Interesting. Istanbul embraces algorithmic tradingBy Delphine...

Interesting.

Istanbul embraces algorithmic trading
By Delphine Strauss in Ankara

Published: November 1 2010 02:37 | Last updated: November 1 2010 02:37

Turkey?s main bourse, the Istanbul Stock Exchange, is set to become the latest to open up to the rapid electronic trading practices that are sweeping the world?s markets with plans to ease access to foreign investors.

Brokers planning to take advantage of the moves said the changes, effective from Monday, would open Turkish equity markets to algorithmic trading and attract quantitative investors.


The ISE will begin reducing tick sizes, the increments by which prices can move up or down, for stocks and exchange-traded funds, in a step likely to appeal to high-frequency traders.

Other changes, which took effect in October, allow traders, for a nominal fee, to cancel or reduce orders midsession ? crucial to deploying algorithms making ?passive? trades.

Algorithms are computer programs that automatically direct trades to certain venues or are set to trade in certain patterns over time.

A third change the ISE has made means the identity of buyers and sellers will no longer be disclosed until the next session, a move some brokers see as a loss of transparency but others as a level of anonymity normal on European exchanges.

Istanbul is joining a rush of emerging market exchanges that are upgrading trading systems to appeal to international brokers.

The result will be that complex, algorithmic trading will account for an increasing share of trading volumes on exchanges from Brazil to Thailand.

Overseas brokers had previously held back from trading in Turkey because ?lots of the discretion built into algo trading US and European stocks wasn?t available,? said Rob Boardman, Europe managing director of broker Investment Technology Group.

?If a machine wanted to delay trading for a while, it couldn?t.?

The latest changes, which ITG and other brokers lobbied for, ?look designed to make the market more friendly for algorithmic trading?, he added, saying ITG was now considering offering its full range of algos for Turkish equities in the coming months.

Cr?dit Agricole Cheuvreux said it had immediately deployed 13 algorithmic strategies for trading on the ISE as a ?direct consequence? of the new rules on order cancellation.

Foreign investors own almost 70 per cent of stocks traded on Istanbul?s stock exchange, a level that has remained constant for some years. But data show they accounted for 16 per cent of trading volumes in September. The ISE?s latest changes could reduce this imbalance