ISTANBUL INTERNATIONAL FINANCIAL CENTRE PROGRAM ACTION PLAN ( )

ISTANBUL INTERNATIONAL FINANCIAL CENTRE PROGRAM ACTION PLAN (2015-2018) REPUBLIC OF TURKEY MINISTRY OF DEVELOPMENT

ABBREVIATIONS AYEDAŞ BEDAŞ BITT CAIA CCP CFA CPA EU FRM GDP IFC-Istanbul OTC PDP PRM SWIFT TEFAS TL VAT XBRL Istanbul Anatolian Side Electricity Distribution Company Bosporus Electricity Distribution Company Banking and Insurance Transactions Tax Chartered Alternative Investment Analyst Central Counterparty Chartered Financial Analyst Chartered Professional Accountant European Union Financial Risk Manager Gross Domestic Product Istanbul International Financial Center Over-the-Counter Public Disclosure Platform Professional Risk Manager Society for Worldwide Interbank Financial Telecommunication Turkey Electronic Fund Distribution Platform Turkish Lira Value Added Tax extensible Business Reporting Language 1

ACTION PLAN FOR ISTANBUL INTERNATIONAL FINANCIAL CENTER PROGRAM 1. Objective and Scope of the Program In order to support economic growth and develop the high value-added financial sector, works on IFC-Istanbul have been initiated in 2009. Decisively continuation of the works on IFC- Istanbul is crucial, as it would contribute to the formation of a financial sector which is integrated with global markets, collects funds and allocates them in an effective way and is capable of exporting financial services on international scale. Accordingly, in order for Istanbul to become a globally competitive international financial center, the aim is to establish an effectively-audited and transparent market, which can correspond to the needs of the real economy, has a strong physical, technological and human infrastructure, and in which all kinds of financial instruments can be issued. The Prime Ministry Circular numbered 2010/11 named Administrative Structure for Istanbul International Financial Center states that the former IFC-Istanbul Strategy and Action Plan (published in Official Gazette dated 2 October 2009) was to be renewed after three years. Within this framework, IFC-Istanbul Primary Transformation Program has been prepared. 2. Targets of the Program Istanbul will rank among the first 25 global financial centers. Turkey will take place among the first 30 countries in terms of financial development. The share of financial services in GDP will increase to 6 percent at the end of the program period. 2

3. Performance Indicators Current Targets Indicator Name Situation (1) 2014 2015 2016 2017 2018 Global Financial Centers Index (Z/Yen) (Istanbul s Rank) 44 42 35 30 27 25 Banking Sector Assets/GDP (%) 110.9 111 115 119 123 125 Non-Banking Financial Sector Assets/GDP (%) 12.6 13 14 15 17 19 Debt Securities Market Stock/GDP (%) 28.2 30 33 37 42 47 Borsa Istanbul Equity Market Capitalization/GDP (%) 32.4 38 44 51 58 66 Change in Export of Financial Services Insurance Services (Million Dollar) Financial Services (Million Dollar) Insurance Services (Percentage Change) Financial Services (Percentage Change) 995 1,098 1,248 1,423 1,599 1,794 779 876 954 1,040 1,134 1,236 14.9 10.3 13.7 14.0 12.4 12.2 45.9 12.5 8.9 9.0 9.0 9.0 The Number of Firms Listed in Borsa Istanbul 424 426 450 496 547 606 The Number of Promotions of IFC-Istanbul on International Platform Total Number of Investors (In Thousands) The Number of The Number of Individual Individual and Investors Institutional Domestic (In Thousands) Investors The Number of Institutional Investors (In Thousands) The Number of National Vocational Standards in the Financial Sector The Number of Meetings to Introduce Internationally Valid Certificates in Capital Markets The Number of Students to Be Send Abroad for Post Graduate Education in the Financial Sector (1) As of the end 2013. - - - 6 6 10 4,011 4,105 4,317 4,554 4,692 4,830 3,916 4,000 4,206 4,438 4,571 4,704 95 105 111 116 121 126 8 8 11 15 21 29 - - 3 4 5 6-59 100 100 100 100 3

4. Components of the Program and the Responsible Institutions Program Coordinator: The Ministry of Development Component 1: Establishing an Administrative Structure for IFC-Istanbul (Ministry of Development) Component 2: Increasing the Diversity of Financial Products and Services (Capital Markets Board of Turkey) Component 3: Enhancing the Legal Infrastructure (Ministry of Justice) Component 4: Improving the Physical Infrastructure in the Clustering Areas (Istanbul Metropolitan Municipality) Component 5: Strengthening the Technological Infrastructure (Borsa Istanbul) Component 6: Increasing Qualified Human Resources (Ministry of National Education) Component 7: Strengthening Interest-free Finance and Participation Banking (Banking Regulation and Supervision Agency) 4

