MAY 2014
Turkish
Brokerage
Industry
2013
Review
Büyükdere Caddesi No.173
1. Levent Plaza A Blok Kat:4
1. Levent 34394 İstanbul
Phone: +90 212 280 85 67
Fax: +90 212 280 85 89
www.tspb.org.tr
[email protected]
TURKISH BROKERAGE INDUSTRY
2013 REVIEW
Edited by
Alparslan Budak
Ekin Fıkırkoca
Written by
Erdem Ünsal
Gökben Altaş
Özge Taşkeli
Print: Umur Printing
Istanbul, May 2014
TCMA Publication No. 70
ISBN-978-975-6483-48-0
For online version please visit TCMA’s website at www.tspakb.org.tr.
This report has been prepared by TCMA for information purposes only. TCMA exerts maximum effort to ensure that the
information published in this report is obtained from reliable sources, is up-to-date and accurate. However, TCMA can not
guarantee the accuracy, adequacy or integrity of the data or information. Information, comments and recommendations
should not be construed as investment advice. TCMA does not accept any responsibility for any losses or damages that
could result from the use of any information in this report. This report may be used without prior permission, provided
that it is appropriately quoted.
ABBREVIATIONS
Term
CBRT
Definition
Central Bank of the Republic of Turkey
CMB
Capital Markets Board
CRA
Central Securities Depository
IFRS
International Financial Reporting Standards
MCap
Market Capitalization
OTC
Over-the-Counter
PMC
Pension Monitoring Center
Takasbank
Istanbul Settlement and Custody Bank
TL
Turkish Lira
TCMA
Turkish Capital Markets Association
TurkDex
VIOP
WFE
Y-t-d
Turkish Derivatives Exchange
Futures and Options Market
World Federation of Exchanges
Year-to-Date
TABLE OF CONTENTS
Market Returns ............................................................................................. 1
Equity Market ............................................................................................... 2
Debt Securities Market...................................................................................
3
Repo Market .................................................................................................. 4
Futures Market .............................................................................................. 5
Lending, Borrowing & Margin Trading .............................................................. 6
Corporate Finance .......................................................................................... 7
Asset Management & Branch Network............................................................... 8
Employees ..................................................................................................... 9
Financial Statements ...................................................................................... 10
Investors ....................................................................................................... 13
Capital Market Institutions .............................................................................. 16
MARKET RETURNS
Moderate growth expectations in developed countries
coupled with fading sovereign debt problems in the
European Union moved the markets in 2013.
Selected Market Returns (US$ Based-2013)
Peru
Borsa Istanbul
BM&FBOVESPA
Colombia
Thailand
BSE India
Johannesburg
Singapore
Hong Kong
Luxembourg
Wiener Börse
Italy
Deutsche Börse
The impact of FED tapering on liquidity resulted in capital
outflows from emerging countries to developed countries
in the second half of 2013. In addition, the political unrest
in Turkey, that has governed the second half of 2013, had
a negative impact on the economy. Consequently, BIST100 index decreased by 28% in US$ terms which is the
second largest drop after Peru.
NASDAQ OMX
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Source: WFE
BIST-100 Index & Trading Volume
Points
100,000
Trading Volume
BIST-100 (TL)
90,000
3,600
3,000
80,000
2,400
70,000
60,000
1,800
50,000
While the index declined, the average daily trading volume
went up by 18% to US$ 1.3 billion in 2013 from US$ 1.1
billion in 2012.
1,200
40,000
600
2011/01
2011/03
2011/06
2011/09
2011/12
2012/03
2012/06
2012/08
2012/11
2013/02
2013/05
2013/08
2013/11
30,000
20,000
Mn. $
After hitting its all-time high level in May, BIST-100 index
ended the year 2013 at 67.800 points with a 13% loss
in TL terms. In US$ terms, BIST-100 index decreased by
28% due to the depreciation of the Turkish lira.
0
Source: Borsa Istanbul
Benchmark and O/N Interest Rates
%
12
Benchmark Interest Rate (compounded)
O/N Rates (simple, 5-day MA)
10
8
6
4
0
2011/01
2011/03
2011/05
2011/07
2011/09
2011/11
2012/01
2012/03
2012/05
2012/07
2012/09
2012/11
2013/01
2013/03
2013/05
2013/07
2013/09
2013/11
2
After rising above the 10% mark by the end of 2011 with
the Central Bank’s tighter monetary policy, the benchmark
interest rates started to decline in 2012. The downward
trend in benchmark interest rates continued in 2013,
parallel to CBRT’s policy aiming at financial stability amidst
rising global capital inflows. In May 2013, the benchmark
interest rates went down to 5%. However, in the second
half of the year they increased sharply back to 10% due to
the Fed tapering and the rise in domestic inflation which
went up from 6% to 7.5% throughout 2013. The turmoil
caused by the demonstrations throughout the country also
impacted on the increase of benchmark interest rates.
Source: Bloomberg, Borsa Istanbul
1
TCMA
EQUITY MARKET
In 2013, equity trading volume increased by 23% in US$
terms (31% in TL terms). 87 brokerage firms traded in
the equity market. First 5 brokerage firms’ share in total
volume increased slightly by 1 percentage point to 31%.
