MONEY TALKS

Turkey 2016 | FINANCE | INTERVIEW

TBY talks to Vahdettin Ertaş, President of the Capital Markets Board of Turkey, on setting goals, building awareness, and plans for the future.

Vahdettin Ertaş
BIOGRAPHY
Vahdettin Ertaş graduated from the Ankara University Faculty of Political Sciences in 1987 with a BA in Management, and earned Master’s in 1991 from Hacettepe University and Lancaster University in 1996. He completed his PhD in management at Hacettepe University in 2012. He also serves as the Chairman of the Board of Directors of the Investor Compensation Centre and the COMCEC Capital Markets Regulatory Forum. He began his career at the CMB as a junior expert in 1987. During his tenure at the CFD, he also carried out Board memberships at Turkish Catastrophe Insurance Pool and Tax Council. He was appointed as the Chairman of Istanbul Gold Exchange in 2005 and served at this post until his appointment as a member to the CMB Executive Board in December 2006.

What are the key aims and objectives of the Capital Markets Board of Turkey?

Until 2014, membership was limited to brokerage houses and commercial banks, but last year, after new regulations, we now represent a bigger part of the finance industry, including banks and brokerage houses, portfolio management companies, real estate companies, private equity, and venture capital investment companies. This means that we cover nearly every activity related to capital markets and banking activities. Of course this new structure brings more responsibilities for us, and we have some targets as an association. We would like to increase savings in Turkey, where the savings ratios are very low compared to other countries and represent one of the fundamental problems of our economy. Secondly, we would like to increase the length of investments. For example, in Turkey, for small investments, culturally people like to invest in short-term conservative products and this means short-term deposits and short-term government bonds. We would like to change that structure; we would like to convince investors to invest in longer-term products. These are our main aims and in the short term we believe that there should be specific government incentives to get some early and fast results. The second focus is a longer-term policy to increase the financial literacy of the people in general. These are the two components of our policy; more savings and longer-term savings. The second target for us, the famous Istanbul Financial Center initiative, is the first in Turkey, and we believe that Istanbul is a natural center for regional finance. The third is to bring in new products and services. The fourth area is that there are some markets here in Turkey that we would like to see more developed and more liquid; for example, if you look at the stock market or the futures market here, they are very liquid, they would like to grow, and they would like to support that options business, but what we believe is that we should have bigger and more liquid options market here in Turkey. Education and training are also very important for our members. On the education side we target two different people, the first being the market professionals, which are directly related to the employees of our members, and the second is more general, just targeting financial literacy. It is not a direct program; we use social media and the internet, and so forth, to increase the financial awareness of Turks.

How do you use education to build greater awareness of the capital markets?

We have formal training programs targeting market professionals. First of all, we provide training for around 4,500 to 5,000 people. That is face-to-face classroom education, and in addition we organize seminars and conferences to develop the awareness level of the industry. On top of that we have periodic research reports that we distribute to market professionals and in those reports we publish articles related to developments in the global markets, and we talk about the developments in Turkey that target local investors. If you look on the website you can see publications in English, which are directed to foreign investors, but for the domestic market. We try to explain what is going on in the global market, for example EU directives, what is happening structurally in the US, trading platforms, crowd funding, and topics like that. We would like to inform the financial community about global trends.

What are the association's plans for the year ahead?

For savings, there are two components; increasing savings—we will try to convince the government to offer incentive plans to encourage longer-term savings, like the pension plan—and secondly, to invest in people, to increase financial literacy, and offer education and training programs for people to increase awareness. For example, we held a short film festival and competition focusing on savings, in which university students took part. We will run it again this year as well, and we also have children's theater to teach them about the importance of saving. These programs are designed to raise awareness in the general community about finance.