MERKEZİ KAYIT KURULUŞU:CENTRAL SECURITIES DEPOSITORY OF TURKEY

MKK - MERKEZI KAYIT KURULUSU

Central Securities Depository of Turkish Capital Markets for dematerialized securities

Turkish capital markets is fully dematerialized Beneficial-owner based system with the opportunity of having «omnibus accounts» for foreign

CSDs & ICSDs

Supervised & Regulated by the Capital Markets Board of Turkey (CMB)

Officially Licensed R&D Center In-house developed depository sytem; «Central Dematerialized System» In-house developed Inverstor Services ; «e-MKK Services»

Financial Accounts Center of Turkey All accounts that are opened in the financial system System integration with «Ministry of Internal Affairs» & «Ministry of Finance»

Direct Link with the Austrian CSD – OeKB

GENERAL INFORMATION

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DEMATERIALIZATION PROCESS

SECURITY TYPE DATEDEMATERIALIZATION

RATE(%)

Stocks 2005-2007 %100

Mutual Funds 2005-2006 %100

Exchange Traded Funds 2005 %100

Private Sector Bonds 2006 %100

Private Sector Commercial Papers

and Bank Bills2009 %100

Warrants 2010 %100

Asset Covered Securities / Asset Backed

Securities2011 % 100

Government Bonds & T-Bills 2012 % 100

Certificates 2012 % 100

Sukuks 2012 % 100

1 Member

2 Members

1 Member

% 64.9

SHAREHOLDERS

BOARD STRUCTURE

MKK - SHAREHOLDERS & BOARD STRUCTURE

% 5% 30.1

3 Members

1 Member 1 Member

The Association of Capital Market Intermediary Institutions of Turkey

Central Securities Depository of Dematerialized Capital Market Instruments

(November.2005)

Financial Accounts Center for all the accounts opened in Turkish Financial Sector

(October.2011)

Electronic General Meeting Center for all Borsa Istanbul listed Companies

(August.2012)

Electronic Commodity Center for all e-Warehouse Receipts (December.2012)

Digital Company Center for Companies’ «Information Society Services»

(October.2013)

R&D Center for its Software Development Technologies (November.2013)

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MAIN DUTIES AND RESPONSIBILITIES

Developed by MKK R&D Center, e-signature usage

Web Based – Java Application – Remote Access

Secure messaging infrastructure MOM (Message-Oriented-Middleware)

ISO 27001 Information Security Certification

ISO 22301 Business Continuity Management System Certification

Award of merit at the 7th Technology Conference by TUBITAK (Scientific and Technological Research Council of Turkey)

TTGV (Technology Development Foundation of Turkey)

TUSIAD (Turkish Industrialists’ and Businessmen’s Association)

TUBITAK R&D support

DEMATERIALIZED SYSTEM SOFTWARE

R&D SUPPORT

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CENTRAL SECURITIES DEPOSITORY ACCOUNT STRUCTURE

MKKPARTICIPANT «A»

(INTERMEDIARY INST.)

Participant Portfolio Acc. Investor Acc.(1)

Free

Pledge

Attachment

PARTICIPANT «B»

( (I)CSD )

(I)CSD Portfolio Acc.

(I)CSD Investor Acc. (Beneficial Owner)

Free

Pledge

Attachment

«Omnibus» Account

SUB-ACCOUNTS

ACCOUNTS

PARTICIPANTS

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MKK Central

DematerializedSystem

ISSUERCOMPANY

INTERMEDIARY INSTITUTION/BANK

Legal Entity

INVESTORS

Real Person

MINISTRY OF FINANCE

MINISTRY OF INTERNAL AFFAIRS

TAX ID NO

T.R. ID NO

TAX ID NO

T.R. ID NO

ISSUERCOMPANY

INTEGRATIONMKK MEMBER AND

ACCOUNT STRUCTURE

INVESTOR ACCOUNTS

INVESTOR ACCOUNTS

APPLICATION FOR ACCOUNT OPENING

Investors

Accounts

ELECTRONIC ACCOUNT OPENING

REGISTRY NO & PASSWORD

INTERMEDIARY INSTITUTION/BANK

e-Government Integration

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All accounts opened in Turkish Financial Markets

ID and contact information of every Investor in Turkey

(phone numbers, e-mail and mail addresses of investors)

ACCOUNTS OPENED (2012 vs 2013)

YEARNUMBER OF ACCOUNTS

OPENED

NUMBER OF FOREIGN INVESTORS’

ACCOUNTS OPENED

FOREIGN OWNERSHIP

(%)

2012 4,431,409 19,208 0,433%

2013 3,214,464 19,861 0,618%

In 2013, 42% increase in the number of depository accounts opened by the foreign investors compared to 2012

• 333 BILLION USDASSETS UNDER CUSTODY (MARKET VALUE)