Equity Trading Volume (bn.$)
426
424
2010
2011
316
2009
430
349
2012
2013
Source: Borsa Istanbul
Investor Breakdown of Equity Trading Volume
Dom. Individual
For. Individual
100%
Dom. Corporation
For. Corporation
Dom. Institutional
For. Institutional
80%
60%
40%
20%
0%
2009
2010
2011
2012
2013
Source: TCMA
Department Breakdown of Equity Trading Volume
Domestic Sales
Rep. Offices
Mutual Funds
International Sales
Branches
Internet
Portfolio Mngt.
Bank Branches
Call Center
Prop.Trading
100%
80%
60%
40%
20%
0%
2009
2010
2011
2012
2013
Domestic investors generated 80% of the total equity
trading in 2013. Domestic individuals continued to drive
the equity market with a 59% share. On the other hand,
these investors held around only 19% of the free float
as of end-2013. Volume share of domestic corporations
increased by 2 percentage points to 12% and institutional
investors by 1 percentage point to 10%.
In terms of trading volume, foreign investors’ share peaked
above 30% in May 2008. However, with the worsening
financial crisis, this figure retreated to around 15% in 2009.
The share of foreign investors has slightly recovered since
then and increased to 20% in 2013. Foreign corporations,
which mainly refers to foreign banks and brokerage firms,
generated 16% of the trading volume. In 2013 foreign
institutional investors, which hold around 45% of the free
float, had only 4% share in total turnover. More detailed
information regarding foreign investors is provided in the
“Investors” section.
Department breakdown of the trading volume indicates
the channels through which trading is carried out.
Domestic sales refers to the headquarters of the brokerage
firms. Branches are owned by the brokerage firms. Bank
branches indicate the order flow from banks. Mutual
funds are included in the institutional investors group
and proprietary trading is included in corporations in the
previous investor breakdown section.
The share of internet trading, which represents the largest
channel of equity trading, hit an all-time high of 25% in
2012. This figure went slightly down by 1 percentage point
to 24% in 2013. Domestic sales department generated
20% of the total turnover in 2013, down from 21% in
2012. Branches and bank branches generated 29%
of the trading volume, indicating a slight decrease of 1
percentage point.
Source: TCMA
TCMA
2
DEBT SECURITIES MARKET
Bonds & Bills Trading Volume (bn. $)
Banks
Brokerage Firms
1,017
912
986
963
941
932
888
800
818
712
88
94
76
54
75
2009
2010
2011
2012
2013
Source: Borsa Istanbul
Investor Breakdown of Bonds & Bills Trading Vol.
Dom. Individual
For. Individual
Dom. Corporation
For. Corporation
Dom. Institutional
For. Institutional
100%
In 2013, bonds trading volume of intermediaries decreased
by 2% to US$ 963 billion. The share of OTC transactions
remained at %59 in 2013.
68 brokerage firms and 38 banks traded bonds and bills
in 2013. First 5 of them generated over half of the total
volume. The share of brokerage firms in the bonds and bills
market increased by 1 percentage point to 7% in 2013.
The breakdown of trading volume, in terms of departments
and investor categories, includes the brokerage firms’
figures only.
99% of bonds and bills trading volume of brokerage firms
was generated by domestic investors. Domestic institutional
investors, which represent mutual funds, investment trusts
and pension funds generated 84% of total trading volume.
Domestic corporations, mainly reflecting the proprietary
trading of brokerage firms, created 14% of bonds trading
volume.
80%
60%
40%
20%
0%
In the fixed income market, both brokerage firms and
banks are authorized to trade. Figures in this section
represent the sum of public and corporate bonds and bills,
traded at the Borsa Istanbul and OTC markets. Although
the corporate bond market revived recently, trading volume
of corporate bonds represent only 3% of the total. The
figures on the chart show the trading volume of financial
intermediaries. It excludes the transactions by the Central
Bank and Takasbank (Settlement and Custody Bank).
2009
2010
2011
2012
2013
The share of foreign investors’ bonds and bills trading has
decreased by 5 percentage points to 1% in 2013. Only one
brokerage firm generated 82% of foreign investors’ trading
volume. Foreign investors prefer to use banks rather than
brokerage firms to trade in the bonds and bills market.
Source: TCMA
Department Breakdown of Bonds&Bills Trading Vol.
Domestic Sales
Rep. Offices
Mutual Funds
International Sales
Branches
Internet
Portfolio Mngt.
Bank Branches
Call Center
Prop.Trading
100%
80%
60%
40%
20%
0%
2009
2010
2011
2012
Domestic sales, mutual funds and proprietary trading
cover 94% of the trading volume. The share of domestic
sales department increased by 12 percentage points to
73% in 2013. On the other hand, the share of proprietary
trading went down by 6 percentage points to 11% in the
same period. Discretionary portfolio management clients
and mutual funds that are managed by brokerage firms
generated 11% of the trading volume. The share of
international sales department went down by 4% to 0% in
2013. A brokerage firm, which generated almost all of the
trading volume of international sales in 2012, did not do
any transactions through international sales department
during 2013.