Component 1: Establishing an Administrative Structure for IFC-Istanbul Policy 1: Establishing an organizational structure for IFC-Istanbul in which private sector has a more active role - Providing a more effective promotion for Istanbul to international financial institutions and investors No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 In order to conduct works on IFC-Istanbul, an administrative structure in which private sector participates more will be established. Ministry of Development Prime Ministry, Undersecretariat of Treasury, Central Bank of the Republic of Turkey, Capital Markets Board of Turkey, Banking Regulation and Supervision Agency, Istanbul Metropolitan Municipality, Investment Support and Promotion Agency, Borsa Istanbul, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, Financial Institutions Association of Turkey December 2015 In order to effectively conduct the promotion and communication activities regarding IFC-Istanbul and to strengthen the coordination among domestic and foreign stakeholders in the medium-term, a model for an organizational structure that financial sector associations and private sector participate more actively will be developed. Within the framework of this model, works for establishing this structure will be completed. Until a new management structure is established, the administrative structure that was established with the Prime Ministry Circular No. 2010/11 regarding the Administrative Structuring of Istanbul International Finance Center will be effective. 2 IFC-Istanbul Promotion and Communication Strategy will be prepared. Ministry of Development Investment Support and Promotion Agency, Istanbul Metropolitan Municipality, Borsa Istanbul, Related Sectorial Unions and Associations January 2016 - June 2016 For the promotion of the IFC-Istanbul and strengthening communication among stakeholders, Promotion and Communication Strategy for the IFC-Istanbul will be prepared with the contribution of professional associations and private sector. The promotion and communication strategy will be approved by the IFC-Istanbul Coordination Office. 5

Policy 2: Improving the coordination among domestic and international stakeholders No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 A National Advisory Committee will be established. Ministry of Development Prime Ministry, Ministry of Justice, Ministry of Finance, Ministry of National Education, Undersecretariat of Treasury, Central Bank of the Republic of Turkey, Capital Markets Board of Turkey, Savings Deposit Insurance Fund, Istanbul Metropolitan Municipality, Borsa Istanbul, Related Sectorial Unions and Associations June 2015 In order to provide consensus between domestic stakeholders on IFC-Istanbul activities, to direct IFC-Istanbul studies and to ensure that institutions act in a harmony in accordance with the determined targets, the activities for forming of a National Advisory Committee will be carried out. Studies conducted for the IFC-Istanbul will be evaluated and opinions on the future agenda will be expressed on Advisory Committee meetings. The first meeting of the Committee will be made until June 2015. 2 An International Advisory Committee will be established. Ministry of Development Prime Ministry, Undersecretariat of Treasury, Central Bank of the Republic of Turkey, Capital Markets Board of Turkey Istanbul Metropolitan Municipality, Borsa Istanbul, Related Sectorial Unions and Associations January 2016 - June 2016 In order to strengthen Istanbul s potential for being an international financial center and to advice in this direction, an International Advisory Committee composed of senior executives of the leading institutions of financial and business sector will be established. The Committee will meet once a year. 6

Component 2: Increasing the Diversity of Financial Products and Services Policy 1: Increasing the diversity of financial products No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 The diversity of derivative instruments traded on organized markets will be increased. Capital Markets Board of Turkey Undersecretariat of Treasury, Central Bank of the Republic of Turkey, Borsa Istanbul, Istanbul Settlement and Custody Bank, Central Registry Agency, The Banks Association of Turkey, Turkish Capital Markets Association June 2018 Derivatives such as interest rate swaps, foreign exchange options, gold options, interest rate futures and options, energy options, precious metals and metal futures will be developed and traded in organized markets. 2 A project will be carried out to allow issuance and trading of securities denominated in foreign currencies. Capital Markets Board of Turkey Undersecretariat of Treasury, Central Bank of the Republic of Turkey, Banking Regulation and Supervision Agency, Borsa Istanbul, Istanbul Settlement and Custody Bank, Central Registry Agency March 2015 - June 2017 A project will be carried out to enable the issuance, trading and risk management of securities denominated in foreign currencies while taking the development of TL markets into consideration. The project will be evaluated by the Financial Stability Committee. 3 The secondary legislation on investment companies with variable capital will be enacted. Capital Markets Board of Turkey Turkish Institutional Investment Managers Association, Turkish Capital Markets Association June 2017 The secondary legislation on investment companies with variable capital, defined for the first time at the article 50 of the Capital Markets Law No. 6362 and designed for enjoying the benefits of both investment companies and investment funds will be enacted. 4 It will be ensured that state-owned enterprises and institutions can utilize capital markets. Capital Markets Board of Turkey Ministry of Development, Undersecretariat of Treasury, Turkish Privatization Administration June 2017 State-owned enterprises and institutions which can use capital markets and issue capital market instruments will be determined. These determined state-owned enterprises and institutions will be classified according to their sequences of materiality and priority and studies will be made on which instruments can be issued by them. 7

5 Alternative financing methods that can be used and provided by brokerage firms will be developed. Capital Markets Board of Turkey Ministry of Finance, Turkish Capital Markets Association June 2017 In order to transform brokerage firms into investment firms by providing finance using methods such as bridge finance, legislative obstacles will be removed and legislations related with taxes will be made. 6 A research will be carried out in order to determine the markets to be focused, within the framework of building Istanbul as a global financial center. Ministry of Development - December 2015 Within the framework of a comparative competition analysis, an analytical research will be carried out to determine the financial products and markets to be focused in medium and long term in order to build Istanbul as a global financial center. Policy 2: Developing markets and the financial infrastructure No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 A strategy document will be prepared to improve non-banking financial markets. Central Bank of the Republic of Turkey Undersecretariat of Treasury, Banking Regulation and Supervision Agency, Capital Markets Board of Turkey, Related Sectorial Unions and Associations December 2015 Financial needs of the corporate sector are mainly met through the banking sector. Strengthening the operational and legal infrastructure of the non-banking financial sector, as well as the markets they operate, will enhance the efficiency of the financial system. In this respect, a road map will be prepared to improve non-banking financial markets for the corporate sector to have easier access to more financial resources at lower costs by increasing the diversity of financial products and services in a way to contribute to financial stability. 8

