Leveraged and short indices will be calculated in Borsa Istanbul for first time

ISTANBUL

Turkey’s main stock exchange, Borsa Istanbul, has said it will begin to calculate leveraged and short indices which cover investment strategies with the expectation of a bull market and a bear market, as of April 1.

Leveraged and short indices will provide the opportunity to get same or inverse index exposure in return for smaller cash position, it noted in a written statement on March 21. 

The objective of leveraged indices is to reflect the return of a reference index (underlying index) by a multiple of the leverage factor in the same direction. It is assumed that leverage is obtained by borrowing money and investing more in the underlying index. The borrowing cost of the leverage is supposed to be daily repo interest rates. The objective of short indices is to reflect the return of a reference index (underlying index) by a multiple of the leverage factor in the opposite direction. It is assumed that short position is obtained by borrowing equities in the underlying index, selling them short and investing the fund generated, in repo. 

“Indices are calculated from the closing values of underlying index and repo index. Base date of the indices is April 1, 2016, and base values are 1000,” said the statement.