The Precious Metals Lending Market was launched on March 24, 2000 within the Istanbul Gold Exchange in order to meet the institutions supplying and demanding precious metals in an organized market environment, to provide production financing for the jewelry sector at a lower cost, and to securitize gold by trading it in financial markets. Following the launch of Borsa Istanbul A.Ş., the market continues to operate under the Precious Metals and Diamond Market Directorate.

Members of the Precious Metals Market can apply to the Precious Metals Lending Market. For this, it is sufficient to apply to the General Directorate of the Stock Exchange with a petition.

Loan Market and Proxy in Investments Transactions

Lending transactions are transactions in which the price, maturity and lending amount can be freely determined by the precious metal lenders and precious metal demanders within the framework of the specified session hours and transaction rules, and the actual value and additional value at the end of the maturity are paid by the borrower to the lender in a predetermined currency in terms of the loaned precious metal, and the exchange is carried out.

Proxy in investments’ transactions are a type of transactions wherein precious metal suppliers and those demanding precious metals for investment by proxy may freely determine the price, maturity and capital amount within the predetermined session hours and within the frame of trading rules, and at the end of maturity, capital amount and promised yield value are paid by the party buying precious metals by proxy agent (wakil) to the party supplying precious metals by proxy principal (muwakkil), and settlement is realized, in the kind of the precious metal supplied by proxy or in the currency of transaction.

Principal value or additional value required to be delivered at the end of maturity may be delivered in kind as precious metals or in the currency of transaction.

Price Types

Trades in the market are carried out in TL/Kg and US dollar/ounce.

Order Types

In the Market, orders are submitted as limit orders. Orders may be given in block or in a divisible manner. Block order is a type of order wherein the quantity of precious metals covered by the transaction is fully matched if available. Divisible order is a type of order wherein the quantity of precious metals covered by the transaction is permitted to be partially matched.

Precious Metals that may be subject to Lending Transactions and Proxy In Investment Transactions

Standard precious metals as defined and standardized in the Governmental Decree no. 32 may be traded in the Precious Metals Lending Market.

In the Market, settlement and physical delivery of lending transactions and proxy in investments are realized in kind by standard precious metals as defined and standardized in the Governmental Decree no. 32 by degrees of purity inter alia.

Lending transactions and proxy in investments are affected on the basis of 1000/1000 degree of purity in gold and of 100/100 degree of purity in silver, platinum and palladium. The degree of purity of subject precious metal is relied upon also in calculations of settlement of lending transactions and proxy in investments.

Precious metals imported or produced out of ore cannot be subject to any lending transactions and proxy in investments before trading in the Precious Metals Market.

Trading units

Lending transactions and transactions of proxy in investments are executed over a weight unit. End-of-maturity obligations are performed in precious metals, Turkish Lira and United States Dollar. In transactions executed in the Market, trading unit is kilogram

Price and price priority in lending transactions and in proxy in investments

In lending transactions, price is the rate of return, while in transactions of proxy in investments, price is the promised rate of return. Price is related not to monetary amount, but to quantity of precious metals.

In lending transactions and transactions of proxy in investments, orders are matched according to price and time priority rules.

Among the orders where the kind and purity of precious metal covered by the lending transaction, and the date of maturity, currency, and principal value obligations performance preferences are same, the best price for borrowing orders is the order with the highest rate of return, while the best price for lending orders is the order with the lowest rate of return.

Among the orders where the kind and purity of precious metal covered by the proxy in investments transaction, and the date of maturity, currency, and principal value obligations performance preferences are same, the best price for orders for receiving by proxy is the order with the highest promised rate of return, while the best price for orders for supplying by proxy is the order with the lowest promised rate of return.

Required contents of orders for lending and for proxy in investments, and matching of orders

The orders for borrowing / lending transactions and for proxy in investments are required to contain the following information;

• Name of order given
• Kind of order (divisible / block)
• Type of order (lending / borrowing, proxy in investments)
• Price Type (TL or United States Dollar)
• Kind and quantity of precious metal covered by order
• Interest rate (in lending transactions)
• Promised yield (in proxy in investments)
• Transaction maturity (end-of-maturity date)
• Whether end-of-maturity delivery will be made physically or in cash

Quantity of precious metals in the orders given indicates the quantity lent / supplied by proxy.