• 23,188,568NUMBER OF INVESTORS

• 3,609,422INVESTOR ACCOUNTS WITH A BALANCE

• 43,376,355NUMBER OF ACCOUNTS

• 4,278,759NUMBER OF ACCOUNTS WITH A BALANCE

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FIGURES (February 2014)

• 1,115,151 INVESTORS• 220 BILLION US $STOCKS

• 36,594 INVESTORS• 81 BILLION US $

GOVERNMENT DEBT SECURITIES

• 2,746,347 INVESTORS• 13 BILLION US $MUTUAL FUNDS

• 173,735 INVESTORS• 16 BILLION US $

CORPORATE BONDS

• 3,676 INVESTORS• 93 MILLION US $

EXCHANGE TRADED FUNDS

• 3,216 INVESTORS• 4.07 MILLION US $

STRUCTURED PRODUCTS

• 2,717 INVESTORS• 1.594 BILLION US $

OTHER SECURITIES

Free Float:84 bil. US $

Non Free Float:136 bil. US $

CUSTODY-SECURITIES(February 2014)

ForeignOwnership:

% 61.23

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e-CAS : Investor Notification

MKK - Investor Services

Random Report Delivery

IVR System/ Call Center

Mobile Blockage Electronic Report Posting System

Instant Notifications Account Movements Information on

Corporate Actions

Periodic Notification Portfolio Status

Account Movements

Monthly 10,000 Investors Portfolio Status

Information Portfolio Status Account

Movements Reports

Investor Blockages

AloMKK(444 0 655)

Mobile Services SMS

Electronic Reports(e-mail)

Electronic Notification(SMS & e-mail)

Random Notifications

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e-GOVERNANCE : Corporate Governance & Investor Relations

e-GEM : Electronic General Meeting

e-DATA : Capital Markets Data Bank

Participation to General Assembly meetings by remote access & mobile applications - voting by electronic means

Distribution of capital markets data by econometric models RISE (Investor Risk Appetite Index)

Communication bridge between companies and shareholders

Real time notification of investors regarding the movements in their accounts

e-WAREHOUSE RECEIPT : Electronic Warehouse Receipt Center

Conversion of agricultural products to electronic warehouse receipts

Mobile Corporate Governance Project which is a platform to enhance corporate governance and investor relations and develop transparency and information access for market participants

Communication bridge between companies and shareholders Continuous information exchange between shareholders and companies

through internet, e-mail and mobile applications Enables companies to reach their shareholders directly Enables shareholders to access information on companies easily and

completely Investor Information Center TUBITAK R&D support

R&D SUPPORT

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DevelopmentStartedNov 2011

LaunchedOct. 2012

Load TestsJul-Aug 2012

Pen. TestsSept. 2012

DevelopmentFinishedJul 2012

«One of the pioneering applications in scope»

Developed in-house, launched and operated by MKK (Central Securities Depository of Turkey), e-GEM is a multilingual, real-time online general meeting, e-voting and e-proxy platform. The platfrom can be easily customized based on different requirements of any financial markets.

With its launch on 01 October 2012, issuers/companies started to use e-GEM for conducting online general meetings as per the requirement of the Capital Markets Board of Turkey.

Turkey is the first country to make it a legal obligation for Borsa Istanbul listed companies to enable electronic means for their shareholders to attend general meetings via e-GEM. It is possible for non-listed companies to use e-GEM as well.

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What Kind of Operations are Carried Out on e-GEM;

Issuers make convocations on e-GEM and upload proxy materials to the system.

All parties are notified when convocation is made on e-GEM.

Access to proxy materials including meeting documents.

Proxy assignment and delivery of voting instructions without any PoA documents.

Pre-registration of the vote preferences.

Live stream of general meetings.

Issuers can easily prepare list of attendees on e-GEM.

Participants can ask questions, express opinions and vote online during the meeting.

Physical and electronic votes are aggregated on e-GEM and calculated by the system to give the exact result for each agenda item.

Access to voting results as soon as the meeting finishes.

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Minimum Costs (operations & time)

General Meeting Process from A to Z

Vote Recording

Attendance to Concurrent Meetings

Access to Proxy Materials

Instant Notifications

No Record Date

Partial & Split Voting (through intermediary)

No Shares Blockage

Paperless Proxy

Vote Instructions

Live Stream of Meeting

What e-GEM Brings to Investors;

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Minimum Operational and Out of Pocket Costs

Vote Recording

Paperless Proxy

Attendance to Concurrent Meetings

Instant Reporting

No Record Date

No More Blocking

of Shares

Integration with SWIFT

e-Attendance

What e-GEM Brings to Custodians;

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13,464 investors attended electronically, 6,196 investors attended physically (19,660).

In its first year attendance ratio increased by 124%.

