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FOURTH MEETING OF THE OIC MEMBER STATES’ STOCK EXCHANGES FORUM

FOURTH MEETING OF THE OIC MEMBER STATES’ STOCK EXCHANGES FORUM. Istanbul, October 2-3, 2010 Hüseyin Erkan Istanbul Stock Exchange Chairman & CEO. Background.

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FOURTH MEETING OF THE OIC MEMBER STATES’ STOCK EXCHANGES FORUM

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  1. FOURTH MEETING OF THE OIC MEMBER STATES’ STOCK EXCHANGES FORUM Istanbul, October 2-3, 2010 Hüseyin Erkan Istanbul Stock Exchange Chairman & CEO

  2. Background • The Forum aims to provide a dedicated platform and communication channel for representatives of the relevant OIC organizations and institutions to discuss international cooperation activities. • Initiated in accordance with the decision of the 20th session of the Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Conference (COMCEC), in 2004. • First round-table meeting, Istanbul, March 2005 • Second Annual Meeting, Istanbul, October 2008 • One working committee and four task forces to operate under the Committee were established. The Working Committee held its first meeting in Tehran in May 2009. • Decisions of the 2nd Annual Meeting were presented to and included in the 24th session of the COMCEC, 2008 • The Forum’s decision regarding the encouragement of the capital markets authorities was strongly emphasized in the report of the 24th session of the COMCEC.

  3. Background - 2 • Third Annual Meeting, Istanbul, October 2009 • The four task forces operating under the Working Committee were re-named and were assigned new tasks. • Decisions of the Third Annual Meeting were presented to and included in the 25th session of the COMCEC, 2009 • Final Report was submitted to the COMCEC and regulatory bodies of the OIC member states requested that a similar platform to boost the cooperation efforts be established. • Third Working CommitteeMeeting, Abu Dhabi, April 2009 • All task forces were requested to present a road map, time schedule and more specific proposals to the Annual Meeting. It was decided that an interactive link be created on the OIC Member Stock Exchanges website.

  4. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 1. The name of the Task Force for “Customized Indices, ETFs and Islamic Depositary Receipts” is converted to “Customized Indices and Exchange Traded Islamic Financial Products”. The Forum appreciates the work done by the Task Force. ------------------------OUTCOME------------------------- • As determined.

  5. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 2. The Task Force for Customized Indices and Exchange Traded Islamic Financial Products together with IDB, shall communicate with various index providers to determine alternative types of investable indices (e.g. corporate governance index, regional index, sectoral index), by the next Working Committee meeting ------------------------OUTCOME------------------------- • Proposals were made by three major index providers for the construction of an “OIC Index”. The Forum prefers such index to include the companies in the OIC countries, and believes that such index will create a new demand.

  6. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 3. The Task Force for Customized Indices and Exchange Traded Islamic Financial Products shall consult with IIFM and AAOIFI to determine ways to offer practical, easily comprehensible and cost effective financial instruments, particularly exchange traded commodity contracts and Islamic repos and shall make recommendations to the Working Committee ------------------------OUTCOME------------------------- • The Task Force for Customized Indices and Exchange Traded Islamic Financial Products presented its work on financial instruments including repo, commodity murabaha, and indices to the Working Committee meeting in Abu Dhabi. IIFM Repo Reference Paper, published in July 2010, might be a good reference point and might provide specific answers for Islamic repo. More to come from IIFM today.

  7. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 4. The name of the Task Force for “Feasibility of Islamic Securities Exchange” is converted to “OIC Capital Markets Linkages”. The Forum appreciates the information provided on ASEAN Gateway. The Forum encourages and supports such initiatives. Members of the Forum may participate in such linkage gateways at their own options. Cross-border models of linkages, in particular, multilateral modalities of simulated trades should be further studied by the Task Force. ------------------------OUTCOME------------------------- • A proposal entitled “Settlement-Aware Interlink Protocol” for linking trade and post trade service providers amongthe OIC countries’ capital markets was presented by Tehran Stock Exchange and Central Depository of Iran. New models for linkages can be devised.

  8. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 5. The name of the Task Force for “Promotion of Awareness and Education of Investors about Islamic Capital Markets” is converted to Task Force for the “Promotion, Awareness and Investor Education about Islamic Financial Markets”. The efforts of the Task Force are appreciated and the promotional material presented has been well received. The Task Force shall prepare an annual publication covering research, articles, advertisements and educational materials while the member exchanges of the Forum shall provide links to the Forum web site. ------------------------OUTCOME------------------------- • Bursa Malaysia presented the template of the OIC Directory to the Working Committee. The Forum Secretariat is working on converting the Forum website into an interactive website. Thomson Reuters (TR) is working on a project to create a section within TR on the OIC exchanges.

  9. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 6. Training programs organized by the OIC capital markets institutions shall be announced on the OIC exchanges web site http://www.oicexchanges.org. The Forum welcomes the offer made by SESRIC that the Center is ready to assume the role of Forum’s Training Activities Coordinator in capacity building for the Forum members. ------------------------OUTCOME------------------------- • No activity so far

  10. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 7. The Forum appreciates the work done by the Task Force for Post-Trade Services. Bilateral cooperation among post trade institutions to facilitate more efficient cross-border trading should be encouraged and such efforts shall be reported to the Working Committee. As an initial step, bilateral correspondent accounts will be opened between the interested members of the Forum. ------------------------ OUTCOME ------------------------- • The questionnaire prepared by Takasbank as the task forcecoordinator was presented to the Working Committee, however, it contains the data of only 8-9 CSDs. An inter-committee meeting of the task forces forthe OIC Linkages and Post-trade services may be held for the work on linkages.

  11. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 8. The next Working Committee Meeting of the Forum shall be hosted by the Abu-Dhabi Securities Exchange on a date to be further announced by the Secretariat. ------------------------OUTCOME------------------------- • As determined.

  12. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 9. The Fourth meeting of the OIC Member States’ Stock Exchanges Forum shall be held in Istanbul on a date to be further announced by the Secretariat. ------------------------OUTCOME------------------------- • As determined.

  13. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 10. The following stock exchanges are included in the Task Force for Customized Indices and Exchange Traded Islamic Financial Products: • Saudi Arabian Stock Exchange (Tadawul), Saudi Arabia; • Dhaka Stock Exchange, Bangladesh, • Lahore Stock Exchange, Pakistan • Tehran Stock Exchange, Iran ------------------------OUTCOME------------------------- • As determined

  14. Decisions of the 3rd Annual Meeting of the OIC Member States’ Stock Exchanges Forum and the Tasks Accomplished • 11. The following post-trade services institutions are included in the Task Force for Post-Trade Services: • Central Securities Depository of Iran, Iran • National Clearing Company of Pakistan, Pakistan • Abu Dhabi Securities Exchange, UAE ------------------------OUTCOME------------------------- • As determined

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