Borsa İstanbul and Konya Commodity Exchange signed a cooperation agreement in Konya on February 25, with a ceremony participated by Prime Minister Ahmet Davutoğlu.

The agreement aimed at furthering the cooperation between Borsa İstanbul and Konya Commodity Exchange was signed with a ceremony held at Konya Commodity Exchange with the participation of Prime Minister of the Republic of Turkey Ahmet Davutoğlu, Union of Chambers and Commodity Exchanges of Turkey (TOBB) President Rifat Hisarcıklıoğlu, Borsa İstanbul Chairman Dr. Talat Ulussever, Borsa İstanbul CEO Tuncay Dinç and Konya Commodity Exchange Chairman Hüseyin Çevik.

Deputy Prime Minister Lütfi Elvan, Minister of Food, Agriculture and Livestock Faruk Çelik, Minister of Customs and Trade Bülent Tüfenkci and Justice and Development Party Deputy President Mehdi Eker also participated in the event.

Within the framework of cooperation between Borsa İstanbul and Konya Commodity Exchange (BorsaKonya), domestic and foreign investors will start trading wheat futures contracts with physical delivery, similar to international derivatives markets.

Borsa İstanbul will launch wheat futures contacts with physical delivery through electronic warehouse receipts.

These developments are expected to add to the international prestige of both Borsa İstanbul and Turkey in addition to allowing the two institutions to carry out the process together.

An agreement was signed today between Borsa İstanbul and Konya Commodity Exchange to improve the cooperation between the two institutions, with a ceremony participated by Prime Minister of the Republic of Turkey Ahmet Davutoğlu and TOBB President Rifat Hisarcıklıoğlu.

In his address at the signing ceremony held at Konya Commodity Exchange, Prime Minister Davutoğlu said that they are witnessing a historical moment, adding, “We have taken a historical step between Borsa İstanbul and BorsaKonya to ensure that agricultural trade can reach international markets especially. This step is the first cooperation of Borsa İstanbul with an Anatolian exchange. More is yet to come. This is a historical step towards uniting the local, national and international economic networks of the Republic of Turkey. Therefore, it will be possible to connect our agricultural trade with international financial markets and financial centers. An economy of isolated markets, where the local fails to reach the international level through national is not sustainable. We have announced two important decisions here: Establishing a specialized commodity exchange and transferring the licensed warehouse operations to the private sector, therefore assigning the role of a regulator only to the Turkish Grain Board, like the Ministry of Food, Agriculture and Livestock. I would like to note that contrary to those who want to confine Turkey’s agenda to negative events, we are fighting against terrorism in determination while continuing with our reforms. Last night, Turkish Grand National Assembly was in session until 2.30 a.m. We are working intensively on our reform agenda. On the other hand, we are taking historical steps on sectoral basis. Earlier this week, we announced the support we are planning to offer to the tourism sector. And now, in the middle of the week, we are taking very important steps related to the agriculture sector. I would like to thank those that have made it possible.”

Headlines from Prime Minister Ahmet Davutoğlu’s address:

• Agriculture is a strategic sector. You can neglect any sector –well, you should not be doing that, but even if you do, it would not lead to existential consequences. However, this is not the case with agriculture. It cannot be seen as a secondary area. Konya is the heart of our agriculture sector.
• Unless a connection is established with financial markets, it would not be possible to open up to international markets. In such a case, all of a sudden, we would be deprived of the instruments that would convert the large agricultural potential into real added value. Using financial instruments is a must, and integration with the world economy is a must. We are taking a historical step today.
• I have asked our Minister of Customs and Trade to ensure the establishment of a specialized commodity exchange as soon as possible. Previously, when someone said “as soon as possible”, you wouldn’t know whether he was talking about one year or four years; however, now we make promises on weekly, monthly, quarterly, semi-annual and annual basis. Our promises are certificates, just like the certificates that are traded here.
• I was with the Minister of Food, Agriculture and Livestock yesterday. He was unable to come to Konya last night; he could only make it this morning. He told me that the Grand National Assembly was in session all night long. This is the way we work –day and night. So, I would like to announce here: when we say as soon as possible, we don’t mean a vague date some time in two or three years. What we mean by this is the first half of this year, within 3-4 months, and not later than the first half of this year. We will pass the required legal regulations and introduce specialized commodity exchanges.
• As a result of the legal arrangement regarding licensed warehousing we have introduced, we will take one step further and Turkish Grain Board will no longer be involved in warehousing. The government will be in a regulatory role rather than being engaged in warehousing. However, just like the Central Bank of the Republic of Turkey, this role will involve controlling the price volatility in the markets. Other than that, we will transfer the warehousing business to the private sector.
• Konya has registered an extraordinary capacity increase in the last fourteen years. Exports of around US$ 130 million increased to US$ 1.354 million. This means that with exports, you are integrated with the world, therefore you need to find the instruments towards realizing this target. So, these are the instruments. I am sure that as these instruments are introduced, exports from Konya will increase even more significantly.
• The number of exports companies in Konya increased from 517 to 1,543. We believe that these figures will exceed thousands, and will be expressed in ten thousands.  
• Established in 1907, BorsaKonya has a historical importance as the first exchange in Anatolia. It has 1,400 active members, and therefore has a significant potential. BorsaKonya has a traded value of close to TL 10 billion and traded volume of 1 million tons, and is therefore expected to make a big leap.
• An exchange that is not backed by a strong economy cannot be influential in the global markets. Unless Istanbul is backed by Anatolia, its relations with Nasdaq and London Stock Exchange may have a reflection in the global markets, but it would fail to reflect the true power of Borsa İstanbul.
• We are working to make Istanbul a financial center; however, in order to become an international financial center, Istanbul needs to be backed by the locomotive power of the Anatolian economy.  Otherwise, it would not be influential through financial trades only. Therefore, this is a historical step for Borsa İstanbul and it is important that Borsa İstanbul is backed by the power of the Turkish economy and the economic potential of Konya. I do hope that this will spread to the entire country and Borsa İstanbul will be in a special position, opening the Turkish real sector to the global markets and introducing the global markets to the Turkish real sector.
• As Borsa İstanbul goes hand in hand with BorsaKonya, the Seljuki and Ottoman potential will be realized through modern, global instruments while our Republic, founded on this strong governmental tradition, will gain brand new dimensions and horizons.
• We are calling on you from BorsaKonya Hall, from Konya Commodity Exchange with Borsa İstanbul… No matter what you do, this land will continue to be highly fertile. No matter what you do, we will talk of productiveness, fertility, wisdom, and knowledge against terror and violence. No matter what you do, whatever plans your masters make using you, this country will march towards the one and same direction with its east, west, north and south.”