2013
Source: TCMA
3
TCMA
REPO MARKET
Repo Volume (bn. $)
Brokerage Firms
Banks
7,416
6,669
4,572
4,126
3,631
2,955
6,658
6,009
3,416
3,897
710
675
758
660
2011
2012
2013
676
2009
2010
Source: Borsa Istanbul
Investor Breakdown of Repo Volume
Dom. Individual
For. Individual
Dom. Corporation
For. Corporation
Dom. Institutional
For. Institutional
100%
45 brokerage firms and 37 banks traded in the repo
market in 2013. First 5 intermediaries generated 60%
of repo transactions in 2013. Similar to bonds and bills
market, banks dominate the repo market. Although the
repo trading volume of brokerage firms decreased by
13% to US$ 660 million in 2013, their share in total repo
transactions remained unchanged around 10%.
As in bonds and bills trading, the breakdown of the repo
volume, in terms of departments and investor categories,
includes the brokerage firms’ figures only.
Domestic investors generate almost the entire repo trading
volume of brokerage firms. Domestic institutional investors,
which mainly represent the money market mutual funds
managed by brokerage firms or their affiliated portfolio
management companies, are the major investor group
with a share of 83%. Three brokerage firms generated
68% of the domestic institutional investors’ repo volume.
Foreign investors’ repo trading through brokerage firms is
negligible with a share less than 1%.
80%
60%
40%
20%
0%
Total repo trading volume decreased by 10% to US$
6.7 trillion in 2013. These transactions also include OTC
transactions. OTC market’s share represent 5% of total
volume.
2009
2010
2011
2012
2013
Source: TCMA
Department Breakdown of Repo Volume
Domestic Sales
Rep. Offices
Mutual Funds
International Sales
Branches
Internet
Portfolio Mngt.
Bank Branches
Call Center
Prop.Trading
100%
A considerable amount of repo trading was done through
domestic sales department (68%) and by mutual funds
(18%). Propriety trading represents 7% of brokerage
firms’ total repo transactions.
Concentration in repo transactions among brokerage firms
is relatively high. A single brokerage firm generated 33%
of total brokerage firms’ volume.
80%
60%
40%
20%
0%
2009
2010
2011
2012
2013
Source: TCMA
TCMA
4
FUTURES MARKET
Futures Trading Volume (bn. $)
Brokerage Firms
Banks
576
529
437
500
449
382
451
440
397
395
53
76
78
53
45
2009
2010
2011
2012
2013
Source: Borsa Istanbul
Investor Breakdown of Futures Trading Volume
Dom. Individual
For. Individual
Dom. Corporation
For. Corporation
Dom. Institutional
For. Institutional
100%
80%
60%
40%
20%
0%
2009
2010
2011
2012
2013
Since the merger of the Turkish Derivatives Exchange
(TurkDex) and Borsa Istanbul on August 5, 2013, all futures
and options contracts in Turkey are traded on a single
platform under Borsa Istanbul Futures and Options Market
(VIOP). Options have been traded in Turkey since December
2012. Although options are included in this report, their
traded value constituted only a small fraction (0.002%) of
the total derivatives’ volume. On Borsa Istanbul Futures and
Options Market, brokerage firms and banks are authorized
to trade. The trading volume on Borsa Istanbul Futures and
Options Market decreased by 2% to US$ 440 billion in 2013.
74 brokerage firms and 11 banks traded in this market in
2013. Contrary to the fixed income market, brokerage firms
dominate the market with a 90% trading share. Banks’
market share has been slightly declining since 2011. It is
worth mentioning that banks are not permitted to trade in
equity-based contracts. First 10 institutions (9 brokerage
firms and 1 bank) generated 54% of total futures trading
volume in 2013.
The breakdown of the futures trading volume includes
the brokerage firms only. The share of domestic individual
investors decreased regularly from 2009 to 2012. But in
2013, their share rose by 2 percentage points to 63%.
Still, trading volume is driven by domestic individuals in the
futures market, as well as in the equity market. Domestic
corporations’ (mainly reflecting the proprietary trading of
brokerage firms) market share drastically decreased by 8
percentage points to 10% due to the decrease in trading
volume of two brokerage firms. Domestic institutional
investors’ share is quite limited at 4%. Foreign investors’
share in the trading volume increased to an all-time high
of 23% in 2013. This is the first time since 2007 that the
share of foreign investors exceeded 20%. At the same
time, concentration in foreign investors’ futures trading
volume is high. Four brokerage firms generated 69% of
the foreign investors’ futures trading volume.
Source: TCMA
Department Breakdown of Futures Trading Volume
Domestic Sales
Rep. Offices
Mutual Funds
International Sales
Branches
Internet
Portfolio Mngt.
Bank Branches
Call Center
Prop.Trading
100%
The domestic sales department, representing the
headquarters of brokerage firms, generated 16% of the
futures trading volume, which was 11% in 2012. In 2013,
21% of futures transactions have been done through
brokerage firms’ branches, representative offices and bank
branches. Their share increased by 3 percentage points in
2013. 8% of total volume was produced by the brokerage
firm’s proprietary trading, compared to 12% in 2012.
