Istanbul Stock Exchange to introduce order cancellation

Turkish trading venue, the Istanbul Stock Exchange, is to allow cancellation of orders on its exchange for the first time.
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Turkish trading venue, the Istanbul Stock Exchange (ISE), is to allow cancellation of orders on its exchange for the first time.

The ISE has confirmed that change will be announced in early October. Currently it is only possible to amend orders ”aggressively' on the exchange – in other words, to amend upwards in value. The change will allow orders to be cancelled altogether, or amended downwards.

Market response to the move has been very supportive. “Cancellation is a must,” commented Serkan Aran, manager, institutional sales, IS Investment, a subsidiary of Turkey-based IS bank. “We cannot operate efficiently without it. The whole market supports this step,” he said, adding that the use of algorithmic trading was impaired without the possibility of cancellation on the exchange.

Other observers concurred. “The inability to cancel orders in the way you do in other markets has prevented us from extending an electronic platform into the Turkish market,” commented Ashok Krishnan, head of EMEA execution services and sales at broker Bank of America Merrill Lynch.

“The ability to cancel orders would generally be seen as a pre-requisite for any kind of electronic trading,” he added, pointing out that “This is going to be seen as a positive development everywhere. It will allow flow to increase in the market, and as we have seen with most markets, getting electronic access is probably the first step towards increasing the turnover or the market share.”

The introduction of order cancellation on the ISE comes as the government seeks to make amendments to the Turkish Capital Markets Law, which governs all aspects of trade in the country, to bring it into line with developments in Europe such as MiFID.

“We are working to amend our law in line with the European law,” said Aran. “Once the amendments are passed through Parliament, all the definitions of instruments in Turkey will be the same as in MiFID. We insist the bill will pass before the end of 2010, with the expectation it will go ahead in October.”

The Turkish Capital Markets Board is also looking into algorithmic trading and high frequency trading, said Aran, but no decision has been made as to whether or not new regulation on these activities will be introduced.