| On This Page: Trading on the Bonds and Bills Market Operations of the Bonds and Bills Market |
Trading on the Bonds and Bills Market The Bonds and Bills Market is the only organized, fully-automated market for both outright purchases and sales and repo/reverse repo transactions. The purpose of the market is to provide a transparent, liquid, competitive and efficient environment for secondary market trading of fixed-income securities comprising Government bonds, Treasury bills, revenue-sharing certificates, bonds issued by the Privatization Administration and corporate bonds listed on the ISE. Although there is a market for the securities stated above, most of the transactions are conducted on Treasury bills and Government bonds. The Bonds and Bills Market was established on June 17, 1991 while repo/reverse repo transactions began on February 17, 1993. In a recent development, the Real Estate Certificates Market was launched on June 3, 1996 within the ISE Bonds and Bills Market.
The Central Bank of Turkey, market member banks and ISE member brokerage houses that have the necessary authorizations (those authorized to operate in the Outright Purchases/Sales Market and Real Estate Certificates Market are marked as "B" and those authorized to operate in the Repo/Reverse Repo Market are marked as "R" in the list of members). These financial institutions also have to deposit a certain amount of collateral to cover any price risk in the event that a trade is not cleared on the value date. Operations of the Bonds and Bills Market An electronic order matching, administering and reporting system is employed in order to operate both the Repo/Reverse Repo Market and Outright Purchases and Sales Market. Members transmit their orders through ATS (Automated Trading System) in their dealing rooms or via telephone to the ISE staff who enter the orders to the system as "blind brokers". All telephone conversations are recorded. After an order is entered into the computer system, it is processed according to price and time priorities. Both the Outright Purchases and Sales Market and the Repo/Reverse Repo Market operate on a multiple price-continuous trading system. All orders are continuously entered into the computer system and only the best price orders (bid orders are matched with equal or lower priced ask orders and ask orders are matched with equal or higher priced bid orders) and volume are automatically matched. Members are subsequently informed about the executed transaction. Same day value orders as well as forward value date transactions up to 7 days for repo-reverse repo and up to 90 days for outright purchases and sales are available in the market. Orders are classified with respect to their nominal values/nominal volumes as normal orders and small orders and they are traded in different markets as such. An outright purchase or sale order with a nominal value of up to TL 100 billion and repo and reverse repo order with a nominal value of up to TL 500 billion is traded in the "small orders market" (whereas orders with larger nominal values are traded in the normal orders market). The ISE Bonds and Bills Market has been computing and disseminating ISE Government Debt Securities Indices (Price and Performance Indices) since the beginning of 1996. All information pertaining to price, yield and volume of best orders as well as details of the last transaction and a summary of all transactions are disseminated on data vendors' screens. Outright purchases and sales orders with the same price are displayed on a cumulative basis. All securities traded on the ISE Bonds and Bills Market other than those issued by the Government or the Privatization Administration are required to fulfill the listing requirements. Clearing and settlement operations are handled by the ISE Settlement and Custody Bank Inc. (Takasbank), which is the sole and independent institution inaugurated by the ISE and its members. Takasbank employs the DVP (Delivery Versus Payment) principles. The Repo\Reverse Repo Market provides a highly secure environment for the participants involved in repo transactions through; a) an adequate amount of highly liquid public securities during the initiation of the repo agreement, b) safekeeping these securities on behalf of the participant involved with reverse-repo transaction, in a segregated account, during the transaction process, c) daily marking-to-market of securities (government bonds, treasury bills, Wholesale Goods Prices Indices+6 type of revenue-sharing certificates) during the validity period of the repo transaction, d) computing margin excess\deficit automatically and making margin calls if necessary, e) ensuring securities and cash transfers at the close of the transaction, f) efficient reporting facilities. All of the services mentioned above are offered by the ISE Bonds and Bills Market and ISE Settlement and Custody Bank Inc. (Takasbank) safekeeps the underlying securities. Outright purchases and sales and repo/reverse repo transactions take place between 9:30-17:00 Monday through Friday. Same day value orders (the beginning value date for repo/reverse-repo market) can be matched until 14:00, whereas forward value orders (the beginning value date for the repo/reverse repo market) are valid until 17:00. Same day value orders for mutual fund transactions can be executed until 17:00. Luncheon break is between 12:00 -13:00 hours and trading is halted. Real Estate Certificates Market In a recent development, the “Real Estate Certificates Market” was launched on June 3, 1996 within the ISE Bonds and Bills Market. The aim of this market is to provide finance in order to accelerate the production of organized housing and work residence projects through funds obtained from the capital markets. The market also offers an alternative investment instrument to the investors. The Real Estate Certificates Market operates on a multiple price and continuous auction system between 9:30-17:00 from Monday through Friday. Transactions are conducted by matching ask and bid orders in the market. The unit of trading is the amount of real estate certificates with a nominal value of TL 10 million. The best bid and ask orders of Real Estate Certificates are disseminated via the vendors' screens. All settlement and custody activities are carried out by the ISE Settlement and Custody Bank Inc. (Takasbank) on T+2 basis (two work days following trade date). Physical delivery of real estate certificates is possible. In May 2000 the Turkish Treasury has launched the primary dealership system in order to increase the liquidity in domestic debt securities in the secondary market. At the beginning of each year banks that will act as primary dealers will be announced by the Treasury. The Treasury does not discriminate among foreign and domestic financial institutions while selecting primary dealers, in order to have shelf-space in the international markets. Primary dealers have to meet certain criteria and fulfill the obligations set by the Treasury. Being members of the ISE, primary dealers have to give two-way price quotations on benchmark securities which are determined by the Treasury, on the ISE Bonds and Bills Market which brings more liquidity to the market. |
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