ANNUAL REPORT 2021
CONTENTS 04 Turkish Capital Markets Association 06 Milestones 08 Organizational Structure 09 Board of Directors 11 Board of Auditors 12 Discipline Committee 13 Executive Management 14 Our Team 20 Overview of 2021 26 Initiatives 35 Professional Committees 36 Research and Publications 38 Data 39 International Relations 40 Investor Education 45 Meetings and Events 50 Training 54 Information Technology 56 Media Relations 57 Memberships 59 Investments 60 Oversight and Dispute Resolution 60 Applications for Access to Information 61 Board of Auditors’ Report 62 Financial Statements and Independent Auditor’s Report WE TAKE ON AN ACTIVE ROLE IN THE SECTOR’S DEVELOPMENT AND THE STEPS THAT WILL CARRY IT FORWARD. We are a self-regulatory organization established in 2001 under the Capital Market Law. Since 2014, our membership structure consists of banks, brokerage firms, asset management companies, and listed investment trusts that are authorized for capital market operations. Drawing on our representative power and experience, we offer solutions driving the development of the capital market for members and investors.
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WE DRIVE PROGRESS Through our informed and leader management and expert team, we analyze the industry’s problems and formulate solution suggestions that will drive the industry’s progress based on strategic plans built on constructive approaches. We serve as the reference guide of the industry with our know-how and expertise in the capital markets, the data and reports we offer, and the training programs and informative activities we organize.
TCMA Annual Report 2021 4 WHAT WE DO • We develop, implement and oversee guidelines to make sure that our members’ operations are fair and honest, and that they exercise the due care and discipline required by the capital market in their business. • We evaluate complaints regarding the services our members offer to their customers, and we assist in the resolution of disputes. • We hold events aimed at the development and deepening of the sector in our country, and we take actions before the public institutions and agencies. • We cooperate in relation to capital markets with related foreign institutions. • We conduct research for the development of the capital market. • We monitor professional, regulatory and administrative developments, and inform our members. • We offer training programs for the market professionals. • We design and run investor education programs. FOR A SOLID CAPITAL MARKET: We collaborate with: • Institutional and individual investors, • Our members and market professionals, • All relevant public institutions and mainly the Capital Markets Board of Türkiye (CMB), • Capital market institutions including Borsa İstanbul, İstanbul Settlement and Custody Bank (Takasbank), Central Securities Depository (MKK), Capital Markets Licensing Registration and Training Agency, etc., • Public companies, universities, relevant associations, and the media. TURKISH CAPITAL MARKETS ASSOCIATION We are a self-regulatory organization established in 2001 under the Capital Market Law. Since 2014, our membership structure consists of banks, brokerage firms, asset management companies, and listed investment trusts that are authorized for capital market operations. Drawing on our representative power and experience, we offer solutions driving the development of the capital market for members and investors.
TCMA Annual Report 2021 5
TCMA Annual Report 2021 6 MILESTONES 2001 • The Association of Capital Market Intermediary Institutions of Türkiye (TSPAKB) was founded. • The first general meeting was held. • The first membership meeting was held. • Professional Rule Book was published. • Disciplinary Regulation was announced. 2002 • The first panel discussion was held. • TSPAKB website went live. • The first annual report was printed. • The first monthly magazine was published. • Licensing exam preparation trainings started. • The first press conference was held. 2003 • Professional development training started. • Rules of Arbitration were released. • The Association joined the International Organization of Securities Commissions (IOSCO). 2004 • TurkDEX trainings were initiated. • First university campus visits were paid. 2005 • A questionnaire was administered regarding the Capital Market Activities. 2006 • The Association joined the International Council of Securities Associations (ICSA). 2007 • Global Financial Centers and İstanbul report was released. 2008 • The first annual report in English was published. • Personal development trainings began. 2009 • Compliance Program Development Guide for Brokerage Firms was published. • The Association joined the International Forum for Investor Education (IFIE). • The Association’s Disaster Recovery Center was launched. 2010 • Financial Statements Guide for Brokerage Firms was released. • The first international conference was organized. • The first overseas event was organized in South Korea. • 100th issue of the monthly “Agenda in Capital Markets” was published. • Various data associated with financial statements of brokerage firms required by the Central Bank of the Republic of Türkiye (CBRT) were integrated in the Association’s data collection forms and began to be collected at the Association. 2011 • The Association completed its 10th year in operation. • Tenth edition of the Turkish Capital Market Annual Review was published. 2012 • Investor training began through social media accounts. • The Association hosted the ICSA and IOSCO SROCC Semi-Annual Conferences. • Free training was offered for university students. • Cooperation agreements were signed with the Korean Stock Exchange and the Japan Association of Intermediary Institutions. • Member data began to be collected using the Association’s proprietary Member Management System software. 2013 • Social network accounts of the Association were activated. • www.paramveben.org (My Money and I) website went live as part of investor education. • “Kamera Elinde Geleceğin Cebinde (Camera in Your Hand, Future in Your Pocket)” short film contest was organized for the first time. • “TSPAKB Public Offering Principles” were developed. 2014 • The Association of Capital Market Intermediary Institutions of Türkiye (TSPAKB) acquired its new membership structure with the inclusion of asset management companies and investment trusts, and was renamed Turkish Capital Markets Association (TCMA). • Various professional committees, subcommittees and task forces were set up at the Association. • The first issue of the Gösterge publication was released. • The Association was elected as a member of the FEAS (Federation of Euro-Asian Stock Exchanges) Board of Directors. 2001 2006 2010 2014 TSPAKB was founded. The Association joined ICSA. With its new membership structure, TSPAKB was renamed Turkish Capital Markets Association (TCMA). First international conference held.
