Market making program based on revenue sharing, which was initiated in the Turkish capital markets for the first time in January 2015, is successfully implemented on single stock futures & options, index and currency options markets on Borsa İstanbul VIOP. With the help of market making program, in the first three quarters of 2015, trading volume of single stock futures increased 120 fold (recorded as 1.2 billion TRY), trading volume of index options increased 3 fold (recorded as 2.1 billion TRY) and trading volume of USDTRY options increased 176 fold (recorded as 1.3 billion TRY). Electricity futures contracts are included in the new market making program with the aim of obtaining the success of single stock futures, index and USDTRY options.

Aksa Aksen Enerji and Naksan Elektrik along with Is Investment and EnerjiSA Electricity Wholesale&Trading along with Ak Investment became market makers for Electricity Futures Contracts on October 1, 2015. The contract months for Electricity Futures Contracts were increased from 4 to 16 months. Additionally, minimum order size is reduced in the trade reporting, and with the help of five market maker institutions, the energy sector participants can effectively use VIOP electricity futures for their risk management with a central counterparty clearing service. Due to having the new market making program, increased number of contract months, and reduced minimum order size of trade reporting, the trade volume in Electricity futures, is expected to accelerate in the coming months on top of its fast growth since June 2015.

Clearing part of trading has importance especially in the scope of counterparty risk. Counterparty risk is undertaken in OTC markets. However, VIOP has been offering central counterparty service of Takasbank for all the products traded on VIOP since March 2014. In other words, Takasbank acts as a seller for the buyer and a buyer for the seller. Thus, trade is actually executed against Takasbank and counterparty risk is eliminated.

VIOP Electricity futures are traded with a lower cost trading compared to OTC platforms. One of the most important cost items is the stamp tax which is not applicable on VIOP. When a trade of electricity futures is executed on VIOP, stamp tax is not collected whereas approximately 1% stamp tax is collected in OTC platforms. Secondly, brokerage fees are lower at VIOP compared to OTC platforms.

In brief, it is possible to trade on VIOP without counterparty risk, stamp tax and paying high brokerage fees.

Muammer Çakır, Head of Derivatives Market (VIOP) Borsa İstanbul said, “Currently, electricity is traded predominantly OTC in Turkey. In the forthcoming period, we expect the trading of electricity to shift to VIOP platform which offers central counterparty clearing service with a clear tax advantage. Towards this end, we will continue to offer new products that satisfy the market’s risk management requirements. We have expanded our successful market making program based on revenue sharing including electricity futures contracts. Therefore, we offer good opportunities even for consumers who want to manage their electricity price risk at VIOP.”

Borsa İstanbul Derivatives Market (VIOP) is the region’s leading and most liquid derivatives marketplace where the investors and corporates come to manage their risk. VIOP offers the widest range of regional benchmark products across all major asset classes, including futures and options based on equity indices, currencies, interest rates, precious metals, commodities and energy with a central counterparty clearing service.