2 Eligible OTC derivatives will be traded on organized markets. Capital Markets Board of Turkey Central Bank of the Republic of Turkey, Banking Regulation and Supervision Agency, Borsa Istanbul, Istanbul Settlement and Custody Bank, Central Registry Agency, The Banks Association of Turkey, Turkish Capital Markets Association June 2017 Within the framework of G20 decisions and EU regulations, a project will be carried out by the related institutions for the determination of whether there is a need for standardization of OTC derivatives, which derivative instruments that will be standardized can be traded on organized exchanges and whether there is a need for central clearing. Eligible OTC derivatives will be traded on organized markets. 3 Public Disclosure Platform (PDP) will be aligned with international standards. Central Registry Agency Capital Markets Board of Turkey, Borsa Istanbul, Turkish Institutional Investment Managers Association, Turkish Investor Relations Society June 2016 In line with international requirements, PDP system will be restructured to improve PDP English website which will include English contents of disclosure notifications, to enable receiving and sharing of data in XBRL format that is an important factor for providing analyzable data to end-users, to put the system in line with EU directives (such as data integrity protection and time stamp), and to enable conveying corporate actions notifications more comprehensively to end-users with SWIFT. 4 Secondary legislation regarding trade repositories will be enacted in line with the Capital Markets Law No. 6362. Capital Markets Board of Turkey Central Bank of Republic of Turkey, Banking Regulation and Supervision Agency, Istanbul Settlement and Custody Bank, Central Registry Agency, The Banks Association of Turkey, Turkish Capital Markets Association June 2017 The legal basis of trade repositories has been formed through Capital Markets Law No. 6362. Secondary regulation regarding the trade repositories which will be authorized by Capital Markets Board of Turkey in terms of capital market transactions with the purpose of monitoring systemic risk and maintaining financial stability will be completed. 9

5 The regulatory and clearing infrastructure will be finalized regarding the markets for which the central counterparty (CCP) is decided to be used. Capital Markets Board of Turkey Central Bank of the Republic of Turkey, Banking Regulation and Supervision Agency, Borsa Istanbul, Istanbul Settlement and Custody Bank June 2017 CCP will be used initially in equities markets followed by debt instruments markets within Borsa Istanbul either on the request of Borsa Istanbul or with the requirement of Capital Markets Board of Turkey. If it is deemed suitable after the finalization of the work among Capital Markets Board of Turkey and other public and private institutions, CCP will also be used in OTC products. 6 Dispute resolution systems within Turkish Capital Markets Association and Borsa Istanbul will be developed in order to resolve investor conflicts caused by capital markets operations. Capital Markets Board of Turkey Borsa Istanbul, Central Registry Agency, Turkish Capital Markets Association June 2017 In the scope of article 70 and 74 of the Capital Markets Law No. 6362, the efficiency of the existing systems within the body of Borsa Istanbul and Turkish Capital Markets Association will be increased. 7 Market-making mechanism for shares and private sector debt instruments traded on Borsa Istanbul will be introduced. Borsa Istanbul Capital Markets Board of Turkey, Turkish Capital Markets Association December 2017 A regulatory framework for the market-making mechanism in shares traded on Equity Market of Borsa Istanbul and in private sector debt instruments traded on Debt Securities Market will be introduced. 8 The infrastructure for licensed warehousing and electronic warehouse receipt towards agricultural products will be improved. Ministry of Customs and Trade Undersecretariat of Treasury, Capital Markets Board of Turkey, Borsa Istanbul, Istanbul Settlement and Custody Bank, Central Registry Agency, The Union of Chambers and Commodity Exchanges of Turkey December 2017 In the framework of the Act of Licensed Warehousing and the Regulation of Electronic Warehouse Receipt; a) The specialized product exchange will be set up and put into operation. b) Electronic warehouse receipt will be made an alternative investment instrument. 10