TCMA Annual Report 2021 7 2015 • Under the Association Statute, Turkish Capital Markets Association Disciplinary Guidelines were updated and entered into force upon being published in the Official Gazette. • Periodic data began to be collected from asset management companies. • The first capital markets scholarships began to be granted. 2016 • Client Dispute Arbitration Committee was set up under the Association. • “TCMA Capital Markets Award Ceremony” debuted. • Informative seminars were initiated for chambers of industry members. • The Association began to be appraised in cash collective investment schemes. The first Turkish Capital Markets Summit was held, which was coordinated by the Association. • The Association hosted the annual meeting of the International Forum for Investor Education (IFIE) in İstanbul. • The Association began to undergo independent audit by a firm offering sworn financial advisory service. • The first personal budget management training was offered. 2017 • TCMA and The Turkish Association of Appraisers (TDUB) co-published the “International Valuation Standards”. • Investor education began to be coorganized with the members for the first time. • The first B2B contacts between the manufacturing industry companies and the Association members took place during the “Turkish Capital Markets Summit 2017”. • The first issue of the international peerreviewed journal titled “Journal of Capital Markets Studies” was published. • The Association was elected to the ICSA Board of Directors to represent the Europe area. 2018 • “Mutual Funds Provisions Directive” was published. • “Recommendations and Action Plan for the Development of the Capital Markets” report was released. • The first Vision Meeting was coorganized by the Association and TKYD (Turkish Institutional Investment Managers’ Association). • The Association became a signatory of the Asia Securities Forum’s Declaration on Commitment to Sustainable Development Goals along with the leading capital markets representatives in the Asia-Pacific region. 2019 • “Serathon-in Capital Markets Software Marathon”, the first hackathon in the area of capital markets in Türkiye, was held. • The Association hosted the Asia Securities Forum. • The Association became a shareholder of JCR Eurasia Rating. • The Association began to be represented on the newly established Borsa İstanbul A.Ş. Advisory Committee with three members. • The 200th issue of the Gündem was published. 2020 • Our international peer-reviewed journal titled “Journal of Capital Markets Studies” published in cooperation with the Emerald Publishing Group was made available for open access in EconLit and ERIH PLUS. • The Association joined the Executive Committee of the Venture Capital Support Program launched by TÜBİTAKTEYDEB (Technology and Innovation Grant Programs Directorate). • The Association became a shareholder of Birleşik İpotek Finansmanı A.Ş., a mortgage financing company. 2021 • 2021 marked the completion of the Association’s twentieth year in operation. • As per the modification in the statute of the Turkish Association of Appraisers (TDUB), our Association started to be represented on the TDUB Board of Directors with one member. 2016 2019 2020 2021 “Serathon-in Capital Markets Software Marathon” was held. Association’s twentieth year in operation. The first Turkish Capital Markets Summit was held, which was coordinated by the Association. “Journal of Capital Markets Studies” was made available for open access in EconLit and ERIH PLUS.
TCMA Annual Report 2021 8 ORGANIZATIONAL STRUCTURE General Assembly Board of Directors Board of Auditors Chairperson Secretary General Assistant Secretary General Assistant Secretary General Assistant Secretary General Research & Statistics Legal Affairs Information Technologies Training Compliance and Surveillance Membership Affairs Corporate Communications Human Resources, Administrative and Financial Affairs Discipline Committee Average age of our staff is 41, average years of work experience is 17 years. 1 of our employees has a doctoral degree, 13 have master’s degree and 11 have bachelor’s degree. Our total number of employees is 28.
