MKK’s CEO and Board Member, Mr. Ekrem Arıkan’s AMEDA Interview
We are pleased to share an interview with Dr. Ekrem Arıkan, the CEO and Board Member of Merkezi Kayıt Kuruluşu A.Ş. (MKK), who has recently assumed the role of Chairman of the Association of Eurasian Central Securities Depositories (AECSD). The interview focuses on his professional experience in the Turkish financial sector, which also reflects the evolving landscape of global financial markets and the important role of financial market infrastructures. Additionally, the interview sheds light on MKK’s role in Turkish capital markets and its global presence. We believe that the innovative initiatives and services introduced under Dr. Arıkan’s tenure at MKK will prove beneficial as well as interesting for AMEDA member institutions.
1. A brief introduction of Dr. Ekrem Arıkan’s background in the Turkish capital markets.
Dr. Ekrem Arıkan, with over 25 years of experience, predominantly as a senior manager in the financial sector, has made a substantial impact on the Turkish capital markets, through the innovative initiatives that he led.
Dr. Arıkan began his career as a computer engineer at Microsoft as an International Program Manager, focusing on Windows operating system development for Turkish markets, and later held various managerial positions at Ziraat Teknoloji A.Ş. and Ziraat Insurance Company, providing IT services for Ziraat Finance Group, the largest governmental bank of Türkiye. His career path includes pivotal roles at Enerji Piyasaları İşletme A.Ş. (EPİAŞ), which was founded in year 2015 as the energy exchange company of Türkiye, where he contributed to the establishment of the Transparency Platform, strategic planning, and international collaborations.
In 2016, he joined Borsa Istanbul Group at Takasbank A.Ş. as the Executive Vice President for Information Technology. He led projects like the BISTECH transition, the gold backed cryptocurrency (BiGA) project based on blockchain technology, establishment and structuring of the Takasbank R&D center, takeover of check clearing system from the Central Bank of the Republic of Türkiye, establishment of the EPİAŞ Natural Gas Market Clearing and Collateral Management services, opening of the SWAP market, the development of the Türkiye Electronic Fund Trading Platform (TEFAS) and Pension Fund System applications, also enterprise architecture and IT infrastructure.
Since 2019, he has been serving as the CEO and Board Member at Merkezi Kayıt Kuruluşu A.Ş. (MKK), the Central Securities Depository and Trade Repository of Türkiye. Here, he has been instrumental in launching numerous products and services, enhancing the organization’s capabilities and range of services. These initiatives include depository services provided to the Turkish Mercantile Exchange, establishment of the Omnibus Account structure and membership of Euroclear Bank and the Central Securities Depository of Azerbaijan (MDM), founding of the Crowdfunding Platform, development of the Electronic Trade Repository, implementation of the Electronic General Meeting System (e-GKS) in the Indonesian capital market and acquisition of the MKK Real Estate Information Center (GABİM) company from the Turkish Association of Appraisers. Moreover, he led development and establishment of the Data Analysis Platform, Investor Information Center (e-YATIRIMCI) application, Bearer Shares Registry System, Investor Risk Monitoring System, Intermediary Institutions MKK Data Analysis Platform (Pusula) and the Real Estate Based and Developing Financial Instruments Information System (GEFAS). He’s currently leading the efforts of MKK to establish the Capital Markets Risk Monitoring Center for Turkish capital markets.
As of September 2023, Dr. Arıkan, in his capacity as CEO and Board Member of MKK, has undertaken the role of Chairman of the Association of Eurasian Central Securities Depositories (AECSD). Additionally, he has enhanced his influence in the international financial world by becoming a Board Member of the World Forum of CSDs (WFC), as the representative of AECSD.
2. Overview of the MKK.
MKK plays a pivotal role as the Central Securities Depository of Turkish Capital Markets, operating under the supervision and regulation of the Capital Markets Board of Türkiye and the Central Bank of Türkiye. Officially licensed as a Financial Markets Infrastructure Institution and an R&D Center, MKK operates an in-house developed depository system (MKS) and maintains direct links with foreign CSDs like Euroclear Bank and MDM for omnibus accounts that deposit Turkish government debt instruments, and Austrian CSD – OeKB and for the shares of an Austrian company that is dual listed on Vienna Stock Exchange and Borsa Istanbul. MKK also acts as the Financial Accounts Center and Registrar in Turkish capital markets.
MKK concentrates its services on four main pillars as Depository, Trade Repository, Corporate Governance and Investor Services.