A lending transaction order may be matched only with another lending transaction order, while an order for proxy in investments may be matched only with another order for proxy in investments.

Lending transactions are executed through matching of the best borrowing orders and the best lending orders with the same price in accordance with the priority rules. Transactions of proxy in investments are executed through matching of the best orders for receiving by proxy and the best orders for supplying by proxy with the same price in accordance with the priority rules.

In the Market, validity time of orders submitted is limited by the related session. Orders submitted by a Market member, but not executed yet may be changed or cancelled during the session they are valid. Orders not matched or not cancelled until the end of session are cancelled at the end of session.

Trading Limits

In the trades, lower limit is required to be minimum 5 kg. Order quantity increases as 1 kg and its multiples.

Session Hours

In the Precious Metals Lending Market, trades are continuously affected between 10:00 and 16:00 hours in trading days.

Trading value date

In the Precious Metals Lending Market, trades may be affected with same day value (T+0).

Trading maturities

In trades executed in the Precious Metals Lending Market, maturity may be arranged and determined as each business day for a period up to 1 month, and after 1 month, may be arranged and determined by 1 monthly maturity each up to 365 days.

Precious Metals Lending Market settlement and delivery principles

For trades executed in the Precious Metals Lending Market, precious metal settlement is done by the Exchange, while cash settlement is done by Takasbank.

Precious metal debt of the lending party arises in the day the lending transaction is executed, and the lending party is required to perform its obligation within settlement hours in the day the lending transaction is executed.

The party borrowing precious metals is under obligation to pay to the lending party the value of precious metals established at the end of maturity. If the end-of-maturity value is to be paid in kind in precious metals, this value covers both the lent precious metals and the interests. If the end-of-maturity value is to be paid in cash, the amount to be paid is calculated by multiplying the total sum of interests and precious metal amount by the reference price valid for the delivery day depending on the chosen price type.

In transactions of proxy in investments, precious metal debt of the party giving the proxy in investments Principal (muwakkil) arises in the day the transaction is executed, and the party giving the proxy in investments Principal (muwakkil)) is required to perform its obligation within settlement hours in the day the transaction is executed.

The party receiving the proxy in investments Agent (wakil) is under obligation to pay to the party giving the proxy in investments Principal (muwakkil) the value of precious metals established at the end of maturity of the subject transaction. The end-of-maturity value is comprised of the precious metals covered by the transaction of proxy in investments (capital) and the promised yield. If the end-of-maturity value is to be paid in kind in precious metals, this value covers the capital and the promised yield. If the end-of-maturity value is to be paid in cash, the amount to be paid is calculated by multiplying the total sum of capital and promised yield by the reference price valid for the delivery day depending on the chosen price type.

Members trading in maturities longer than two business days are informed about their precious metal debts and receivables two business days prior to the end of maturity.

Settlement hours

In these markets, last delivery time for precious metals and monetary obligations is same with the hours applied in the Precious Metals Market. Settlement cannot be affected in weekends, public holidays and half business days.

Precious Metals Lending Market collateralization principles

In the lending transactions and the transactions of proxy in investments in the Precious Metals Lending Market, the member borrowing precious metals / receiving a proxy in investments is allowed to trade up to 90% of total net margin (collateral) amount during the period from the time of trade to the delivery to be made at the end of maturity.

Acceptable types of collaterals

• Turkish lira, and
• Cash and foreign currencies determined as United States Dollar and euro, and
• Definite letters of guarantee unlimited in time issued in Turkish lira or in United States Dollar and
• All types of goverment bonds, treasury bills and lease certificates (only 90% of amount of goverment bonds, treasury bills and lease certificates is used).

In lending transactions and in proxy in investments, collateralization system and daily valuation of collaterals

The Exchange values and appraises the collateral at the end of each day.

If the collaterals of lending transactions are not adequate, a margin call is made to the related members. If and when the amount of lending transactions reaches 97% of total sum of collaterals, a margin call is made, and upon receipt of this margin call, the related members are required to provide an additional margin in such manner to ensure that value of the borrowed precious metals is equal to maximum 90% of total sum of collaterals.

The margin amounts are released upon fulfilment of settlement obligations at the end of maturity.

Trading fees

Exchange transaction fee and other fees due and payable in lending transactions executed in the Precious Metals Lending Market are published in Borsa İstanbul corporate internet site.