TCMA Annual Report 2021 9 BOARD OF DIRECTORS İbrahim H. Öztop Chairperson Development and Investment Bank of Türkiye CEO and Board Member M. Selim Yazıcı Vice Chairperson TEB Investment General Manager E. Pamir Karagöz Member QNB Finansinvest General Manager and Board Member Ali Şöner Member Halkbank Deputy General Manager Alim Telci Member RE-PIE Portfolio Management General Manager and Board Member Ersan Akpınar Member Gedik Investment General Manager and Board Member
TCMA Annual Report 2021 10 BOARD OF DIRECTORS Şule Korkmaz, Ph.D. Independent Member Hakan Gedikli Member Emlak Konut Real Estate Investment Company General Manager and Board Member Taliye Yeşilürdü Independent Member Yaşar Bahçeci Member The Turkish Association of Appraisers Chairperson of Executive Board Burak Sezercan Member İş Asset Management CEO
TCMA Annual Report 2021 11 E. Kerem Korur Audit Board Member PhillipCapital Securities General Manager and Vice Chairperson of the Board Murat Onuk Audit Board Member Arz Portfolio CEO and Board Member Yılmaz Arısoy Audit Board Member Yapı Kredi Invest General Manager and Board Member İ. Gökşin Durusoy Audit Board Member Akiş Real Estate Investment Trust General Manager and Board Member Okan Aksu Audit Board Member DenizBank Deputy General Manager BOARD OF AUDITORS
TCMA Annual Report 2021 12 Erkan Ünal Discipline Committee Member Oyak Securities General Manager M. Emin Özer Discipline Committee Member Albaraka Asset Management General Manager and Board Member Ömer Eryılmaz Discipline Committee Member Yatırım Finansman Securities General Manager Nazlı Yılmaz Discipline Committee Member Doğuş Real Estate Investment Trust Deputy General Manager İzzet Şahin Discipline Committee Member Anadolubank Vice Chairperson of Executive Board DISCIPLINE COMMITTEE
TCMA Annual Report 2021 13 EXECUTIVE MANAGEMENT Süleyman Morbel Assistant Secretary General • Legal Affairs • Compliance and Surveillance • Human Resources, Administrative and Financial Affairs Serdar Sürer Secretary General Elif Gönençer Assistant Secretary General • Research and Statistics • Training • Corporate Communications Ö. Faruk Şenel Assistant Secretary General • Information Technologies • Membership Affairs
TCMA Annual Report 2021 14 EXECUTIVE MANAGEMENT Serdar Sürer Secretary General Süleyman Morbel Assistant Secretary General Elif Gönençer Assistant Secretary General Ö. Faruk Şenel Assistant Secretary General DIRECTORS Ekin Fıkırkoca Asena Research and Statistics Director Engin Turan Human Resources, Administrative and Financial Affairs Director Esra Esin Compliance and Surveillance Director Gökhan Büyükşengür, Ph.D. Training Director Telman Şahbazoğlu Information Technology Director Tuğba Oğan Corporate Communications Director OUR STAFF Aslı Hondu İmamoğlu Membership Affairs / Assistant Director Barış Y. Uzunlu Research and Statistics / Specialist Ceylan Anıl Research and Statistics / Specialist Cihan Coşgun Information Technology / Senior Specialist Çağla Eralp Training / Senior Specialist Deniz Kahraman Research and Statistics / Senior Specialist Duru Güner Corporate Communications / Assistant Specialist Gökben Çevikcan Research and Statistics / Assistant Director Gülcan Yalcıner Durmuş Human Resources, Administrative and Financial Affairs / Assistant Chief Hülya Kandemir Yılmaz Human Resources, Administrative and Financial Affairs / Assistant Director Kerim Karakaya Human Resources, Administrative and Financial / Assistant Director Atty. K. Burcu Mert Legal Affairs / Assistant Director Muzaffer Demirci Human Resources, Administrative and Financial / Administrative Support Atty. Nil Ayav Tural Legal Affairs / Senior Specialist Nilüfer Gevenoğlu Corporate Communications / Assistant Director Serhat T. İşler Compliance and Surveillance / Assistant Director Sevda Uslu Compliance and Surveillance / Assistant Director Şadiye Selek Human Resources, Administrative and Financial / Office Services OUR TEAM
16 TSPB Annual Report 2021 17 TSPB Annual Report 2021
WE ARE STRONG We are a strong organization drawing on the support extended by our prestigious members and our corporate governance.
TCMA Annual Report 2021 20 OVERVIEW OF 2021 Distinguished Members, Following the shock the pandemic created, 2021 has seen global economy relatively revived compared to the previous year as vaccination came into the equation. Continued economic incentives by governments and central banks in an effort to ease the impacts of the pandemic, the fast transformation in financial technology, increased tendency for saving up, and investors’ search for returns brought along a growing interest in capital markets on a global scale. Despite the pandemic, our government worked vigorously to navigate our country through this ordeal as smoothly as possible implementing supportive policies from the onset of the process. Critical changes have been authored within the frame of these efforts and policies, which were directed towards increasing the role of capital markets. Assisted with these supports, we, as the Turkish capital market, left behind a year of records enabled by our successful performance. In the present “Annual Report” we are sharing with you, I would like to summarize and review our Association’s activities in 2021. As the Turkish Capital Markets Association, we left behind 20 years in operation. In these two decades, our Association took critical steps for the growth, strengthening and deepening of our capital markets with the sub-regulations it has developed, with solution suggestions to industry’s issues devised in cooperation with the market players, with endeavors to communicate pathways to the industry’s evolution to public institutions and organizations, and with research and education activities carried on. The Association has always played a pioneering and creative role in the creation of the shared values that will drive the development of our capital TCMA at its 20th year Turkish Capital Markets Association that celebrated two decades in service last year has always played a pioneering and productive role in creating the common values that will drive the development of our capital markets with its solution proposals, research, training programs and communication activities.