Under the Depository Services, MKK provides central securities depository services for dematerialized capital market instruments that are traded in Borsa Istanbul Equities, Fixed Income and Derivatives markets, Takasbank Lending Market and Funds Platform (TEFAS), Turkish Mercantile Exchange (TURIB) e-Warehouse Receipts Spot Market and Crowdfunding Platforms. MKK also provides depository services for bearer shares of companies not regulated under the Capital Markets Law, and for company shares listed on the Turkish Republic of Northern Cyprus Stock Exchange.
Trade repositories play a crucial role in financial markets by collecting and maintaining records of derivatives trades. This process aids regulators in monitoring systemic risk build-up and ensuring financial stability. Recognizing this critical function, the Capital Markets Board of Türkiye authorized MKK to serve as Türkiye’s official Trade Repository. This designation enables MKK to effectively monitor systemic risks within Turkish capital markets. MKK’s e-VEDO System is instrumental in recording transaction details for over-the-counter and exchange-traded derivatives from both financial and non-financial counterparties. This system adheres to EU regulations and aligns with standards set by the European Securities and Market Authority (ESMA) and European Market Infrastructure Regulation (EMIR). As of December 2023, approximately 230 members are actively reporting to this system daily, generating almost 350,000 notifications each day.
Since 2020, MKK has notably enhanced the e-VEDO services. These enhancements include T+0 reporting, Fixed Income Reporting, and the YRTS Investor Risk Monitoring System. Additionally, it includes YRTS Group Credit and Interest Rate Reporting, the VAP Data Analysis Platform, and the GEFAS. These developments have significantly bolstered MKK’s capability in managing and mitigating systemic risk in Turkish capital markets.
MKK also provides a wide range of products and services that improve corporate governance practices of companies.
MKK is the operator of Public Disclosure Platform (KAP) which is the primary source of information of Turkish Capital Markets. The XBRL based KAP system is also developed by MKK’s R&D center. All listed companies, intermediary institutions, portfolio management companies, audit firms, rating firms, regulatory authorities and funds have to disclose their notifications within the scope of mandatory public disclosure obligations on KAP. On annual basis around 150.000 notifications disclosed on the system and KAP web page gets 43.000 visits/day. The mobile application of KAP has more than 200.000 users.
As part of its corporate governance service range MKK furthermore develops and operates systems such as the Electronic General Meeting System (e-GKS) and Companies Information Portal (e-ŞİRKET). MKK’s most recent addition to these services was the Electronic Board of Directors System (e-YKS). e-GKS is a product that MKK implements in markets around the world. And as a quite new service, the e-YKS system enables all board and committee meeting processes including sharing of information and documents in addition to direct real-time communication and voting for currently more than 160 companies in Türkiye.
Under our Investor Services, by means of e-YATIRIMCI system, investors can view the account balance and portfolio distribution of their accounts held with MKK, put/remove blockage on their securities, access corporate actions information on their shares, receive periodic notifications with regards to their transactions, monitor their limits on crowdfunding platforms, prepare and send notifications with regards to their bearer shares and monitor their holdings in these shares.
3. MKK’s global presence.
From its establishment, MKK has been instrumental in fostering extensive cooperation within the international capital and financial markets. This effort aligns with the Turkish Government’s “Century of Türkiye” vision, enhancing MKK’s global reputation.
MKK’s technological expertise, extensive knowledge, and experience place it among the leading CSDs globally, particularly in terms of global collaborations. It has signed Memorandum of Understanding (MoU) with 20 foreign CSDs. MKK actively participates in working groups and conferences hosted by major CSD Associations such as ECSDA, AECSD, AMEDA, WFC, and ISSA, through its memberships in all these regional industry organizations.
In recent years, MKK’s global reach expanded significantly. MKK signed a sales agreement with Africlear Global (2016) for the use of e-GKS in Kenya and Nigeria, followed by another sales agreement signed with the Indonesian CSD – KSEI (2017). Currently a customized version e-GKS is widely used in this country by issuer companies and shareholders. In 2023, more than 1,300 general meetings performed in Indonesia by means of e-GKS.
Through the direct link established with Euroclear Bank in 2020, MKK’s global reach peaked. As MKK’s first foreign CSD member, Euroclear Bank provides direct access to Turkish capital markets for its clients; Euroclear Bank has direct and indirect links with over 50 countries. In addition to Euroclear Bank, MKK concentrated its efforts to onboard new foreign CSDs in the coming years.
Following its pioneering link with Euroclear Bank, MKK welcomed the National Deposit Center (MDM) of Azerbaijan as a member in 2021. This partnership allows Azerbaijani investment institutions and investors to directly engage in clearing and custody operations for Turkish government debt securities through the MDM omnibus account at MKK. In a reciprocal arrangement, MKK opened an omnibus account under MDM by the end of 2022.