9 Organized markets for metals and other commodities will be established. Borsa Istanbul Ministry of Customs and Trade, Ministry of Finance, Undersecretariat of Treasury, Capital Markets Board of Turkey, Istanbul Settlement and Custody Bank, Central Registry Agency, The Union of Chambers and Commodity Exchanges of Turkey December 2017 To enable the trading of metal products on Borsa Istanbul, necessary regulations and the system infrastructure for physical delivery will be developed taking the participation banking principles into consideration. A study will be carried out which addresses the possible tax related problems that may occur due to trading of metal and other commodity derivatives on Borsa Istanbul. 10 Turkey Electronic Fund Distribution Platform (TEFAS) will be restructured. Capital Markets Board of Turkey Istanbul Settlement and Custody Bank, Central Registry Agency, Turkish Capital Markets Association June 2017 Restructuring of TEFAS for the sake of enhancement of distribution channels and to make investors able to reach various mutual funds via one platform will be accomplished. 11 Integration with international payment and settlement systems will be enhanced. Capital Markets Board of Turkey Ministry of Finance, Undersecretariat of Treasury, Presidency of the Turkish Revenue Administration, Central Bank of the Republic of Turkey, Borsa Istanbul, Istanbul Settlement and Custody Bank, Central Registry Agency June 2017 Regulatory infrastructure on collateral management shall be constituted to enable the use of collateral management services and international settlement and custody services provided by international settlement and custody institutions and their affiliated institutions to their members. Amendments on regulations shall be finalized and operational infrastructure shall be constituted to enable financial institutions intending to invest in Turkish markets to use collateral management services offered by international settlement and custody institutions and by their affiliated institutions, which will at the same time facilitate the provision of settlement and custody services directly or indirectly to the concerned investors and their clients. 11

Policy 3: Improving tax regulations in financial instruments No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 Tax practices related to financial instruments and their underlying assets will be reviewed. 2 Tax practices in hedging transactions carried out relating to OTC derivative instruments and leveraged transactions on foreign exchange will be reorganized. 3 Tax practices that lead to unfair competition among different types of financial institutions will be determined and eliminated. Ministry of Finance Undersecretariat of Treasury, Presidency of Turkish Revenue Administration, Central Bank of Republic of Turkey, Capital Markets Board of Turkey, Banking Regulation and Supervision Agency, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association Ministry of Finance Undersecretariat of Treasury, Presidency of Turkish Revenue Administration, Central Bank of the Republic of Turkey, Capital Markets Board of Turkey, Banking Regulation and Supervision Agency, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association Ministry of Finance Undersecretariat of Treasury, Presidency of Turkish Revenue Administration, Central Bank of the Republic of Turkey, Capital Markets Board of Turkey, Banking Regulation and Supervision Agency, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, Financial Institutions Association of Turkey December 2017 December 2017 December 2017 A study involving impact analysis will be made in order to harmonize taxation procedures of foreign exchange and gold-backed securities and their underlying assets. According to the results of this study, necessary regulations will be made. Regarding the taxation of OTC derivative instruments and leveraged transactions on foreign exchange in terms of Banking and Insurance Transactions Tax (BITT), the linked transactions carried out for hedging risks will be considered as a single transaction and necessary legislative changes will be made so that BITT base would be the amount calculated by offsetting the losses and gains of linked transactions. In order to eliminate unfair competition arising from tax treatments on different types of financial institutions, the legal regulations related to stamp tax, Banking and Insurance Transactions Tax, Resource Utilization and Support Fund, corporation tax, VAT and fees will be examined. Thereafter, the required regulations will be made. 12

Component 3: Improving the Legal Infrastructure Policy 1: Establishing an institutional arbitration center in Istanbul No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 The Istanbul Arbitration Center will be put into operation. Istanbul Arbitration Center Ministry of Justice, Council of Higher Education, Undersecretariat of Treasury, Capital Markets Board of Turkey, Banking Regulation and Supervision Agency, Borsa Istanbul, Turkish Exporters Assembly, Union of Chambers and Commodity Exchanges of Turkey, Union Of Turkish Bar Associations, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, Confederation of Turkish Tradesmen and Craftsmen December 2015 In the framework of the Istanbul Arbitration Center Law which entered into force on January 1st of 2015; a) The General Assembly, the Board of Directors and the Advisory Board of Istanbul Arbitration Center will be established until March 2015. b) By providing staff recruitment and putting the secondary legislation into effect, National and International Councils of Arbitration will be put into operation until December 2015. 2 Vocational training will be given to judges and lawyers interested in the field of arbitration. Ministry of Justice Ministry of Justice, High Council of Judges and Prosecutors, Supreme Court, Council of State, Union of Turkish Bar Associations, Justice Academy of Turkey, Union of Chambers and Commodity Exchanges of Turkey, Istanbul Arbitration Center In order for arbitration institution to operate effectively, vocational training will be given to judges and lawyers interested in the field of arbitration. 13

3 Pre-professional trainings concerning arbitration will be provided for the trainee judges and lawyers. Ministry of Justice Ministry of Justice, High Council of Judges and Prosecutors, Supreme Court, Council of State, Union of Turkish Bar Associations, Justice Academy of Turkey, Union of Chambers and Commodity Exchanges of Turkey, Istanbul Arbitration Center Arbitration will be added to the curriculum of trainee judge and lawyer training programs. 4 Promotion activities related to the Istanbul Arbitration Center will be conducted. Istanbul Arbitration Center Ministry of Justice, Council of Higher Education, Undersecretariat of Treasury, Capital Markets Board of Turkey, Banking Regulation and Supervision Agency, Borsa Istanbul, Turkish Exporters Assembly, Union of Chambers and Commodity Exchanges of Turkey, Union of Turkish Bar Associations, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey Promotional and educational activities under the supervision of local and international financial institutions and investors will be carried out for increasing both the recognition of the Istanbul Arbitration Center and awareness towards the functioning of the arbitration mechanism. 14