TCMA Annual Report 2021 21 2021 has also seen an intense investor interest in mutual funds as was the case for share certificates. Benefiting also from this trend, asset management companies reached a portfolio size of TL 653.1 billion. As 323 new funds were added to those managed by asset management companies, the number of mutual funds in the market comprised of marketable securities, property, venture capital, stock exchange and hedge funds went up to 982. While the total volume of mutual funds went up by 115 percent to increase from TL 151.8 billion at year-end 2020 to TL 325.9 billion at year-end 2021, the number of mutual fund investors reached almost 3.2 million. We have also seen the pension mutual funds that play an important role in the expansion of long-term savings pool grow significantly in 2021. Pension mutual funds volume grew by 43 percent to reach TL 243.8 billion, while discretionary asset management portfolio more than doubled over the previous year to arrive at TL 82.4 billion. Investment trust portfolio volume managed by asset management companies rose to TL 920 million at the end of 2021, up by 25 percent. All these data demonstrate increased investor interest in our capital markets. We are delighted with the increased investor interest in our capital markets and regard it as an opportunity. However, I would like to underline that our capital markets have not yet reached the levels we target. We need to develop our capital markets in line with our country’s potential for sustainable growth of the Turkish economy and for allocation of resources to future and technology-driven, efficient areas. We know for a fact that increasing the depth of capital markets will contribute in various ways to companies, investors and to our country’s sustainable growth. The key asset for the growth of our capital markets is protection of investors and keeping them informed. For this reason, investors have always been our focus and priority at the Association. Accordingly, we held training programs, panels and events intensively during the course of the year despite markets on the demand and supply side alike. It is my heartfelt wish that our Association will carry on and multiply its valuable contributions in the years ahead and will have many more years of success. In 2021, interest in the capital markets increased significantly both on supply and demand sides. As Association, we actively carried on with our initiatives to help sustain the real sector and investor interest in the capital markets. Domestic investors’ interest in our country’s capital markets picked up significantly particularly during the pandemic. After remaining in the order of 1 million for many years, the number of investors with securities holdings in Borsa İstanbul equity market surged to 2 million at the end of 2020. Investors’ intense interest in the capital markets continued in 2021 and the number of investors with securities holdings in the equity market hit a record 2.7 million at end-April 2021. Following the peak captured with the added contribution of the equal distribution method in public offerings, the number of equity investors was registered as 2.4 million at year-end 2021. During 2021, domestic investors’ equity holdings enlarged by 38 percent as compared to the previous year and reached TL 524.7 million at the end of 2021. Investors’ higher interest in the capital markets and mainly in the equity market was accompanied by a record interest in IPOs by companies. During 2021, IPOs were carried out for 52 companies, four of them investment companies, while one company was quoted on the stock exchange without going public. The funding these companies generated in the capital markets through public offering amounted to TL 21.6 billion. Hence, 2021 went down in the history as a year of record levels captured in public offerings.
TCMA Annual Report 2021 22 Record interest in capital markets With the growing interest of investors in the capital markets, 2021 was a year of records both on the demand and supply side. While the number of investors in the Borsa İstanbul stock market increased to 2 million 355 thousand, 52 companies were offered to the public. OVERVIEW OF 2021 At the Summit, we hosted extremely valuable participants. Global warming and climate change issues that pose a severe threat for the planet’s future were also on the table. We included the sustainability concept in our agenda for the future of the world. With the Green Deal, the European Union put forth a fair and inclusive green transformation strategy that basically entails offsetting net greenhouse gas emissions by 2050. Our country also targets to introduce its net zero strategy by 2053 with the goal of “Green Development Revolution”. Apart from sustainability, we also discussed in detail other topics that are key for the future of capital markets including digitalization, new generation entrepreneurship, IPOs, environmental, social and governance (ESG) investments, and impact investing. The number of online viewers of the Summit during those two days reached 32,500. the pandemic. Among them, we organized the sixth Turkish Capital Markets Summit that has a special importance for us with the theme “Reunited”. Due to the pandemic, our summit was held in hybrid format, blending physical and online sessions. Our two-day summit covered 35 panels and 23 workshops under the four main topics of “Post-Coronavirus Economy and Financial Markets”, “Sustainability”, “Digital Transformation and Future Scenarios” and “New Generation Entrepreneurship and Capital Market Capabilities”.
TCMA Annual Report 2021 23 For the sake of a greener future and sustainable living, a total of 25,000 seed ball shootings were made using drones in the name of participants of the Summit. The Association carried on with various activities in communication, training and events to promote consciousness of saving up and investing. Our investors have always been our unchanged focus in this respect. Despite all the restrictions of the pandemic days, we continued with our investor education efforts. We have efficiently and successfully carried through the fifth edition of the World Investor Week that we have co-organized with the Capital Markets Board of Türkiye and Borsa İstanbul. During the World Investor Week, participants made up of investors, company representatives and students followed the livestreamed sessions that dwelled on 15 different topics that were participated by 62 speakers comprised of subject matter experts, market professionals and academics. We reached 11,500 people in total over the course of three days. We have held the TCMA Golden Bull Awards ceremony that we have been organizing for the six consecutive years. Within the scope of the recognition program we have initiated as the Turkish Capital Markets Association to contribute to the development and recognition of capital markets and to add visibility to success stories, we presented awards to our valuable members. Organized since 2014 as an annual event of our Association with the aim of increasing consciousness about financial literacy in our country by raising awareness of the importance of budgeting, saving up, and investing in capital markets and drawing on the social transformative power of cinema to do that, “Camera In Your Hand, Future In Your Pocket Short Film Contest” took place with its seventh edition in 2021. With its theme defined as “Soldout Lives” this year, our short film contest will continue to be held in the coming years. Distinguished Members, We have embarked upon a game-changing period in the world economy due to the rapid change that was driven by the pandemic and digitalization, global inflation, and geopolitical risks. We need to encourage foreign investors’ interest in our national capital markets, as well as domestic investors’. In keeping with this understanding, we will place our investors in our focus in line with our goals in 2022, as we did in previous years, and we will relentlessly carry on with our efforts and initiatives to help with the sustainable growth of the Turkish economy and for flourishing our capital markets. I would like to extend my thanks to you, our esteemed members who always stand by us, and to the members of our Board of Directors and Board of Auditors for their invaluable contributions. Yours sincerely, İbrahim H. ÖZTOP Chairperson
WE ARE RELIABLE We are a reliable organization as we represent all of the capital market institutions in our country based on our status as a professional organization, strictly adhere to regulations, and embrace an impartial, fair, transparent and ethical approach as our fundamental principle.
