Filiz KAYA Managing Director ISE Settlement & Custody Bank Inc. November 2, 2011 Seoul

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1 Filiz KAYA Managing Director ISE Settlement & Custody Bank Inc. November 2, 2011 Seoul

2 Takasbank, Is the Central Clearing Agency of Turkish Capital Market. As an Investment Bank, provides some unique securities services as well as some banking facilities for the Turkish Capital Market participants. Clearing and Settlement Agent for Istanbul Stock Exchange (ISE) Turkish Derivatives Exchange (TURKDEX) Official Custodian for Pension Funds National Numbering Agency of Turkey

3 Takasbank Has a Central Position in Turkish Capital Market Regulatory Authorities Banking Regulation Government Supervision Agency Capital Markets Board Central Bank Domestic Clearing & Settlement Service Istanbul Stock Exchange Turkish Derivatives Exchange ICSDs Cross-border Settlement& Custody Service TAKASBANK Custody Accounts for Bonds & Cash Transfers Central Registry Agency (CSD) Custody Accounts for Equities, ETF Shares Broker Firms Funds Market Participants Banks

4 Main Services of Takasbank 1. Clearing and Settlement 2. Custody 3. Banking Services 4. National Numbering Agency 5. Organized Markets 6. Guarantee Fund & Collateral Management

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6 Takasbank Fund Services Clearing Settlement Custody Reporting services to: Investment Funds Investment Trusts Private Pension Funds Exchange Traded Funds

7 Takasbank Interface for Institutional Investors Institutional investors (mutual funds, private pension funds, investment trusts, ETFs) have direct link to Takasbank system. These firms execute their operations online, real-time by using Takasbank interface.

8 Services to Mutual Funds Custody service Securities accounts in CRA for mutual funds portfolios. Online link to CRA. Settlement of securities in fund portfolio Equity settlement. Fixed-income securities settlement. Foreign securities settlement. Calculating NAV and unit price Calculating the NAVs and unit prices Comparing the data declared by funds. Informing the difference to brokers and CMB. Reporting Reporting fund datas to Capital Market Board.

9 Services to ETFs Creation and redemption of ETF shares. Clearing and settlement of ETF shares traded in ISE. Custody services: Securities accounts in CRA for fund portfolios. On-line link to CRA for ETF transactions. Clearing & settlement and custody services to multinational ETFs (e.g. GT-30 ETF traded both in ISE and ATHEX).

10 Service to Pension Funds Custody service Official Custodian for Private Pension Funds Settlement of securities in fund portfolio Portfolio value and unit share price control Equity settlement Fixed-income securities settlement Foreign securities settlement Calculating the NAVs and unit prices Comparing the data declared by funds. Informing the difference to funds and CMB. Reporting Reporting fund datas to Capital Market Board.

11 Cross-border Settlement for Funds Portfolios Takasbank gives also cross-border settlement service to local funds for the foreign securities in their portfolios (inc. shares and eurobonds). Correspondent relationship with ICSDs (Euroclear) for foreign securities clearing & settlement.

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13 PLATFORM A platform enabling fund issuers to execute creation and redemption transactions of mutual fund shares among other platform members and their customers in an electronic environment. This platform also enables the settlement and custody of these transactions to be realized through Takasbank and Central Registry Agency system.

14 The Aim of the Platform To create a fully automated and centralized fund distribution system. To improve the Turkish fund industry and to expand national distribution channels. To design a system similar to international samples like Fund/SERV (DTCC), FundSettle (Euroclear),Vestima+ (Clearstream).

15 Benefits Easy access to fund transactions and related informations through one single platform Investors will have the opportunity to choose among different alternative funds on a single platform Solution for limited distribution channels of fund issuers and managers Substantial reduction in operational costs and risks A new generation distribution system for successful asset managers lacking widespread distribution channels. They can easily increase their market shares Fund performances will become a more noticeable criteria in fund investment No counterparty risk Retail sales will increase New transfer agents will enter into the market more competitive fund industry A new income source for market participants

16 Participants of the Platform A web-based, on-line structure combines all the parties in the industry; Fund Issuers, Fund Distributors, Institutional Investors, Takasbank, Central Registry Agency.

17 Members Fund Issuers and Managers. Distributors; Banks, Brokers, Custodians, Asset Management Companies

18 Structure of the Platform Order Management Entry Routing Matching Reporting Clearing and Settlement Delivery versus Payment (DvP) Straight through Processing (STP) Gross settlement Fund Information Database Fund types All types of funds

19 The Scheme of the Platform Capital Market Board Issuers Distributors Reporting Database TURKISH ELECTRONIC FUND PLATFORM TAKASBANK Settlement Custody Orders Fund Info. Issuers Distributors Investors Central Registry Agency Investors

20 Order Management Fund issuer/operator defines trading rules and price information for their funds on the platform They also transfer fund shares available for sale to their account held for the platform transactions Fund distributer wanting to purchase a fund, sends the order to the platform via Takasbank screens or web service After receiving the order, cash/fund share will be blocked and the issuer s account will be checked. The order will be matched if the account is available In case of inadequate fund balance, depending on the fund distributor s request, order can be suspended or canceled.

21 Clearing&Settlement I Turkish Electronic Fund Platform Fund Distributor Cash Shares TAKASBANK Cash Account Central Registry Agency Securities Account Cash Shares Fund Issuer

22 Clearing & Settlement II Delivery versus Payment Straight Through Processing In Takasbank Cash accounts In Central Registry Agency Securities accounts

23 Fund Database TURKISH ELECTRONIC FUND DISTRIBUTION Fund Issuer Enter General info NAV per share Asset allocation Fund prospectus Manager info Periodical returns Benchmark Report Market Participants Investors Data Vendors Asset Managers Regulators Fund costs

24 The Structure of Fee Procedure Brokerage Fee Fund Issuer can set a general commission rate. Intermediaries can set a special commission rate by selection. Brokerage fee is paid through Takasbank system. Membership Fee for Funds This fee will be collected in fund basis. Membership Fee for Platform Members It is the fee that will be collected monthly from the platform members. Trade Commission On a percentage basis of brokerage fee It will be collected from the Fund issuer s account Commission Rebate In case of Fund issuer acts as a intermediary for fund distribution apart from its own fund, Takasbank commissions will be reduced at the rate of 50 %.

25 The Way Forward Integration of the Turkey Electronic Fund Platform with the international fund platforms

26 THANK YOU!