Policy 2: Establishing specialized courts on financial sector specific issues No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 The fields in which specialization is needed by the financial sector will be defined and submitted to the High Council of Judges and Prosecutors. Ministry of Justice High Council of Judges and Prosecutors, Council of Higher Education, Undersecretariat of Treasury, Capital Markets Board of Turkey, Banking Regulation and Supervision Agency, Justice Academy of Turkey, Union Of Turkish Bar Associations, Turkish Exporters Assembly, Union of Chambers and Commodity Exchanges of Turkey June 2015 By the Law No. 6460, it was ensured that in order for courts to specialize, work distribution among departments would be defined by the High Council of Judges and Prosecutors considering the workload and the nature of it. The legal fields needed by the financial sector will be determined and these fields will be taken into account in the distribution of work by the High Council of Judges and Prosecutors. 2 Each personnel working in specialized courts will be subjected to at least one training program in order to specialize in the field. Ministry of Justice High Council of Judges and Prosecutors, Supreme Court, Council of State, Justice Academy of Turkey, Union of Turkish Bar Associations In order to perform their duties faster and effectively, periodical trainings will be provided for the personnel working in specialized courts related to financial sector. 15

Policy 3: Taking IFC-Istanbul Project into consideration during new legislation works No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 In labor disputes, necessary activities will be carried out to bring alternative dispute resolution procedures into Turkish judicial system. Ministry of Justice Ministry of Labor and Social Security, Union of Chambers and Commodity Exchanges of Turkey December 2017 It is aimed that arbitration committee will be established for the resolution of labor disputes concerning claims before the trial. Moreover, in labor disputes mediation institutions will be promoted and it is also aimed that the workload of the courts will be lessened by increasing the capacity of resolving complaint procedure disputes concerning employee claims stated by the article 91 of the Labor Law No. 4857. 2 Letters of credit will be followed electronically. Ministry of Transport, Maritime Affairs and Communications Ministry of Justice, Banking Regulation and Supervision Agency, The Banks Association of Turkey, Participation Banks Association of Turkey, Bureau of Credit Record December 2017 By preparing the letters of guarantee on electronic media, it is expected that current risks will decrease considerably, cost of operation will diminish, problems resulted from forgery and irregularity will be minimized. While technical infrastructure is ready, changes will be done in Electronic Signature Act No. 5070 to put the application into practice. Component 4: Enhancing the Physical Infrastructure in the Clustered Areas Policy 1: Enhancing the transportation infrastructure in IFC-Istanbul clustered areas No Action Responsible Institution Related Institutions Start - Finish Date Explanation 16

1 Kartal-Kaynarca rail system connection will be completed. Istanbul Metropolitan Municipality - December 2015 After the completion of the ongoing project, Kadıköy-Kartal Line will be extended towards east. The line is 4.5 kilometers in length and contains 3 stations. The estimated cost of the project is $137,185,100, which will be afforded by the Istanbul Metropolitan Municipality budget. 2 Road and junction works in the surroundings of Ataşehir Financial District will be carried out. Ministry of Environment and Urbanization Istanbul Metropolitan Municipality December 2015 Ataşehir Financial District will be connected with the main roads via this project. The estimated cost is TL 79,605,000, which will be afforded by the participation of landowners. 3 Researches will be made in order to determine transportation demand in IFC-Istanbul clustered areas. Istanbul Metropolitan Municipality - December 2016 The transportation demand will be determined for the financial clustered areas. 4 Studies and projects will be prepared in order to meet parking area needs in IFC-Istanbul clustered areas. Istanbul Metropolitan Municipality - December 2016 Studies on determining the demand for parking areas in the clustered areas will be finalized until June 2015. Following this, projects will be designed to meet this demand. 5 Traffic surveys will be done in IFC-Istanbul clustered areas. Istanbul Metropolitan Municipality - December 2017 Traffic surveys will be done considering the effects of IFC- Istanbul project on the clustered zones. Studies for Büyükdere-Levent-Maslak, Kâğıthane-Cendere, Ataşehir- Kozyatağı and Ümraniye districts will be finished by December 2015. Studies for Yenibosna-Basın Ekspres District, Topkapı-Maltepe-Bayrampaşa and Kartal will be finished by December 2016. 17