TCMA Annual Report 2021 26 Innovative efforts Cooperation between Borsa İstanbul and the Association Joint meetings are being held between the representatives of brokerage firms and banks from amongst the Association’s Board of Directors and Board of Auditors members and Borsa İstanbul officials from İstanbul Settlement and Custody Bank (Takasbank) and Central Securities Depository (MKK) representatives. The meetings are held to exchange ideas in relation to implementation principles mainly for the equity market, derivatives market, IPO and debt securities market, and for the improvement and expansion of the markets; to evaluate new products and improve market operation processes. In the meetings, issues and uncertainties arising in practice were tackled and solutions were sought. Promotional Campaigns Pursuant to the Capital Markets Board of Türkiye (CMB) requirements, promotion campaigns in relation to capital market activities held by brokerage firms and banks are notified to the Association prior to implementation, and planned campaigns can be held only after applications are reviewed and approved. During 2021, the Association reviewed 78 applications by its members and informed the related parties on its conclusions. General Letter on Promotional Campaigns Promotional campaigns for capital market transactions organized by member brokerage firms and banks are primarily intended to raise or promote interest in the capital market. It is considered that campaigns putting products with a very high monetary value at stake, which would normally require individuals with normal economic and financial means to save up money We carried on our innovative efforts to deepen and strengthen our capital markets in 2021. INITIATIVES
TCMA Annual Report 2021 27 authorized for, are notified to apply in the form of written document to our Association before they are launched. A planned campaign can only be implemented after the application is approved by our Association. “Turkish Capital Markets Association Guidelines for Promotional Campaigns”, which is developed for updating the Association’s related regulations incorporating the CMB’s opinions, was announced to our members by the Circular no. 45. Research Report Principles Guidelines The Association announced the “TCMA Research and Analyst Reports Principles Guidelines” to our members by the Circular no. 44. The Guidelines are developed by the Association for establishing the principles, procedures and contents (sector principles) for research and analyst reports on company and sector reviews (initiation of coverage reports) that Association members prepare for providing information within the fundamental principles of finance, and for determining the minimum standards and the report format. for a given period of time or use external funds (loans, etc.), might not be aligned with the intended purpose; it is assessed that investors’ rights and benefits may be harmed as they may be tempted to act for the sole purpose of winning the prize, and that the healthy operation of the market might negatively be affected in contradiction with the goodwill principle. Accordingly, after seeking the opinion and feedback of the Capital Markets Board of Türkiye (CMB), it has been announced to our members by the General Letter no. 846 that our Association will adhere to its former practice of non-evaluation of applications for promotional campaigns that are of a nature to transcend the intended purpose, injure investors’ rights and benefits, contradict with the goodwill principle, and/or that are exaggerated. TCMA Guidelines for Promotional Campaigns Pursuant to the Capital Markets Board of Türkiye (CMB) requirements, promotional campaigns to be organized by brokerage firms, and by banks, for the capital market activities they are
TCMA Annual Report 2021 28 INITIATIVES TCMA Public Offering Principles Update A working group, formed of our willing member representatives from amongst the participants of Brokerage Firms Professional Committee under our Association and Borsa İstanbul officials, carried out a study to update the “TCMA Public Offering Principles” published in 2013 with the Association’s Circular no. 13 so as to reflect the current conditions and regulatory changes. With the aim of contributing to successful completion of issues and sales by structuring public offering processes, protection of investors’ rights, and operation of markets amid a setting of trust and stability, the updated draft “TCMA Guidelines for Public Offering (Equity Issue) Intermediation Principles” were submitted to the Capital Markets Board of Türkiye (CMB) for its approval. Opinions and Suggestions Regarding Public Offering Processes Within the scope of the Economic Reforms announced by the Presidency of the Republic of Türkiye and its action plans published by the Republic of Türkiye Ministry of Treasury and Finance, the Capital Markets Board of Türkiye (CMB) requested our opinions regarding improvement areas in current practices and in the legislation, potential changes and suggested activities with the aim of facilitating and encouraging public offering processes of companies with purpose of strengthening the capital market. We have conveyed to the CMB our opinions and suggestions for facilitation and encouragement of public offering processes that would affect the growth of capital markets under the current conditions where equity public offerings intensified and investor interest increased. Draft Guidelines on Principles and Procedures for Informing Customers on Commissions, Fees and Charges A study was carried out for our members to post on their websites the current maximum amounts and rates of commissions, fees and charges to be charged to their customers in table format with its minimum content and model determined in a clear and understandable manner that can allow customers to do their own calculations, and for setting the principles and procedures to be followed when informing customers. The resulting “Draft Guidelines on Principles and Procedures for Informing Customers on Commissions, Fees and Charges” were submitted to the Capital Markets Board of Türkiye (CMB) for its approval.