80%
60%
40%
20%
0%
Although the share of internet transactions decreased
by 10 percentage points in 2013 to 30%, the internet is
undoubtedly the most popular channel of trading in the
futures market.
2009
2010
2011
2012
2013
Source: TCMA
5
TCMA
LENDING, BORROWING, & MARGIN TRADING
Takasbank operates the Securities Lending and Borrowing
Market. In 2013, 258 securities were subject to borrowing
and lending transactions. The volume of these transactions
declined slightly by 2% to US$ 1.6 billion in 2013.
Securities Lending & Borrowing (mn. $)
1,957
1,653
1,641
1,606
2012
2013
1,327
2009
2010
2011
Source: Takasbank
Short Selling
5 2
1 4
%
Short Selling Volume (Bn. $)
Share in Total Volume
4 8
4 4
11%
1 2
%
4 0
1 0
%
3 6
3 2
8 %
The short selling transactions were on a downward trend
between 2010 and 2012. Short selling volume decreased
by 17% to US$ 19 billion in 2012 due to the CMB’s
measures to limit the short selling operations.
In February 2013, the uptick rule was abolished by CMB.
As a result, short selling volume increased by 158% to
US$ 49 billion.
2 8
2 4
2 0
6%
6%
6 %
5%
1 6
5%
The share of short selling in total trading volume rose by 6
percentage points to 11% in 2013.
4 %
1 2
8
2 %
4
19
27
23
19
49
0
0 %
2009
2010
2011
2012
2013
Source: Borsa Istanbul
Margin Trading
Outstanding Loan Size (Mn. $)
No. of Investors
11,616
11,462
10,964
10,417
8,977
315
479
437
598
764
2009
2010
2011
2012
2013
Since the global financial crisis, total loan size and the
number of margin trading investors have been recovering
gradually. The total loan size increased by 28% in 2013 to
US$ 764 million, although the number of margin trading
investors went down by 9% in the same year. 60 brokerage
firms have margin-trading customers as of end-2013.
10,400 investors borrowed for their equity transactions.
Average loan size per investor is around US$ 73,400.
Source: TCMA
TCMA
6
CORPORATE FINANCE
Initial Public Offerings
IPO Volume (Mn. $)
No. of IPOs
30
27
25
19
2
76
2009
2,153
842
362
758
2010
2011
2012
2013
Source: Borsa Istanbul
Corporate Bonds Issues
Size of Private Debt Securities
Issued (Mn. $)
No. of Private Debt Securities
Issued
330
235
The global financial crisis limited the number of public
offerings and in 2009 there were only two IPOs amounting
to US$ 76 million. With favourable market conditions and
the support of the IPO campaign, the primary market
revived in 2010. The recovery continued in terms of
numbers, but the values fell sharply in 2011 and 2012.
In 2013, 19 IPOs took place with a size of US$ 758 million.
The average IPO size increased to US$ 40 million in 2013
from US$ 12 million in 2012.
Out of 19 IPOs, 9 companies were listed on the Emerging
Companies Market and 3 companies were listed on the
Second National Market. Both markets are intended for
small and medium sized enterprises (SMEs). In addition,
Emlak Konut’s (a real estate trust) secondary public
offering took place in November 2013. The total issue size
was US$ 1.6 billion.
Following the revisions in relevant regulations to revive the
market, coupled with a downward trend in interest rates,
the corporate bond market almost exploded since 2010. In
2013, 330 bonds were issued with a size of US$ 29 billion
where major issuers were banks. The corporate finance
services for 282 bond issues were provided by brokerage
firms while 48 bond offerings were managed by banks.
58
00
15
1,294
11,098
23,344
29,188
2009
2010
2011
2012
2013
Source: Borsa Istanbul
Corporate Finance Activities of Brokerage Firms
Privatization
Other Consultancy
M&A
Corporate Actions
255
207
11
44
148
2009
IPO&SPO-Equities
Bond Issuance
387
16
32
47
40
21
21
43
34
102
20
24
28
54
30
95
181
284
2012
2013
170
74
2010
Corporate finance services are provided by brokerage
firms, as well as consultancy companies. This section
covers only the corporate finance activities of brokerage
firms. 31 brokerage firms were active in this market in
2013.
In 2013, the number of finalized transactions increased
to 409 from 387 with the rising number of corporate
actions (34 capital increases and dividend payments) and
the boom in the corporate bond issuances (284). 21 M&A
projects were finalized by brokerage firms, of which 7 were
buy-side. Other consultancy deals were mainly valuation
services.
49
2011
Source: TCMA
7
TCMA
ASSET MANAGEMENT & BRANCH NETWORK
Asset Management at Brokerage Firms
Assets Under Mngmt. (Bn. $)
No. of Investors
2,529
2,765
1,887
1,574
1,153
2.8
2.8
1.9
2.3
2.1
2009
2010
2011
2012
2013
Asset management services are provided by portfolio
management firms and brokerage firms. The data for
portfolio management firms has been gathered by the
Capital Markets Board. Total assets under management
by professionals is around US$ 33 billion as of end-2013.
