Turkey aims to open lira debt trading on Euroclear next year

By bne IntelliNews March 21, 2013

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Turkey hopes to wrap up talks with Euroclear on Turkish-lira debt trading by the end of the year, according to the chairman of the Istanbul Stock Exchange. The move, part of Turkey's push to turn its financial capital into a global financial centre, aims to broaden the investor base and deepen the market for local currency debt.

Currently, foreign investors are dependent on using a local brokerage account to trade lira debt. International clearing platform Euroclear would allow them direct access, making it a fundamental step towards establishing a role for Istanbul as a financial centre for either the region or the world. Euroclear launched direct trading of ruble debt last month, part of the Kremlin's plan to make Moscow such a hub.

"We've had some contact with senior managers of Euroclear," Istanbul Stock Exchange Chairman Ibrahim Turhan told Bloomberg in an interview published on March 20, and "we will have another meeting very soon in Istanbul The work is still in progress and very soon we will have a tangible outcome." He added that he hopes talks will be finalized "before the end of the year."

While analysts have suggested Russia could see $30bn in inflows due to the Euroclear launch, they are less certain it will offer Turkey such a large boost. That's because there's already a higher level of foreign ownership of Turkish debt, despite the fact that at $289bn the Ankara government's outstanding debt is much larger than Moscow's $152m.

"Turkish government securities are traded very well at an international level," Turhan said. "It's one of the deepest markets in the world in terms of fixed-income securities and the advantage in Turkey is that government securities are traded at the exchange."

"This will surely help to broaden the investor base further," Yarkin Cebeci, an economist at JPMorgan in Istanbul told the newswire. "Some of the investors, especially Asian accounts, have been reluctant to have exposure in Turkey as Turkish bonds were not Euroclearable."

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