6 An implementation project to connect Üsküdar-Ümraniye and Kadıköy-Kartal subway lines to Ataşehir Financial District will be prepared. Istanbul Metropolitan Municipality - December 2015 In order to integrate Ataşehir Financial District with other centers of the city and the airport by rail systems, an implementation project will be prepared. The estimated cost of $5,850,000 will be afforded by the Istanbul Metropolitan Municipality budget. 7 In order to connect Sabiha Gökçen Airport to Marmaray and Kadıköy- Kartal-Kaynarca metro lines by rail systems, the implementation project of D-100 and Marmaray will be prepared. Istanbul Metropolitan Municipality - December 2016 In order to integrate Ataşehir Financial District and Kartal District with other centers of the city and Sabiha Gökçen Airport by rail systems, an implementation project will be prepared. The project is 3 kilometers in length and contains 2 stations. This estimated cost of the project will be $1,950,000 which will be afforded by the Istanbul Metropolitan Municipality budget. 8 In order to integrate Kazlıçeşme-Söğütlüçeşme subway and Ataşehir by rail system, an implementation project will be prepared. Istanbul Metropolitan Municipality - January 2016 - In order to integrate Büyükdere-Levent-Maslak District with Ataşehir Financial District by underwater rail system, which will be located between two bridges, an implementation project will be prepared. The project is 40.3 kilometers in length and contains 27 stations. The estimated cost of the project will be $26,195,000 which will be afforded by the Istanbul Metropolitan Municipality budget. 9 In order to integrate Ataşehir Financial District with Sabiha Gökçen Airport by rail system, preparations for implementation project will be carried out. Istanbul Metropolitan Municipality - January 2016 - In order to integrate Ataşehir Financial District with other centers of the city and airport by rail system, an implementation project, which will be finished at the end of 2019, will be prepared. The project ise 17 kilometers in length and contains 12 stations. The estimated cost of the project will be $11,050,000, which will be afforded by the Istanbul Metropolitan Municipality budget. 18

10 Rail system connection between İncirli and Sefaköy will be completed. Ministry of Transport, Maritime Affairs and Communications - December 2017 Yenibosna-Basın Ekspres District will be connected to surrounding settlements through an alternative rail system. The project is 7.2 kilometers in length and contains 6 stations. The estimated cost of the project will be TL 910,953,000, which will be afforded by the budget of Ministry of Transport, Maritime Affairs and Communications. 11 Rail system connection between Bakırköy İDO and Kirazlı will be completed. Ministry of Transport, Maritime Affairs and Communications - Yenibosna-Basın Ekspres District will be connected to surrounding areas through an alternative rail system with transfer stations at Kirazlı, İncirli and Özgürlük Square. The project is 9 kilometers in length and contains 9 stations. The estimated cost of the project will be $585,000,000, which will be afforded by the budget of Ministry of Transport, Maritime Affairs and Communications. 12 In order to integrate Sabiha Gökçen Airport with D-100 Kaynarca rail system, construction works will be started. Ministry of Transport, Maritime Affairs and Communications - December 2017 Ataşehir Finance District and Kartal District will be integrated to Sabiha Gökçen Airport through a rail system. The length of the project is 6 kilometers. The estimated cost of the project will be $300,000,000, which will be afforded by Ministry of Transport, Maritime Affairs and Communications. 13 Construction works for Mecidiyeköy-Mahmut Bey rail system will be started. Istanbul Metropolitan Municipality - Yenibosna-Basın Ekspres District will be integrated to Kâğıthane-Cendere District and Büyükdere-Levent-Maslak District via rail system. The project is 18 kilometers in length and contains 15 stations. The estimated cost of the project will be $ 1,170,000,000, which will be afforded by the budget of Istanbul Metropolitan Municipality. 14 The implementation project of Bostancı- Dudullu rail system will be prepared. Istanbul Metropolitan Municipality - December 2015 Transportation to Ataşehir Financial District by sea route will be provided. The project is 13.4 kilometers in length and contains 11 stations. The estimated cost of the project will be $ 8,710,000,000, which will be afforded by budget of Istanbul Metropolitan Municipality. 19

15 In order to connect Bağcılar (Kirazlı) with Küçükçekmece (Halkalı) by rail system, an implementation project will be prepared. Istanbul Metropolitan Municipality - June 2015 - December 2015 An alternative rail system connection will be built between Yenibosna-Basın Ekspres District and Topkapı-Maltepe Bayrampaşa district, as well as with the coach station. The project is 9.4 kilometers in length and contains 9 stations. The estimated cost of the project will be $6,110,000,000, which will be afforded by budget of Istanbul Metropolitan Municipality. 16 In order to build Ataşehir-Ümraniye monorail line, a study and an implementation project will be prepared. Istanbul Metropolitan Municipality - January 2017 - Ataşehir Financial District will be connected to Ümraniye District by a rail system of 11.1 kilometers. The estimated cost of this 11 stations line is $7,215,000 which will be afforded by the Istanbul Metropolitan Municipality budget. 17 In order to build Beşiktaş- Sarıyer rail system, a study and an implementation project will be prepared. Istanbul Metropolitan Municipality - January 2018 - An implementation project connecting Beşiktaş district to surroundings will be prepared. The 14.6 kilometers line will cost approximately $9,490,000 which will be afforded by the Istanbul Metropolitan Municipality budget. 18 In order to integrate financial cluster districts with each other by rail systems, necessary studies will be done. Istanbul Metropolitan Municipality Ministry of Development, Ministry of Transport, Maritime Affairs and Communications September 2015 In order to meet the need of an integrated rail system providing financial clustered areas to be connected among themselves, with other centers of the city and airports, necessary investments and their funding will be determined with a holistic approach. 20