TCMA Annual Report 2021 29 Taxation of Revenues Derived on Leveraged Trading Transactions The Association presented its opinions to the Republic of Türkiye Ministry of Treasury and Finance, Revenue Administration for clarification of the situation for the sector and for steering the implementations regarding taxation of revenues derived on leveraged trading transactions under Provisional Article 67 of the Income Tax Law. The explications provided by the Revenue Administration regarding taxation of revenues derived on leveraged trading transactions were announced to our members by our General Letter no. 841. In the Revenue Administration’s letter dated 22 January 2021 and no. 91378753-120.06.08- E.10556 concerning taxation of revenues derived on leveraged trading transactions, leveraged trading transactions are deemed as FX-indexed transactions, and it is stated that Turkish lira currency gains/losses that will accrue until the position closure date of the foreign currency (FC) amounts in the nature of principal amount that are traded should also be added to the withholding basis. The Association presented to the Revenue Administration its opinions that withholding should be applied according to the tax basis which will be calculated by taking into account investors’ gains/losses in foreign currency terms and by not taking into account currency gains/ losses in leveraged trading transactions. Tax Issues of Collective Investment Schemes The issues stemming from the tax laws for real estate investment trusts (REIT), real estate mutual funds (REMF), venture capital investment trusts (VCIT), and venture capital mutual funds (VCMF) were conveyed in meetings participated by representatives from the Republic of Türkiye Ministry of Treasury and Finance. At the meetings where the Association was represented by the Chairperson and Vice Chairperson, opinions and suggestions regarding the following points were voiced: • VAT mismatch in real estate purchases and sales for REMFs and REITs, • Title deed fees issue for REMFs and REITs, • BITT and VAT issue in financing provided to startups by VCITs and VCMFs, • Stamp duty in the venture capital investments for VCITs and VCMFs, • Taxation through withholding of the revenues derived on REMF and VCMF shares under the Income Tax Law Provisional Article 67, and the withholding rates to be applied. TCMA Suggestion for FX-Protected Mutual Funds With the goals of encouraging savings and long-term investing, and making the FX-protected application available to individual savers investing in mutual funds, the Association shared its opinions and suggestions with the Republic of Türkiye Ministry of Treasury and Finance that FX-protected application should be provided in the following, taking the CBRT Policy Rate as the minimum rate of return: • Turkish lira term deposits opened by mutual funds invested in by investors, • Debt instruments, mutual funds and money market funds which are held by real person investors for at least three months, and of which are invested by 80% minimum in TL debt instruments and repo/reverse repo transactions.
TCMA Annual Report 2021 30 INITIATIVES Draft Communiqué Amending the Communiqué on Takeover Bids Within the frame of the ancillary regulatory framework preparations conducted by the Capital Markets Board of Türkiye (CMB), the opinions and suggestions of the sector and the Association regarding the “Draft Communiqué Amending the Communiqué on Takeover Bids” were presented to the CMB. MASAK Draft Ancillary Regulatory Framework The Association conveyed to the Republic of Türkiye Ministry of Treasury and Finance Financial Crimes Investigation Board (MASAK) our members’ opinions and suggestions regarding: • the “Draft Regulation Amending the Regulation on Measures for Prevention of Laundering Proceeds from Crime and Financing of Terrorism”, • the “Draft Regulation Amending the Regulation on the Compliance Program for Obligations related to Prevention of Laundering Proceeds from Crime and Financing of Terrorism”, • the “Draft Communiqué (Serial No: 18) Amending the Financial Crimes Investigation Board General Communiqué (Serial No: 5)”, which are prepared and circulated for feedback as part of the ancillary regulatory framework preparations carried out by MASAK. Draft Communiqué on Remote Authentication Methods and Establishment of Electronic Contract Relationship The technical working group formed of market professionals at the Association conveyed to the Capital Markets Board of Türkiye (CMB) the opinions and suggestions developed about the Draft Communiqué on remote ID authentication methods that can be used by brokerage firms and asset management companies for new customers, and on establishment of the contractual relationship, whether distantly or not, using an information or electronic communication device to replace the written form or from a distance.
