Capital Markets in Turkey

The Capital Markets Law is the main piece of legislation which governs the structure of all organised markets, capital markets institutions and their activities, capital markets instruments and their issuance and oferings, main requirements for public companies as well as the structure, powers and duties of the Capital Markets Board which is the regulatory and supervisory authority in charge of the securities markets in Turkey.

The main objective of the Capital Markets Board is to ensure fair, eicient and transparent capital markets in Turkey, protect the rights and interests of the investors, facilitate modernisation of the capital markets structure and improve Turkish capital markets competitiveness internationally.

The Capital Markets Board is responsible for regulating the activities of, among others, public companies, capital markets institutions (inancial intermediaries including banks acting as intermediary, mutual funds, investment companies; real estate investment companies and private equity/venture capital investment companies, appraisal companies, rating irms and other institutions which engage capital markets activities) and the investors in the concerned markets. Also, upon the enactment of Law No. 7061 which has introduced amendments to the Capital Markets Law, crowdfunding has become one of the permitted and regulated methods of raising equity in Turkey regulated by the Capital Markets Board.

Determining the operational principles of the capital markets and introducing and developing new instruments also fall under the regulatory scope of the Capital Markets Board. In this respect, the Capital Markets Board recently introduced to the Turkish capital markets lease certiicates as a new instrument which is modelled on sukuk bonds. Also, they introduced real estate certiicates which allow investor to acquire ownership of real estate in the form of securities. The Capital Markets Board is expected to develop other types of asset backed securities in the near future.

The Capital Markets Board supervises entire procedures for ofering and issuance of all types of securities. The ofering and issuance procedures and the documents and information required by the Capital Markets Board during such procedures vary depending on the type of securities being issued and the type of the sale method of such securities. Furthermore, depending on the type of securities being issued and type of the sale method of such securities, the Capital Markets Boards also implements certain disclosure requirements for issuers and corporate governance requirements for all publicly traded companies in order to maintain the transparency and integrity of capital markets. Accordingly, certain information which may afect the value of shares or investor’s decisions as well as the inancial statements and reports prepared in accordance with the capital markets legislation are required to be disclosed on the Public Disclosure Platform, which is operated by the Central Registry Agency.

The Capital Markets Board is also entitled to apply certain sanctions against the parties breaching the capital markets legislation, including administrative penalties and licence revocations. Further, the Capital Markets Board can ile criminal complaints concerning insider trading and market manipulation which are subject to criminal sanctions including imprisonment.

With the enactment of the Capital Markets Law, Borsa Istanbul was established as the sole securities exchange so as to combine all previous exchanges operating in Turkish capital markets under a single institution. To be allowed to trade securities on diferent markets of Borsa Istanbul, issuers are required to apply to Borsa Istanbul for approval of the listing of their securities. Further, to promote dual listing practice, the capital markets instruments which are listed on main markets of the foreign exchanges can also be listed in Borsa Istanbul. In this respect, foreign companies listed on Bursa Malaysia, Qatar Stock Exchange, Nasdaq Dubai, GPW Warsaw Stock Exchange, Athens Stock Exchange and Nasdaq OMX Nordic can be dual listed on Borsa Istanbul upon approval of their prospectus / issuance certiicate by Capital Markets Board without any further conditions, provided that the market value of the listed shares is at least TRY 100 million.

All capital markets instruments are held through the Central Registry Agency which is responsible for the dematerialization and registration of capital markets instruments in electronic form and the operation of the Public Disclosure Platform.