Policy 2: Enhancing the communication infrastructure to ensure high speed and efficient service for financial companies and institutions No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 As a part of the national Establishment of Geographic Information System for Electronic Communication Infrastructure Project, the current condition of electronic communication infrastructure will be determined and transferred to the Geographic Information System. Sharing of infrastructure will be improved through enhanced application of the Rights of Way. Ministry of Transport, Maritime Affairs and Communications Information and Communication Technologies Authority, Istanbul Metropolitan Municipality All data regarding the electronic communication infrastructure of Istanbul will be transferred to a single, central Geographic Information System. Data collected in the central system will provide a better management of investments, decisions and applications within the financial clustered areas. The estimated cost which will be afforded by the budget of Ministry of Transport, Maritime Affairs and Communications is TL 7,000,000. 21

Policy 3: Improving the energy infrastructure to provide sufficient, sustainable and uninterrupted energy in financial clustered areas 1 An Energy Infrastructure Master Plan will be prepared for IFC-Istanbul clustered areas. Ministry of Energy and Natural Resources Energy Market Regulatory Authority, Istanbul Metropolitan Municipality, Turkish Electricity Distribution Company, Istanbul Anatolian Side Electricity Distribution Inc. (AYEDAŞ), Bosporus Electricity Distribution Inc. (BEDAŞ) December 2016 In order to evaluate the current energy infrastructure and to prepare energy demand forecasts in IFC-Istanbul clustered areas, a medium and long-term perspective is required. Therefore, to provide high quality, sufficient and uninterrupted energy in these regions, necessary actions will be determined by the coordination of the Ministry of Energy and Natural Resources. It will be ensured that these actions will be taken into consideration by other stakeholders. Within this context, IFC-Istanbul clustered areas data of 2014 will be given to the Ministry of Energy and Natural Resources, AYEDAŞ and BEDAŞ. After this, AYEDAŞ and BEDAŞ will prepare demand forecasts. Infrastructure Plans to meet the energy demand will be prepared in 2015. The Master Plan will be finalized in 2016. 22

Policy 4: Monitoring and evaluating the physical and social development levels of financial clustered areas in Istanbul No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 A monitoring and evaluating system for IFC-Istanbul clustered areas by using physical and social indicators will be set up. Istanbul Metropolitan Municipality Ministry of Development, Provincial Directorates of Ministries, Governorship of Istanbul, Istanbul Development Agency, District Municipalities September 2016 A database, an index and a model will be designed to monitor and evaluate the physical and social development level of IFC-Istanbul clustered areas. Within this context, in 2015; a) Indicators which will compose the index and their shares in the basket will be determined. b) Satisfaction levels, demands and expectations of the people residing and working in the clustered areas will be identified. c) An up-to-date database on physical and social development will be designed. In 2016; a) Physical and Social Development Index (both main and sub-indexes) will be designed. b) Physical and Social Development Monitoring Evaluation Model will be set up. 2 IFC-Istanbul clustered areas will be monitored periodically by physical and social development indicators. Istanbul Metropolitan Municipality Ministry of Development, Provincial Directorates of Ministries, Governorship of Istanbul, Istanbul Development Agency, District Municipalities September 2016 - Physical and social development levels of clustered areas will be measured and evaluated annually. Up-to-date data related to physical and social development will be obtained. The physical and social development levels will be measured via the newly designed index and all results will be used to enhance physical and social development. 23

Component 5: Strengthening Technological Infrastructure Policy 1: Enhancing and consolidating the electronic communication, trading, data dissemination and security infrastructure in capital markets No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 Integration process of the Borsa Istanbul Joint Data Center will be completed. Borsa Istanbul Istanbul Settlement and Custody Bank, Central Registry Agency June 2015 The Borsa Istanbul Joint Data Center, holding the most advanced technological infrastructure used in Turkey will also host server systems of Istanbul Settlement and Custody Bank and Central Registry Agency. 2 Trading, surveillance, data dissemination, index calculation, risk management, clearing and settlement infrastructure of Borsa Istanbul Equity Market will be enhanced. Borsa Istanbul Capital Markets Board of Turkey, Istanbul Settlement and Custody Bank, Central Registry Agency September 2015 Trading, surveillance, data dissemination, index calculation, risk management, clearing and settlement infrastructure of Borsa Istanbul Equity Market will be further developed. After the integration tests, the new trading platform of the equity market will go live by September 2015. 3 Trading, surveillance, data dissemination, risk management, clearing and settlement infrastructure of Borsa Istanbul Derivatives Market, Debt Securities Market and Precious Metals and Diamonds Market will be enhanced. Borsa Istanbul Capital Markets Board of Turkey, Istanbul Settlement and Custody Bank, Central Registry Agency September 2016 Trading, surveillance, data dissemination, risk management, clearing and systems of Borsa Istanbul Derivatives Market, Debt Securities Market and Precious Metals and Diamonds Market will be further developed, detailed analysis and design studies will be finished, trading platforms will be ready for integration tests by the end of 2015 and the systems will go live by September 2016. 24

4 Surveillance systems of Borsa Istanbul markets will be consolidated and improved. Borsa Istanbul Capital Markets Board of Turkey September 2016 Efficiency and effectiveness will be improved by providing central surveillance mechanism for all markets taking into consideration interactions among the markets. Policy 2: Developing software and information technology products needed by financial sector and reducing product development costs No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 The Technology Development Zone will be established jointly by the Borsa Istanbul and Boğaziçi University. Borsa Istanbul Istanbul Development Agency, Boğaziçi University December 2015 Information technology products that meet high level criteria, particularly software and information technology services needed by the financial markets will be developed. Product development costs will be reduced as new technology producing firms will benefit from the synergy of a collaborative environment. For this purpose, necessary permissions for the Technology Development Zone will be obtained and guided project approval process will be initiated with the Istanbul Development Agency. 25