36 brokerage firms were offering asset management
services as of end-2013. The number of investors
increased to 2,765 and the assets under management
went down by 9% to US$ 2.1 billion. Although the value of
assets increased by 13% in TL terms, it indicated a loss in
US$ terms due to the depreciation of the Turkish lira. Two
thirds of this portfolio belongs to fixed income funds, most
of which are money market funds. 18 brokerage firms
manage equity funds with US$ 162 million portfolio. The
rest of the assets under management (US$ 586 million)
belongs to discretionary portfolio management clients.
Source: TCMA
Asset Management at Portfolio Management Co.
Assets Under Mngmt. (Bn. $)
No. of Investors
2,246
2,118
1,745
1,393
1,243
36 portfolio management companies were active in this
market as of end-2013. Although the number of investors
at portfolio management companies increased to 2,246
in 2013, total assets under management shrank by 6%
to US$ 30 billion as a result of strong appreciation of US$
against the Turkish lira. In TL terms, total assets under
management increased by 15%. 89% of the total assets
under management belonged to 604 institutional investors
and corporations.
Average portfolio for institutional investors is around US$
13.5 million in brokerage firms, versus US$ 45 million in
portfolio management companies.
26,961
30,495
25,333
31,710
30,473
2009
2010
2011
2012
2013
Source: CMB
Branch Network
Rep. Offices
Branches
Bank Branches
4
5
6,554
7,174
Brokerage firms reach investors through bank branches,
their own branches and representative offices in addition
to their headquarters.
Branches and representative offices are owned and staffed
by brokerage firms. Bank branches are also used as sales
agents, based on agreements between the banks and the
brokerage firms. As end of 2013, 54 brokerage firms have
at least one of the three types of branches.
6,911
6,686
6,184
5,988
6,347
6,466
6,684
6,950
2009
2010
2011
2012
2013
The number of branches and representative offices was
negatively affected by the global crisis. Since 2010, this
number has been gradually recovering. The number of
representative offices rose to 71 in 2013, from 66 in 2012.
The number of branches slightly decreased to 153. The
number of bank branches reached 6,950, which indicated
an increase of 4% compared to the beginning of the year.
Source: TCMA
TCMA
8
EMPLOYEES
Number of Brokerage Firms' Employees
5,100
4,948
4,715
2009
2010
2011
5,258
5,480
2012
2013
Between 2004 and 2007, brokerage firms employed
around 5,900 personnel. Throughout the global crisis,
brokerage firms reduced the headcount to 4,700 in two
years. Nevertheless, employment has been recovering
since 2010. As of end-2013, brokerage firms are employing
5,480 professionals, up from 5,258 at the end of 2012. The
increase in the number of employees is mainly due to the
forex companies, which are expanding their operations.
The average number of employees for a brokerage firm
is 54.
Source: TCMA
Education of Brokerage Firms' Employees
Post Graduate
100%
Graduate
Pre-Bachelor
≤High School
80%
The education level of the industry has been increasing.
The share of employees that have at least a graduate
diploma increased to 76% in 2013 from 71% in 2009.
Moreover, post-graduate segments’ weight increased to
13.5% as compared to %12.5 at the end of 2009.
60%
40%
20%
0%
2009
2010
2011
2012
2013
Source: TCMA
Age Groups of Brokerage Firms' Employees
>50
41-50
31-40
<30
100%
An aging trend is observed in the industry. In 2009, 23%
of the employees were aged above 40, while this ratio
increased to 32% as of end-2013. 42% of the employees
are aged between 31 and 40.
80%
60%
40%
20%
0%
2009
2010
2011
2012
2013
Source: TCMA
9
TCMA
FINANCIAL STATEMENTS
Balance Sheet of Brokerage Firms (mn. $)
7,000
Current Assets
Total Assets
Shareholders' Equity
6,000
5,000
4,000
3,000
2,000
1,000
0
2009
2010
2011
2012
2013
Source: TCMA
Income Statement of Brokerage Firms (mn. $)
Total Revenues
800
Operating Profit
Net Profit
700
600
500
95 brokerage firms’ stand-alone financial statements,
prepared according to the International Financial Reporting
Standards (IFRS) were collected in 2013. At the end of
2013, brokerage firms’ total assets increased by 3% to
US$ 6.5 billion. The increase in TL terms stands at 23%.
Total assets were merely US$ 3.6 billion in 2009. Asset
structure continued to be quite liquid as 93% of the total
assets is composed of current assets. Cash and cash
equivalents form 56% of total assets. Shareholders’ equity
of the industry is US$ 1.6 billion, equaling to 24% of total
liabilities. This ratio was over 36% as of end 2009. The
decline in the equity’s share is due to the rising short term
debt. Short term liabilities (76%) are related to overnight
borrowings and settlement dues. 2 brokerage firms account
for 85% of the overnight borrowings of the brokerage
industry. Financial table details of these brokerage firms
suggest that, they borrow short term from money market
and invest mainly in FX deposits, derivatives and leveraged
FX trading. In fact, this is the main reason behind the sharp
growth of the balance sheet of the brokerage firm industry
in the last five years.
