First published 3 August 2010
CMB has announced new trading principles for thin stocks through its resolution dated 23.07.2010 and numbered 21/657. New principles are expected to contribute to the efficiency of the price formation in ISE. However, the resolution has raised fairness concerns and has also created adverse reactions in the market.
CMB, for the implementation of the new trading principles, has clarified the definition of the term "free float" through its resolution dated 23.07.2010 and numbered 21/655. As per the resolution; stocks held by (i) public entities, (ii) company founders, their close relatives and affiliates, (iii) real or legal persons holding at least 5% of company's share capital, (iv) company's BoD members, high level executives and their close relatives and/or (v) foundations and associations established by the company, and stocks (i) pledged as security and/or (ii) restricted for or can not be subject to trading activities due to trading bans, sequestration or any other legal reason, shall not be taken into account while determining the free float of an ISE listed company.
CMB, based on the above clarification, has classified ISE listed
companies into three groups, namely Group A, Group B and Group C
and, through the classification, has differentiated the trading
principles applicable to each Group. According to the
classification:
(1) Group A is the 'default" group
for all companies that do not fall under the category of Group B
and C.
(2) Group B is composed of;
- Companies with a free float market value less then TRY 10.000.000 and with a free float corresponding to a number of stocks less than 10.000.000,
- Companies with a free float market value less than TRY 45.000.000 and with a free float corresponding to a percentage less than 5%,
- Investment companies market value of which are at least 1,5 times of their unit value.
(3) Group C is composed of;
- Companies traded on ISE's Watchlist Market,
- Companies with a free float corresponding to a number of stocks less than 250.000,
- Investment companies market value of which are at least 2 times of their unit value.
Please refer to the attached chart summarizing the fundamentals of the trading principles to which each group of companies will be subject as from October 1, 2010.
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