Istanbul Stock Exchange - Early Days of The Securities Market in Turkey

Early Days of The Securities Market in Turkey

The origin of an organized securities market in Turkey has its roots in the second half of the 19th century. The first securities market in the Ottoman Empire was established in 1866 under the name of "Dersaadet Securities Exchange" following the Crimean War. Dersaadet Exchange also created a medium for European investors who were seeking higher returns in the vast Ottoman markets. Following the proclamation of the Turkish Republic, a new law was enacted in 1929 to reorganize the fledgling capital markets under the new name of "Istanbul Securities and Foreign Exchange Bourse".

Soon, the Bourse became very active and contributed substantially to the funding requirements of new enterprises across the country. However, its success was clouded by a string of events, including the Great Depression of 1929 and the impending World War II abroad which had taken their toll in the just developing business world in Turkey. During the industrial drive of the subsequent decades, there was a continuous increase in the number and size of joint stock companies, which began to open up their equity to the public. Those mature shares faced a strong and growing demand from mostly individual investors and some institutional investors.

The early phase of the 1980s saw a marked improvement in the Turkish capital markets, both in regard to the legislative framework and the institutions required to set the stage for sound capital movements. In 1981, the "Capital Market Law" was enacted. The next year, the main regulatory body responsible for the supervision and regulation of the Turkish securities market, the Capital Markets Board based in Ankara, was established. A new decree was issued in October 1983 foreseeing the setting up of securities exchanges in the country. In October 1984, the "Regulations for the Establishment and Functions of Securities Exchanges" was published in the Official Gazette. The regulations concerning operational procedures were approved in the parliament and the Istanbul Stock Exchange was formally inaugurated at the end of 1985.