As of end 2013, brokerage firms’ total revenues increased
by 17% to US$ 719 million. Commission revenues and
proprietary trading profits, which increased by 16% and
36% respectively, positively affected the sector’s top-line.
As a result, operating profits of the industry increased by
49% to US$ 139 million.
The net profits increased to US$ 278 million in 2013 from
US$ 162 million in 2012. The net profit of the industry was
boosted by the sale of one brokerage firm’s subsidiaries
(US$ 121 million).
400
300
200
100
0
2009
2010
2011
2012
2013
Source: TCMA
Breakdown of Brokerage Firms' Revenues
Brokerage Commissions
Proprietary Trading Profits
13%
6%
17%
64%
2009
Source: TCMA
TCMA
11%
4%
20%
65%
2010
14%
5%
Revenues from Services
Other Revenues
8%
7%
21%
25%
19%
20%
51%
48%
21%
60%
2011
2012
2013
Brokerage firms generate revenues from brokerage
commissions, services, proprietary trading and other
operations.
Brokerage commissions increased by 16% to US$ 352
million in 2013. 48% of the revenues came from brokerage
commissions in 2013, down from 51% a year ago.
Brokerage commissions are followed by proprietary trading
profits which surged by 36% to reach US$181 million in
2013. The rise in the profits from leveraged FX trading
supported the proprietary trading profits.
Revenues from services, which refer to corporate finance
and asset management activities represent one-fifth of
total revenue. The share of other revenues, including
mainly interest income and dividends received, decreased
by 1 percentage point to 7%.
10
FINANCIAL STATEMENTS
Breakdown of Brokerage Commissions
Equities
Fixed Income
Derivatives
17%
2%
16%
1%
80%
82%
2009
2010
18%
Forex
Other
3%
19%
17%
4%
2%
81%
77%
79%
2011
2012
2013
2%
Source: TCMA
Breakdown of Revenues from Services
Corporate Finance
33%
47%
21%
2009
32%
34%
34%
2010
Asset Management
Others
34%
32%
35%
26%
20%
21%
40%
45%
48%
2011
2012
2013
Brokerage firms earned US$ 352 million in brokerage
commissions. In 2013, total commission revenues increased
by 10%, on the back of rising equity trading volume.
Commissions on equity trading form 79% of total
commissions. Equity trading volume increased by 23% in
2013. Meanwhile, commissions on equity trading improved
by only 12% to US$ 278 million. Effective commission rate
on equity trading is calculated by the net amount left to
the brokerage firm, excluding rebates to clients and revenue
sharing with the sales agents. As of end 2013, the effective
commission rate declined to 0.035% compared to 0.038%
a year ago. It was 0.050% as of end 2009. Please note that
this should not be interpreted as the rate charged from the
client. Brokerage firms generated 17% of their commissions
from derivatives trading. Commissions from derivatives
trading decreased by 4% in US$ terms. The effective
commission rate for those transactions was 0.016% in 2013,
compared to 0.017% in 2012.
Revenues from services cover mainly asset management
and corporate finance fees. “Others” refers to fees charged
on custody services, other consultancy services, as well as
money and securities transfers. Service revenues recorded
US$ 147 million, up 24% as compared to 2012.
Total assets under brokerage firms’ management went
down by 9% in US$ terms in 2013. On the other hand,
revenues from asset management increased by 24% to US$
30 million. The increase in revenues is due to one brokerage
firms’ earnings. This firm is mainly marketing foreign funds
to its customers.
Corporate finance activities’ share reached 48% of revenues
from services with the contribution of the revenues from
public offerings. Brokerage firms earned US$ 42 million on
public offerings.
Source: TCMA
Breakdown of Proprietary Trading Profits (mn. $)
Others
Derivatives
Forex
Fixed Income
Mutual Funds
Equities
181
134
2
4
37
118
3
2
62
32
11
56
53
1
2011
2012
2013
Brokerage firms’ proprietary trading profits reached US$ 181
million in 2013, up from US$ 134 million in the previous year.
Leveraged FX trading became the major source of proprietary
trading revenues. The profits from leveraged FX trading
recorded US$ 118 million in 2013. Leveraged FX transactions
are followed by derivatives trading profit, which is US$ 53
million in 2013. This amount was mainly generated by a
single brokerage firm.
3
32
2
20
9
13
2009
2010
2
Source: TCMA
11
TCMA
FINANCIAL STATEMENTS
Interests received from customers, including margin trading
and short selling was around US$ 86 billion as of end 2013.
Due to one brokerage firms’ proprietary trading net interest
expense, other revenues totaled US$53 million in 2013.