Component 6: Increasing Qualified Human Resources Policy 1: Increasing the number of people with an internationally valid certificate in the field of finance and with advanced foreign language skills No Action 1 National vocational standards and national qualifications in the financial sector required by businesses and education system will be put into effect. 2 Labor force profile in the financial sector will be identified, labor force demand for the future will be projected and the results will be announced to the public. Responsible Institution Vocational Qualifications Authority Capital Markets Board of Turkey Related Institutions Council of Higher Education, Ministry of National Education, Undersecretariat of Treasury, Banking Regulation and Supervision Agency, Capital Markets Board of Turkey, Central Bank of the Republic of Turkey, Borsa Istanbul, Capital Markets Licensing and Training Agency, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, Insurance Training Centre Council of Higher Education, Ministry of Labor and Social Security, Undersecretariat of Treasury, Banking Regulation and Supervision Agency, Central Bank of the Republic of Turkey, Istanbul Metropolitan Municipality, Turkish Employment Agency, Vocational Qualifications Authority, Borsa Istanbul, Capital Markets Licensing and Training Agency, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, Insurance Training Centre Start - Finish Date December 2015 Explanation Vocational standards and qualifications demanded by financial system will be determined with all stakeholders. Based on the determined needs, the vocational standards and qualifications will be prepared. Qualifications of the employees working in the financial sector such as number of employees, educational background, qualifications, foreign language skills, number of employees holding a vocational certificate will be identified in order to determine the educational needs in this field. Future quantitative and qualitative labor force demand projections will be made by December 2015. Short-term experts will be employed to prepare a report and this report will be published after a workshop in which the participants will share their opinions. Predicted cost is TL 100,000, which will be paid from the budget of Capital Markets Board of Turkey. 26

3 Awareness-raising activities will be conducted to increase the number of experts holding an internationally recognized certificate in capital markets. Capital Markets Licensing and Training Agency Council of Higher Education, Banking Regulation and Supervision Agency, Central Bank of the Republic of Turkey, Borsa Istanbul, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, Insurance Training Centre, CFA Society of Istanbul Meetings will be organized in order to introduce the internationally recognized certificates such as CFA, CAIA, FRM, PRM and CPA. 4 The number of individuals applying for a capital market license will be increased. Capital Markets Licensing and Training Agency Council of Higher Education, Banking Regulation and Supervision Agency, Central Bank of the Republic of Turkey, Borsa Istanbul, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, Insurance Training Centre, CFA Society of Istanbul The targets of; - 47,500 applications for 2015, - 50,000 applications for 2016, - 51,000 applications for 2017 and - 52,500 applications for 2018 will be reached for capital market license examinations. 5 Public officers working in the field of finance will be supported for having an internationally recognized certificate. Capital Markets Licensing and Training Agency Council of Higher Education, Undersecretariat of Treasury, Capital Markets Board of Turkey, Banking Regulation and Supervision Agency, Central Bank of the Republic of Turkey, CFA Society of Istanbul December 2015 - A part of the application fee for CFA certificate examination will be covered by CFA Society of Istanbul for 300 public officers. The principles of the support program will be determined by all related institutions. 6 Post graduate education in the field of finance will be encouraged. Capital Markets Licensing and Training Agency Council of Higher Education, Borsa Istanbul, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, CFA Society of Istanbul June 2015 - June 2017 50 master and 50 doctorate students (100 in total) in the field of finance will be offered scholarship. 27

7 Arabic and Russian languages will be added to the curricula of undergraduate and graduate finance programs as selective courses. 8 The number of undergraduate and graduate finance students within the scope of international student exchange programs will be increased. Council of Higher Education Council of Higher Education The Universities Turkish National Agency, Istanbul Metropolitan Municipality, the Universities Policy 2: Improving the undergraduate and graduate curriculum in line with the needs of the financial sector These courses will be added to the curricula of two pilot universities which will be determined by the Council of Higher Education by 2016. The students will be supported via national and international resources for foreign education and internship opportunities based on student exchange programs. The number of students participating in Erasmus+ which was 1,517 in 2012-2013 academic year will be increased to an average of 2,000 for each year. No Action Responsible Institution Related Institutions Start - Finish Date Explanation 1 Undergraduate and graduate programs in the field of finance will enable students to gain advanced level mathematical skills. Council of Higher Education Undersecretariat of Treasury, Banking Regulation and Supervision Agency, Capital Markets Board of Turkey, Central Bank of the Republic of Turkey, Borsa Istanbul, Capital Markets Licensing and Training Agency, The Banks Association of Turkey, Participation Banks Association of Turkey, Turkish Capital Markets Association, Insurance Association of Turkey, Insurance Training Centre, the Universities June 2016 A workshop will be organized by the end of June 2015 in order to analyze the undergraduate and graduate finance programs. The outputs of the workshop will be adapted to the finance curricula of five universities to be determined by the Council of Higher Education. 28