TCMA Annual Report 2021 31 Draft Real Estate Appraisal Minimum Fees Tariff and Implementation Principles The Association submitted to the Capital Markets Board of Türkiye (CMB) its opinions and suggestions formed as a result of the assessments made in relation to the draft “Real Estate Appraisal Minimum Fee Tariff” and “Real Estate Appraisal Minimum Fee Implementation Principles” prepared by the CMB for enforcement in 2022, which are intended to set out the amounts and limits of fees to be charged by the members of the Turkish Appraisers Association (TDUB) for the appraisal services to be rendered. Borsa İstanbul A.Ş. Dispute and Disciplinary Committees The terms of duty of the Capital Market Instruments Dispute and Disciplinary Committees and the Precious Metals Market and Precious Metals Lending Market Dispute and Disciplinary Committees operating under Borsa İstanbul expired on 12 December 2021. The Association collected applications of candidates for sharing them with Borsa İstanbul in the form of lists covering a number of candidates whose number is as at least as three times the number of the Committee memberships to be vacated, which will be considered by the Borsa İstanbul Board of Directors in the upcoming elections. Accordingly, candidates who applied in writing for committee membership nomination to our Association were conveyed to Borsa İstanbul. Increasing the Share of Alternative Funds in PPS The TCMA shared with the Republic of Türkiye Ministry of Treasury and Finance and the Capital Markets Board of Türkiye (CMB) its suggestion that the minimum investment limit for venture capital and real estate mutual funds in the existing Auto Enrolment System standard fund portfolios to be implemented for the appropriate fund types in the voluntary private pension system in view of the contribution of those funds to the financing of economic activities and their impact that lessens volatility by increasing portfolio diversification. Contribution to Participation Finance Strategy Document The Association submitted to the Presidency of the Republic of Türkiye Finance Office the suggestions based on the opinions compiled from our members to contribute to the Participation Finance Strategy Document prepared in accordance to the İstanbul Financial Center Project. Benchmark Threshold Lower Limit Although overnight Turkish lira reference rate was defined as the lower limit in the event that threshold value was used as benchmark for individual portfolios and collective investment schemes, in practice, TRLIBOR which denotes the interest rate at which a bank can borrow from another bank or financial institution at certain terms was being used. On the other hand, based on the grounds that there is not a qualified reference point either for participation finance products or for foreign funds with threshold values set in a foreign currency and individual portfolios, the Association submitted to the Capital Markets Board of Türkiye (CMB) its suggestions that diverse threshold value alternatives be considered for Turkish lira and foreign currency products for performance measurement. In line with our suggestions, the CMB modified the Mutual Funds Guide and launched the new practices effective from the performance period dated 30 June 2021.
TCMA Annual Report 2021 32 INITIATIVES Contribution to the Tax Expenditures Report of the Republic of Türkiye Ministry of Treasury and Finance Data on revenues derived on equity and securities investment trust trading on the basis of investor groups for 2020 were compiled from our members and submitted to the Republic of Türkiye Ministry of Treasury and Finance to be used for the Ministry’s Tax Expenditures report. Obtaining LEI Code for Mutual Funds As delegated by the Capital Markets Board of Türkiye (CMB), the Association compiled members’ statements that LEI (Legal Entity Identifier) codes have been obtained for mutual funds and matched with the existing ISIN codes, for which the deadline was 30 June 2021, and submitted the same to the CMB. Actual Beneficiary Notifications Tax Procedure Law General Communiqué Serial No. 529 published on July 13th imposed the obligation on Corporate Tax Payers and certain other persons to electronically notify the actual beneficiary information to the Revenue Administration; however, there was an ambiguity with respect to the definition of the actual beneficiary in relation to mutual funds. Accordingly, the Association asked for clarification whether mutual funds are obliged to make the said notifications and if yes, the Association suggested to the Revenue Administration that the definition should be clarified. The Revenue Administration’s informative announcement about the principles for actual beneficiary definition with respect to entities such as unincorporated business partnerships like mutual funds were shared with our members. Calculating the Maturity of TLREF-based Debt Instruments The Association made attempts before the Capital Markets Board of Türkiye (CMB) for clarification of the calculation of the maturity of TLREF-based debt instruments that can be included in the pension funds and securities money market funds and initial pension funds portfolio. In line with our suggestion, the CMB set out the principles for calculating the maturity of the said products.