Breakdown of Other Revenues
Other Revenues (Mn. $)
Interests Received from Customers (Mn. $)
99.7
76.7
43.3
3.4
39.9
2009
16.4
52.2
53.2
83.3
85.1
85.9
-32.9
-32.7
2012
2013
18.9
57.8
2010
2011
Source: TCMA
Breakdown of Operating Expenses
Administrative, Depreciation
Marketing, R&D
Employee Compensation
Trading, Settlement Costs
Other Official Expenses
30%
26%
28%
27%
27%
6%
5%
7%
9%
3%
7%
8%
3%
8%
7%
4%
8%
7%
5%
9%
52%
54%
53%
54%
52%
2009
2010
2011
2012
2013
In 2013, operating expenses of the brokerage industry
increased by 11% to US$ 631 million. 52% of the expenses
correspond to employee compensation (including social
security payments, health insurance and alike). The average
monthly cost of an employee slightly improved to US$ 5,098
in 2013, from US$ 4,978 in 2012.
Trading and settlement costs increased by 8% to US$ 41
million in 2013 with the rise of trading volumes. Administrative
and depreciation expenses, which include office rents, other
infrastructure expenses and depreciation, represent 27% of
total expenses.
Source: TCMA
Breakdown of Brokerage Firms' Profits
2012
2013
No. of Profit Makers
51
54
No. of Loss Makers
46
41
Total Profit (Mn. $)
191.2
307.6
Total Loss (Mn. $)
-29.4
-29.8
Net Profit/Losses
161.8
277.8
Source: TCMA
Brokerage Firms' Profitability
2012
ROE
9.9%
EPS (TL)
0.18
Source: TCMA
TCMA
2013
16.5%
0.30
Change
6%
-11%
61%
1%
72%
The brokerage firms’ aggregate net profits increased by
72% in 2013 along with the increase number of profit
makers. 54 brokerage firms recorded a profit of US$ 308
million, while 41 brokerage firms posted aggregate losses of
US$ 30 million. The most profitable brokerage firm’s profit
was US$ 147 million supported by the sale of subsidiaries
of one brokerage firm in 2013.
Change
66.9%
62.4%
12
INVESTORS
Breakdown of Total Savings (bn. $)
Mutual Funds
502
26
82
69
324
2009
Equities
585
28
107
77
Fixed Income
Deposits
667
28
521
22
74
617
120
26
94
102
94
75
372
351
2010
2011
416
2012
404
As of end 2013, total savings in Turkey declined by 7%
to US$ 617 billion due to the depreciation of the TL
against the dollar by 20%. In TL terms, total savings
were up by 14% in the same period. Domestic residents
hold 80% of the total savings.
Bank deposits continued to be the major component in
savings. Investors hold US$ 404 billion in bank deposits
as of end 2013. Total investments in equities decreased
by 22% to US$ 94 billion in 2013 because of the decline
in the BIST-100 index by 28% in US dollar terms. The
shares of fixed income securities and mutual funds in
total savings remained almost unchanged, at 14% and
4% respectively.
2013
Source: CBRT, BRSA, CRA
Number of Equity Investors
(thou.)
Domestic Investors
Individuals
Corporations
Institutionals
Foreign Investors
Individuals
Corporations
Institutionals
Total
2011
1,090.1
1,086.4
3.1
0.5
7.7
4.5
1.1
2.1
1,097.8
2012
1,080.3
1,075.4
4.3
0.6
8.3
4.8
1.2
2.2
1,088.6
2013
1,100.9
1,095.2
5.1
0.6
9.6
6.0
1.3
2.3
1,110.4
The number of investors with equity holdings increased
to 1.1 million with the participation of around 20,000
new domestic individuals in 2013. Number of domestic
corporations increased by 747 in the same period.
Although the number of foreign investors continued
to increase, they still represent less than 1% of the
investor base. However, they hold 63% of the total
equities.
Source: CRA
Equity Ownership
(mn.$)
Domestic Investors
Individuals
Corporations
Institutionals
Foreign Investors
Individuals
Corporations
Institutionals
Total
2011
2012
27,985
40,884
15,861
21,226
9,113
14,901
3,011
4,758
45,979
79,056
183
260
13,447
23,459
32,349
55,337
73,964 119,940
2013
34,282
17,344
12,647
4,290
57,369
235
15,646
41,488
91,651
Total equity holdings decreased to US$ 92 billion at the
end of 2013, from US$ 120 billion in 2012.
The share of domestic investors in total holdings went
up by 3 percentage points to 37% in 2013. Foreign
institutional investors continued to hold the major part
of the equities with 45% share, followed by domestic
individual investors (19%).
Source: CRA
13
TCMA
INVESTORS
Foreign Equity Investors in Borsa Istanbul
Share in Total Mcap
70%
Share in Trading Volume
25%
66%
20%
62%
15%
58%
10%
54%
5%
50%
2009
2010
2011
2012
2013
The share of foreign investors in the trading volume
continued to increase in the last five years. Foreign
investors held a lower share in portfolio value in 2013.
However, their share in the trading volume was up by 2
percentage points to 20%.
0%
Source: CRA, Borsa Istanbul
Corporate Bond Investors
Portfolio Size (mn. $)
Number of Investors (thou.)