Among 13,464 investors electronically attended, 13,265 are foreign investors

Among 6,196 investors physically attended, 1,850 are foreign investors

Average number of physical attendees per GM is 13.

Average number of electronic attendees is 34 per GM

STATISTICS (Oct’12-2013)

YEAR MEETING ATTENDANCE (FOREIGN INVESTORS)

2011 4,753

2012 6,036

2013 15,115

Total Number of General Meetings Held on e-GEM 423

Average Length of General Meetings 43 minutes

Total Number of Electronic Attendees 13,464

Total Number of Physical Attendees 6,196

Number of (Investors’) Nationalities Using e-GEM 41

Maximum Number of Electronic Attendance 756

Maximum Number of Meetings Held on the Same Day 32

Average Voting Period on e-GEM 10 seconds

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Public Disclosure Platform (PDP): PDP is the primary official source of information for Borsa Istanbul (listed) companies, who are required to publicly disclose; their financial statements, any material events (events that give rise to Insider Information and Continuous Information), other events (Monthly notifications, Net asset value statements, Articles of Association, Fund Charter, Prospectus, circular, Notifications regarding the mergers, acquisitions and divestures, General information form of the company, Tender offer information form).

GENERAL INFORMATION & STATISTICS

Platform Operational Hours 7/24

Number of Data Vendors Linked to Platform 16

Number of Sub-Vendors Linked to Platform 17

Number of Companies Covered by the Platform 550

Number of Platform Users 2500

Number of PDP Members 1,453

Number of Notifications Sent in 2013 72,100

Notification of Investors via SMS & e-mail on the movements that take

place from out of their accounts

Activates whenever a transaction on their accounts is made

Real time notification of investors on the movements that take place

possible errors and fraudulent attempts that take place on their accounts.

Decreases possible individual or systemic risks Notification Phase: Notification is made after the transaction is completed. Blocking Phase: Transaction is not completed unless the investor subscribes to

e-CAS Service.

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Adapting the dematerialized system to agricultural industry of Turkey

and Turkic Republics

Integration of agricultural sector with capital markets

Conversion of agricultural products stored in licensed warehouses to

electronic warehouse receipts

Safekeeping of electronic warehouse receipts in MKK’s electronic

book-keeping system

Trading of products at the Commodity Exchange

Farmers Notification System

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Central data bank of the capital markets

Co-operation with Ozyegin University & Markit Partners

Distribution of all data produced in the Turkish capital markets by econometric models in a

secure, consistent and reliable manner

Statistics on capital markets in international standards

Academic articles and research reports

Investor Confidence Index, Investor Risk Appetite Index, Attachment Index and Financial

Indicators

Electronic securities database

Contributing to academic research and decision-making processes of policy makers

Providing reliable & consistent data to ratings institutions

MKK is awarded with the “Best Big Data Project in Financial Sector” award by the International

Data Corporation (IDC)21

A weekly indicator, analyzing 850,000 investor data Calculated by taking weekly portfolio changes of the investors who own at least 5,000 TL stock portfolio

value at any period beginning from 28 November 2005. Changes of the investors’ stock and A-type mutual funds total portfolio values on every Friday adjusted for

the changes in BIST-100 are used RISE index covers all investor types, such as “Domestic &/ or Foreign Investors” and etc. Using a matrix of variations, investors are given scores between “0” and “1”

If the calculated index is above (50), it implies that the investors are holding a rather risky portfolio; If the calculated index is below (50), then it implies that the investors are holding a rather risk-free portfolio compared to

previous period of 2 weeks;

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MKK – 2014 TARGETS

Central Depository System Upgrade v2.0 (CDS v2.0)

Establishing new Collaboration and Cooperation Models with Foreign CSDs and ICSDs

Upgrading and Updating of MKK’s Information Technologies Infrastructure

e-GEM SWIFT Integration for both ISO 15022/20022

Taking Over Borsa Istanbul’s «Public Disclosure Platform – PDP» and Upgrading it to v4.0

(MKK has taken over the platform as of March 17th)

Providing Support and Maintenance of Systems for Borsa Istanbul – Nasdaq OMX

Partnership

Dematerialising new Agricultural Products under the Scope of e-WAREHOUSE RECEIPT

Services Provided by MKK

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MKK - FUTURE OUTLOOK

Maximizing Ancillery Service & Value Added Service Revenues (50%)

Data/Information Vendoring

Financial Information Services

Investor Services

Commodity & Capital Market Integration

Innovative IT Services & Software Development

New Value Added Services to utilize information capacity

Implementation of international industry standards (Full STP in Corporate Actions

Operations, ISO20022, LEI, etc.)

Integration,Cooperation and Partnerships with Europe, Middle East, North Africa and Turkic

Republics counterparties to complete the post-trading chain from West to East

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For further assistance please contact with

INTERNATIONALRELATIONS@mkk.com.tr or visit www.mkk.com.tr

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