TCMA Annual Report 2021 33 Performance Presentation Reports of Mutual Funds Performance presentation reports of mutual funds are re-published within 6 business days following the performance presentation period, and within one month following the performance period together with independently audited statements. The Association submitted to the Capital Markets Board of Türkiye (CMB) its opinion that performance presentation reports in relation to mutual funds be published just once upon completion of the independent audit conducted within one month following the performance periods, as is the case with pension funds. The modifications made in line with our suggestions were enforced. The Association’s Initiatives for Improving SME Financing Presented The Association’s initiatives and efforts for the development of the sector, research and training for improving SME finance, and opinions compiled from the members were submitted to the Republic of Türkiye Ministry of Treasury and Finance, for use in relation to the role of Islamic finance in supporting the SMEs against the Covid-19 pandemic in the country report to be presented by the Republic of Türkiye Ministry of Treasury and Finance at the meeting of the Standing Committee for Economic and Commercial Cooperation of the Organisation of Islamic Cooperation (COMCEC). Contribution to 2021 Financial Sector Assessment Program Türkiye Review Our assessments about the sector on topics for which the Association’s opinions were sought by the Capital Markets Board of Türkiye (CMB) were submitted to the CMB within the scope of the 2021 Financial Sector Assessment Program (FSAP) Türkiye Review co-conducted by the International Monetary Fund (IMF) and the World Bank. Contribution to the CMB Guidelines on Green Debt Instruments and Green Lease Certificates The Association submitted to the Capital Markets Board of Türkiye (CMB) its suggestions based on the opinions compiled from our members in relation to the draft CMB Guidelines on Green Debt Instruments and Green Lease Certificates published for promoting the financing of investments that will positively contribute to environmental sustainability. Contribution to the Republic of Türkiye Ministry of Treasury and Finance Fintech Strategy Document The Association submitted to the Republic of Türkiye Ministry of Treasury and Finance its opinions and suggestions concerning the Fintech Strategy Document that will set the roadmap for the necessary regulatory arrangements to support the development of the sector through the establishment of a governing structure that will lead the development of financial technology and provide the necessary coordination and cooperation. Financial Statement Disclosure Dates for Brokerage Firms and Asset Management Companies Although the financial statement disclosure dates for brokerage firms and asset management companies is set at a later date than for issuers whose capital market instruments are traded on the stock exchange according to the current regulatory framework, it has been observed that numerous institutions publish their reports at a much earlier time than the set date. This may lengthen the assessment of the information provided in the publicly disclosed financial statements and strategic decision-making processes. The Association suggested the Capital Markets Board of Türkiye (CMB) that the financial statement disclosure dates for all brokerage firms and asset management companies to be the same with those applicable for issuers whose capital market instruments are traded on the stock exchange.
TCMA Annual Report 2021 34 Development of TEFAS Fund Information Platform In the online meeting organized by the Association with the purpose of further development of Türkiye Electronic Fund Trading Platform (TEFAS) Fund Information Platform that gives investors access to various information about all security mutual funds, İstanbul Settlement and Custody Bank (Takasbank) officials and representatives of brokerage firms, banks and asset management companies got together and expressed their opinions. Draft Guidelines Setting Out the Valuation Principles for Debt Instruments Included in the Fund Portfolios Upon the delegation of the Capital Markets Board of Türkiye (CMB), a working group has been set up at the Association for setting the valuation principles for various debt instruments included in the mutual funds portfolio which are not clearly regulated by the legislation with the aim of ensuring INITIATIVES uniformity in practice across the sector. With the contributions of the working group consisting of our members, İstanbul Settlement and Custody Bank (Takasbank) and Borsa İstanbul representatives, the draft Guidelines on Valuation Principles for Debt Instruments in Mutual Fund Portfolios have been prepared and submitted to the CMB for feedback and comments. The Association’s Investment Portfolio In June 2015, the Association’s Board of Directors decided to invest the provisions for severance and notice pays for the Association’s employees in the mutual funds traded on the Türkiye Electronic Fund Trading Platform (TEFAS), for the dual purpose of securing maximum returns with minimum risk through proper distribution of assets, and of supporting the capital markets. The portfolio allocation of the initial investment amount of TL 1.1 million in March 2016 was updated based on reevaluations over the years and total portfolio reached TL 5.4 million at year-end 2021.
TCMA Annual Report 2021 35 Pursuant to Article 25 of the Statute of the Turkish Capital Markets Association (the Association), the following committees exist under our Association: • Brokerage Firms Professional Committee, • Banks Professional Committee, • Asset Management Companies Professional Committee, • Investment Trusts Professional Committee. Acting as an advisory unit for the Association’s Board of Directors, professional committees have been set up to form and submit joint opinions and suggestions on topics in their respective fields assigned to them by the Board of Directors or determined thereby sua sponte, collaborating with other committees as necessary. During the reporting period, professional committees worked on topics that concern their respective groups, and presented their feedbacks and suggestions to the Association’s Board of Directors. Borsa İstanbul Advisory Committee It has been decided to establish an Advisory Committee under Borsa İstanbul to keep Borsa İstanbul Board of Directors informed about the development of capital markets and the sector’s issues, demands and needs. Under the Advisory Committee’s Operating Procedures and Principles Guidelines, the Committee was formed of the Association’s Chairperson and two members from the Board of Directors members. The Committee was composed in a manner providing the representation of a brokerage firm, a bank and an asset management company. In the Advisory Committee, our Association is represented by: • İbrahim H. Öztop (Chairperson of the Association’s Board of Directors) • M. Selim Yazıcı (Vice Chairperson of the Association’s Board of Directors) • Burak Sezercan (Member of the Association’s Board of Directors) Professional Committees Professional Committees act as the advisory unit of the Association’s Board of Directors. PROFESSIONAL COMMITTEES
TCMA Annual Report 2021 36 RESEARCH AND PUBLICATIONS Turkish Capital Markets 2020 Report The 2020 issue of our report published annually since 2002, “Turkish Capital Markets” was released in May 2021. The report addresses a historic analysis of the Turkish capital markets, changes in investor preferences and the global as well as domestic macroeconomic developments. Monthly Magazine Aiming to communicate the new practices and developments in the sector, the monthly Gündem magazine covers news about member firms and the sector, as well as the activities of the Association. The magazine that continues to be published digitally in the TCMA web site includes summary financial market data compiled by the Association. Reaching large audiences We shared our publications in English and Turkish with large audiences in order to inform the public about financial data and analysis, developments and regulations in the market.www.tspb.org.tr