194
167
119
4.9
1,857
0.3
361
2009
7,271
2010
15,783
16,940
2012
2013
2011
Although both the number of investors and the size of
corporate bond holdings rapidly increased in the last few
years, the number of investors decreased to 167,000 by
the end of 2013 from 194,000 in 2012, due to declining
number of domestic individual investors. On the other
hand, size of the bond investments increased by 7% to
$ 17 billion in the same period. Domestic institutional
investors’ share in outstanding corporate bonds increased
to 21% in 2013 from 18% in 2012.
Source: CRA
Warrant Investors
Portfolio Size (mn. $)
2,457
Number of Investors
3,306
1,945
After its inception in August 2010, investments in the
warrant market reached US$ 5.7 million as of year-end
2013. The number of warrant investors also increased by
70% in 2013, thanks to new warrant issues implying 60%
jump compared to 2012. Domestic individual investors
continued to hold the major part of outstanding warrants
(97%) in 2013.
1,432
4.6
5.2
5.3
5.7
2010
2011
2012
2013
Source: CRA
TCMA
14
INVESTORS
Breakdown of Leveraged FX Trading Volume
2011*
2012
2013
Total Volume (bn $)
183
1,317
2,573
Domestic Investors
99.9%
96.6%
94.8%
Individual Investors
64.7%
51.7%
52.9%
Corporations
35.3%
44.9%
41.3%
0.0%
0.0%
0.6%
Foreign Investors
0.1%
3.4%
5.2%
Individual Investors
0.1%
0.5%
2.8%
Corporations
0.0%
2.9%
2.3%
Institutional Investors
0.0%
0.0%
0.0%
100%
100%
100%
Institutional Investors
Total
Source: TCMA
Forex market showed a remarkable growth, after it became
regulated in August 2011. The trading volume in the forex
market reached US$ 2.6 trillion in 2013.
Domestic retail investors (53%) and domestic corporations
(41%) continued to dominate the market. The high share
of the domestic corporations is due to brokerage firms’
hedging operations.
*September-December
Mutual Fund Investors
Portfolio Size (bn.$)
3.0
Number of Investors (mn.)
3.0
2.9
2.8
2.8
20
22
16
17
15
2009
2010
2011
2012
2013
As of end 2013, the number of mutual fund investors
is 2.8 million, which is almost three times of equity
investors. The number of mutual fund investors
decreased by 1.5% in 2013. The declining trend in
the number of fund investors reflects the meagre
performance - especially in liquid funds - in the last
few years as well as increasing number of options in
alternative investment tools.
Total size of mutual funds declined to US$ 15 billion by
the year end 2013, compared to US$ 17 billion in 2012
due to the depreciation of the Turkish Lira.
Source: CRA
Pension Fund Investors
Portfolio Size (bn.$)
Number of Investors (mn.)
3.1
2.3
4.1
Pension funds market showed a significant development
in 2013, thanks to changes in regulations, envisaging
a 25% state contribution to private pension funds to
boost domestic savings.
The implementation of state subsidy led to a 32%
increase in the number of participants in the Private
Pension System in 2013, while new participants made
a limited contribution to the portfolio size. The assets
under management recorded a limited increase to US$
12 billion due to higher interest rates and declining
stock prices, in addition to the depreciation in the
Turkish Lira.
2.6
2.0
6
8
8
11
12
2009
2010
2011
2012
2013
Source: PMC
15
TCMA
CAPITAL MARKET INSTITUTIONS
Capital Market Institutions
Borsa Istanbul
Capital Markets Board of Turkey
Capital Markets Licensing and Training Agency
Central Securities Depository
Takasbank - Istanbul Settlement and Custody Bank
www.borsaistanbul.com
www.cmb.gov.tr
www.spl.com.tr
www.mkk.com
www.takasbank.com.tr
Public Institutions
Banking Regulation and Supervision Agency
Central Bank of the Republic of Turkey
Financial Crimes Investigation Board
Pension Monitoring Center
Undersecretariat of Treasury
www.bddk.org.tr
www.tcmb.gov.tr
www.masak.gov.tr
www.egm.org.tr
www.treasury.gov.tr
Professional Associations
Association of Brokerage Firms’ Managers
Association of Publicly Traded Companies’ Managers
Association of Stock Market Investors
Banks’ Association of Turkey
Corporate Governance Association of Turkey
Investor Relations Association of Turkey
Participation Banks’ Association of Turkey
Turkish Capital Markets Association
Turkish Institutional Investment Managers’ Association
www.bakyd.org.tr
www.koteder.org.tr
www.boryad.org
www.tbb.org.tr
www.tkyd.org
www.tuyid.org.tr
www.tkbb.org.tr
www.tspakb.org.tr
www.tkyd.org.tr
TCMA
16
MAY 2014
Turkish
Brokerage
Industry
2013
Review
Büyükdere Caddesi No.173
1. Levent Plaza A Blok Kat:4
1. Levent 34394 İstanbul
Phone: +90 212 280 85 67
Fax: +90 212 280 85 89
www.tspb.org.tr
[email protected]
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Turkish Brokerage Industry 2013 Review (May 2014)