Subject: Istanbul embraces algorithmic trading - FT
From: "Michael Andrews" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "Eric Schwerin" <[email-masked]>, "Devon Archer" <[email-masked]>, "Curtis Hastings" <[email-masked]>
Date: Mon, 1 Nov 2010 09:49:10 -0400

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.

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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.

Crédit 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.

Additional reporting by Jeremy Grant in London