In his speech at the ceremony, Borsa İstanbul Chairman Talat Ulussever said that the step made with BorsaKonya to introduce wheat futures contracts will help the cooperation to strengthen. Ulussever went on to say that as the business life, trade and finance experience of the capitals of the Seljuki and Ottoman states are accumulated, it will be possible to make Turkey reach a more efficient unity in the forthcoming period.

Borsa İstanbul CEO Tuncay Dinç indicated that the cooperation planned with Konya Commodity Exchange will contribute to both institutions significantly, and added that the cooperation between the two exchanges will strengthen the connection between the real economy and financial markets. Dinç went on to say, “As Borsa İstanbul, we are on one hand, part of a global network, and on the other, part of a regional network. Until now, one part was missing; which is Anatolia. Today, we complete it with BorsaKonya”.

Dinç reminded the audience that foreign guests always emphasize Turkey’s potential, adding, “What they always tell us is: ‘We do not believe or expect most other countries to go any further. We believe in the potential of Turkey even more than you do. We believe that you will do better, you can do better’. And today, we believe that we will realize Turkey’s potential and make Turkey reach the point it deserves.” Dinç also indicated that formerly, he was a student of Prime Minister Davutoğlu, and said, “If we can operate this new product smoothly and make it contribute to the Turkish economy, we will get an A, hopefully”.

Konya Commodity Exchange Chairman Hüseyin Çevik stated that Konya Commodity Exchange is determined to offer high added value products and services to the Turkish economy in line with the targets of Istanbul International Financial Center strategy, and said at the ceremony, “We want to launch specialized commodity exchanges, where producers, consumers, investors and the government earn more, as soon as possible. Thanks to the experience we have gained in the last two years, well-educated work force, modern infrastructure and the agricultural production capacity of the region, Konya Commodity Exchange is ready for this”.

TOBB President Rifat Hisarcıklıoğlu said in his address that Konya Plain is one of the most important centers feeding Anatolia, however Konya has failed so far to earn what it deserves. Hisarcıklıoğlu added, "The rule of trade says: No matter how much you produce, you cannot make money unless you make the market. A new era opens in agricultural products market. With this opening, agriculture in Konya will become as important as this for the first time”.

Hisarcıklıoğlu said that Konya Commodity Exchange established the world’s most modern infrastructure, offering Turkey’s first electronic trading floor, while the laboratory of the exchange has become a prestigious laboratory setting the standard for grains. Hisarcıklıoğlu added, “After that, Konya Commodity Exchange opened a licensed warehouse and introduced electronic product certificates. They established BorsaKonya Platform for trading these certificates. Today, they are carrying this cooperation one step further. They are cooperating with Borsa İstanbul for derivatives trading of product certificates. I do hope that this agreement will prove beneficial for Konya, and for Turkey”.

President Recep Tayyip Erdoğan sent the following message:

“Turkey has become an attractive country thanks to her strong, dynamic, and stably growing economy, and is taking determined steps towards her 2023 vision. As I emphasize at every opportunity, our strength in the economy lies in dynamic, highly qualified, confident, and brave entrepreneurs taking responsibility. I wholeheartedly congratulate our valuable entrepreneurs and producers who have made Konya a model city through making investments and creating employment, and who have created value for our country thanks to their success. I would like to thank to all individuals and institutions that have worked zealously for the bright future of our country.

With this in mind, I do hope that the cooperation agreement signing ceremony of Borsa İstanbul and BorsaKonya will be beneficial for Turkey and I wholeheartedly greet all participants”.

The wheat futures contracts that will be launched as a result of this cooperation are expected to attract the attention of investors in both national and international markets. As physical delivery is introduced for wheat futures contracts for the first time in Turkey, Turkish capital markets and commodity markets are expected to gain prestige in the international markets while along with increased market depth, producers will have access to alternative and less costly financing opportunities.

Within the scope of the cooperation agreement signed between Borsa İstanbul and BorsaKonya, Anatolian Red Wheat and Durum Wheat Futures Contracts with physical delivery will be traded with expiry in February, May, July and September. At expiry, the physical delivery of the positions will be realized through electronic certificate delivery by BorsaKonya. The said cooperation agreement also covers data sharing and cooperation on surveillance between the two institutions. As such, the interaction between spot and futures markets, price, traded value and investor trades will be monitored by both exchanges in harmony, which will allow manipulative actions to be determined rapidly.

Borsa İstanbul Derivatives Market (VIOP) was the world’s fastest growing exchange in 2015. Having added wheat futures and options contracts with physical delivery to its diverse product range, VIOP continues to march towards becoming the region’s preferred risk management platform for both investors and companies, thanks to central counterparty guarantee and increased liquidity.