collective Products Market by “market making in multiple price - continuous auction system”. This system is operated by entry of buy/sell quotations by the market maker member in charge of the warrant and entry of buy/sell orders by members (including the market maker member) for such warrant. Each warrant has to be assigned a market maker, otherwise they can not be traded.
Borsa İstanbul member intermediary institution, determined by the issuer upon the approval of the CMB, and responsible for giving quotations for the warrants under its responsibility, in order to ensure the fair, orderly, and efficient functioning of the market, and to contribute to the formation of a liquid and continuous market for such warrants.
A two-sided order that the market maker enters Borsa İstanbul Equity Market Automated Trading System (System), which includes information about the price at which and the quantity of the warrant that he is ready to buy and sell.
Main Trading Rules
- Orders are entered into the System according to price and time priority and are matched with the buy/sell orders and/or the quotations within the appropriate quotation interval (including quotation prices).
- The market maker member enters quotations for the relevant warrant. No order entry is accepted for warrants before the market maker member enters a quotation.
- Base price method is not applicable in warrant trading. Therefore, there is no upper or lower limit in price formation (margin is free).
- All trades in the market are realized within the interval of buy/sell quotations given by the market maker (including quotation prices) (the quotations given by the market maker are temporary price limits, in a way).Orders that fall out of the interval are also accepted to the System, but may be matched only when they are within the quotation interval.
- No orders or quotations are entered for warrants during the opening session.
-Orders entered for warrants may be cancelled during the session.
Warrants are traded during continuous trading periods (10:00 - 18:00) of the session .
Just like warrants, certificates are financial products that impose a financial burden on issuers against the investor. The funds raised through issuing certificates are under the issuer’s personal financial responsibility. Therefore, it is important for the investor to consider factors such as financial status, payment capability, and credibility of the issuer.
While certificates shall be traded according to the same principles as warrants, with minor differences only, some trading rules may vary according to the type of certificate. Investors should pay special attention to such differences while trading certificates.
Related DownloadsListing and Trading Principles of Certificates (Circular No: 400)
Participation certificates of venture capital investment funds and real estate investment funds (funds) shall be listed and traded in the Equity Market following an approval of prospectus or issuance document by Capital Markets Board and upon application from the founder provided that there is a related provision in their prospectus or issuance document.
Among the funds that are approved to be listed and traded, the ones offered to public shall be traded in Collective and Structured Products Market (CSPM) and the ones offered to the qualified investors shall be traded in Equity Market for Qualified Investors (EMQI).
Only qualified investors are allowed to trade in Equity Market for Qualified Investors (EMQI).
Having received the buy or sell order to convey to the Exchange, the member is obliged to confirm that its customer is a qualified investor before sending the order. Otherwise, the related member will be legally and financially bound in the event of transactions made against the regulations.
In EMQI, funds are traded with continuous trading (they are included opening and closing auctions) in accordance with the resolution of CMB.
In CSPM, certificates shall be traded with continuous trading method (also included in the opening and closing sections of the session). In case of request from the founder or portfolio management company, liquidity providing or market making activities can be carried out for these instruments.
Trading unit of the funds is lot. One participation certificate of a fund is equal to 1 lot.
Unit price of the fund determined by the founder or the portfolio management company and announced in Public Disclosure Platform (PDP) before the first trading day shall be taken as the base price on the first trading day in the Exchange. In the following days the base price is determined by the current method applied in the Equity Market.
Price margin shall be applied as 20%.
Price ticks and price ranges for ETFs shall also be applied for the funds.
Feature Code (Extension)
Feature codes for real estate investment funds are listed below:
|.F1||Participation certificates of real estate investment funds|
|.TF1||Buy-In transactions for participation certificates of funds|
Feature codes for venture capital investment funds are listed below:
|.F2||Participation certificates of venture capital investment funds|
|.TF2||Buy-In transactions for participation certificates of funds|
Maximum Order Value
Maximum order value will be 3 million TL.
Gross Settlement, Margin Trading and Short Selling
The funds that are traded in EMQI shall not be subject to margin trading or short selling, in accordance with the related CMB resolution. According to the same resolution, certificates are subject to gross settlement and are categorized under group “D”.
The funds that are traded in CSPM shall not be subject to margin trading or short selling as well. General Clearing and Settlement Principles for Equity Market (by netting off) will be applied.
Circuit breaker shall not be applicable to the trading of funds.
Principles Related to Clearing and Settlement
Clearing and settlement of fund trades shall be carried out on the second workday following the transaction day (T+2) by Takasbank in accordance with its own regulations.
Exchange fees in effect for equities shall be applied but order cancellation, price worsening and volume reduction fees shall not be charged for the trading of funds. In cases where market making activities are carried out, discount that is applied for market makers in equities shall also be effective for the funds.
Suspension of Trading and Delisting
In accordance with the first paragraph of article 31 of the Borsa İstanbul Listing Directive that regulates the conditions for trade suspension and delisting, trading in funds shall be suspended and funds shall be delisted in below conditions:
a) Type change or liquidation of the fund for any reason,
b) Termination of the fund,
c) Detection of breach of public disclosure obligation regulated in Annex 5 of the CMB’s Communiqué on Principles of Exchange Traded Funds numbered III-52.2 for the third time in last year,
d) A request from CMB against the trading of funds in the Exchange
Trading in funds -which are founded for a specific time period- are to be suspended upon a written request from the founder or portfolio management company, 3 business days prior to the termination.
Founder of the investment fund that is being traded in the Equity Market shall disclose material information that may affect investors’ investment decisions and documents and reports that are stated in related CMB Communiques, at Public Disclosure Platform.
The real estate certificate, as drawn up by the Capital Markets Board (CMB), is a capital market instrument with equal nominal values that represent certain independent units of a real estate project or certain area units of these independent units. These certificates are issued in order to finance real estate projects that are being built or to be built.
Real estate certificates offer financing options to their issuers through the capital market. Thus, the construction of residential and commercial projects can be completed more easily and quickly. Trading of these certificates, which are an alternative product for investors who want to invest their savings in the capital market, at Borsa İstanbul provides transparency and liquidity.
In order for the real estate certificates to be issued and traded on the stock exchange, applications must be submitted to CMB and Borsa İstanbul concurrently. Real estate certificates, may be issued by public offering or selling them to qualified investors without public offering domestically or internationally.
For further information, you may visit the following internet address: http://gayrimenkuldesertifika.com/ (In Turkish)