4. Turkish capital market’s future outlook according to Dr. Arıkan.
This year marked a milestone for Turkish capital markets as the number of investors surged past 11 million. This record-breaking increase was fueled by the pandemic, through the pursuit of return by market players, and the influx of new investors brought in by public offerings. The number of investors holding equities, which was 1.2 million at the end of 2019, reached to 8.5 million as end of 2023.
The number of listed companies, which exceeded 530 this year, will increase further and investment instruments will become more diversified. Today, the total market value of securities held at MKK has reached USD 435 billion. 56 IPOs were completed in 2023. This trend also led to a substantial increase in the number of investors in Türkiye.
As interest in the stock exchange grows, the value of our companies is expected to rise, further bolstering the growth of our nation’s economy.
5. MKK’s strategic priorities for the future.
At MKK, our vision for the future is anchored in technological innovation, operational efficiency, and expansion of our services. This vision is driven by a comprehensive strategy that includes a significant emphasis on developing new products and services, in line with our unique position as the Central Securities Depository and Trade Repository of Türkiye.
Key to our strategy is the transformation of our application infrastructures. The launch of the new version of our Electronic General Meeting System (e-GKS 2.0) will mark a major upgrade in the exercise of management rights, in addition to new upgrades in MKK’s other advanced corporate governance platform, the Electronic Board of Directors System (e-YKS). These improvements are not just about technology, they represent a leap forward in how we engage with and serve our stakeholders.
We are constantly enhancing our existing products and services, including significant improvements in our depository system MKS. Our Data Analysis Platform (VAP) and Public Disclosure Platform (KAP) are also undergoing substantial updates to offer more comprehensive and user-friendly services. Through the development of the Sustainability Compliance Report Taxonomy, our stakeholders use KAP more extensively with regard to sustainability disclosures. In parallel, our e-YATIRIMCI application is being enriched with new functions, reports, and integrations, further solidifying our position as an investor-oriented and innovative institution in capital markets.
MKK contributes to the management of systemic risk in our capital market through its trade repository services and its risk monitoring platforms such as the Investor Risk Monitoring System (YRTS). MKK is currently working with other stakeholders on establishing the Capital Markets Risk Monitoring Center platform for Turkish capital markets. Through this platform the risk elements that may arise in different areas of the market will be gathered in a single center and monitored 24/7. Almost every year we expand our services with the introduction of new financial instruments in our markets catering to an increasingly diverse group of market players. However, our focus extends beyond domestic advancements. We are planning to implement our range of corporate governance and data services in more markets around the globe.
We are taking significant steps to integrate foreign and domestic capital markets. This includes establishing direct links and account relationships with foreign central securities depository institutions, a move that will not only expand our global footprint but also facilitate international investment flows. Furthermore, we are exploring opportunities for dual listing and similar business models with foreign markets, which will provide unprecedented access and exposure for both Turkish and international investors. Finally, our development of a foreign investor account document management system is set to ease the investment process for international investors in Türkiye, reinforcing our commitment to being a globally integrated and accessible financial hub. These initiatives are pivotal in realizing our vision of connecting Turkish capital markets with the world, fostering a more inclusive and dynamic financial ecosystem.
MKK will continue its transformative journey, one that positions us at the forefront of financial technology innovation. Our strategic priorities, especially in developing new value-added products and services, reflect our ambition to not only lead in the Turkish capital markets but also make a significant impact on the global stage.
6. Dr. Ekrem Arıkan’s message to distinguished AMEDA members.
As the CEO & Board Member of MKK, Central Securities Depository & Trade Repository of Türkiye located at the intersection of many regions, we are proudly a member of also AMEDA and other regional associations. I am very aware and give much importance to international cooperation, especially to compensate missing times and relations due to the pandemic. Also, as the Chairman of AECSD, I am committed to fostering and supporting collaboration between our esteemed member countries of AECSD and AMEDA that have different and valuable experiences.
During my chairing term of AECSD, I would like to sincerely emphasize that one of our primary goals will be improving interregional interaction and fulfilling the potential of collaboration between our regions. I am very sure we can do it by the help of all our member countries and working together and synergistically towards our common goals.
Our collective efforts will be instrumental in bolstering cross-border investment flows, a key step towards the advancement of capital markets and economies in both regions.
May the coming year of 2024 bring our esteemed colleagues an abundance of happiness, success for our institutions and peace in our region.