Pursuant to Article 39 of Capital Markets Law numbered 63621 ("CML"), "It is mandatory to obtain permission from the Authority for performance of investment services and activities as a regular occupation, business or a professional activity...Persons and institutions not meeting conditions as foreseen under this Law, and have not obtained the permission of the Board, cannot carry out investment services and activities, even if they have been authorized according to their special laws." Accordingly, performance of investment services requires specific authorization to be obtained from the Capital Markets Authority ("Authority") for each service. Authorization certificates may contain one or more investment services. The investment services as foreseen under the CML are as follows:
- Reception and transmission of orders with regard to capital market instruments;
- Execution of orders with regard to capital market instruments in the name and account of the customer, or in their own name and in the account of the customer;
- Acquisition and sale of capital market instruments;
- Portfolio management;
- Investment consultancy;
- Brokerage of sale through subscribing to public offerings of capital market instruments;
- Brokerage of sale of capital market instruments without subscribing to public offerings;
- Operation of multilateral trading systems and other off-exchange markets;
- Safekeeping and administration of capital market instruments in the name of the customer and portfolio custody services;
- Other services and activities to be determined by the Capital Markets Authority.
Investment institutions may conduct ancillary services without obtaining a separate authorization, provided that a notification concerning such service is placed with the Capital Markets Authority. Accordingly, investment institutions intending to conduct ancillary services should notify the Capital Markets Authority twenty days prior to conducting the same. Ancillary services are foreseen under the CPL, as follows:
- Providing consultancy services concerning capital markets;
- Granting credits or lending and providing foreign exchange services limited to investment services and activities;
- Providing investment research and financial analysis or general advice concerning transactions in capital market instruments;
- Providing services in relation to underwriting;
- Providing brokerage services for loan or financing through other means;
- Wealth management and financial planning;
- Other services and activities to be determined by the Capital Markets Authority.
Communiqué on Principles Regarding Investment Services, Activities and Ancillary Services numbered III-37.12 ("Communiqué on Investment Services") grants an opportunity to foreign investment institutions to provide investment services to residents in Turkey. Pursuant to Article 9 of the Communiqué on Investment Services, "All kinds of investment services and activities obtained by persons residing in Turkey, including investment firms, on their own initiative, from financial institutions residing abroad, accounts opened at such institutions, and cash and other assets transferred to such accounts, and transactions conducted in these accounts are beyond of the scope of this Communiqué, provided that no promotion, advertisement and marketing activities are conducted by persons intending to reside in Turkey."
Accordingly, foreign investment institutions may provide capital markets services, either directly to investors, or through investment institutions that are authorized in Turkey. The explained exception is conditioned upon to not conduct promotions, advertisements and marketing services. Considering Article 39 of the CML it can be evaluated that the legislator has adopted the understanding that the foreign investment institutions which are not conducting promotional, or any similar activities, will not provide investment services, in Turkey, as a regular occupation.
Article 9 of the Communiqué on Investment Services foresaw certain examples of activities deemed as promotional and marketing activities, "For the purposes of the application of the first paragraph, any cases, such as opening a workplace in Turkey, creation of a web site in Turkish, and intending to conduct advertisement and marketing activities directly and/or through persons or institutions residing in Turkey with respect to investment services, provided by institutions established abroad, shall be deemed to be intended for persons residing in Turkey, and relevant provisions of the legislation shall apply. Additional criteria on a determination as to whether the activities are intended for persons residing in Turkey shall be determined by the Board." Thereby, not only direct promotion, but also indirect promotion are excluded from the exception. Note that the promotional activities stated in the article are exemplary; each activity should be evaluated for each concrete event, taking into consideration the intended persons by the promotional activity.
Another matter that should be emphasized regarding the activities of foreign investment institutions in Turkey is the prohibition of leveraged transactions. According to the amendment to Article 99 of the CML through Article 67 of Decree Law No. 690 ("Decree numbered 690"), which was resolved by the decision of the Council of Ministers dated 17 April 2017, "In the event of detection of leveraged transactions abroad through the internet in relation to the residents in Turkey, the Information Technologies and Communications Authority shall block access to such website upon application of the Capital Markets Authority."
The exception foreseen under Article 9 of Communiqué on Investment Services does not apply to the leveraged transactions. The CML forbids leveraged transactions or similar derivative transactions which are subject to the same terms with leveraged transactions, abroad, in relation to residents in Turkey. The mentioned restriction is also regulated expressly under Articles 11, 15, 16 and 20 of the Communiqué on Investment Services.
Principles on Activities of Brokers with Institutions Abroad
As explained, above, the capital market activities of institutions established abroad does not require authorization, provided that no promotional or marketing activities are conducted. However, the activities of brokers residing in Turkey are predicated on notification. In the event that the Capital Markets Authority is not given an opposing opinion within twenty workdays from such notification, brokers may conduct their activities with investment institutions that are established abroad.
Pursuant to Article 99 of the CML, "Notwithstanding any types of civil and penal liabilities, the Board is authorized to take all necessary measures to stop unauthorized capital market activities, inter alia, and to file a lawsuit within one year starting from the date when unauthorized capital market activities and transactions have been determined, and in any case, within five years starting from the date when they have occurred, to refund right holders their money or capital market instruments, and to annul the consequences caused by unauthorized capital market activities and transactions."
Accordingly, in the event of performance of investment services and activities as a regular occupation, business or a professional activity through promotional activities by foreign investment institutions, the Capital Markets Authority is entitled to take any types of measure.
Additionally, the new specific term introduced through Decree numbered 690 foresees blockage of access to websites that enable leveraged transactions abroad, through application of the Capital Markets Authority to Information and the Communication Technologies Authority. Although the first paragraph of Article 99 entitles the Capital Markets Authority to take any measures, and the third paragraph regulates the blockage of access to the websites in the event of unauthorized activities are conducted on the internet, the fourth paragraph recapitulates such measure for leveraged transactions.
Activities of foreign investment institutions in Turkey are regulated under both the CML and the Communiqué on Investment Services. Accordingly, excluding leveraged transactions, foreign investment institutions may conduct the explained capital markets activities without obtaining authorization.
 Please refer to the following link for Turkish version of Capital Markets Law numbered 6362:
 Please refer to the following link for Turkish version of Communiqué on Principles Regarding Investment Services, Activities and Ancillary Services numbered III-37.1:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.