The Capital Markets Board of Turkey (the "CMB") has
amended the legislation on portfolio management business in an
attempt to diversify the business line of PMCs, create an
alternative distribution and marketing channel for the founders of
investment funds (i.e. banks, brokerage firms and insurance
companies) and increase the competition in the investment fund
market. As per the Amendment, PMCs can act as fund supermarkets and
provide investors a wide-array of investment funds either by
establishing branches or utilizing the internet. This new cost
efficient approach is expected to enlarge the investor base focused
on investment funds and trigger the formation of a new breed of
PMCs specialized on funds distribution.
Below is a brief highlight of the key aspects of the
PMCs, intending to provide intermediary services for
the distribution of fund units, shall obtain a license from the
CMB. In addition, articles of association of PMCs shall be revised
to cover intermediary services regarding sale and purchase of fund
PMCs, having the fund distributor status, shall have a
minimum capital and equity amount of TL 1,250,000.
PMCs, in order to conduct the fund distribution
business, shall secure the necessary physical and technical
infrastructure and employ sufficient number of personnel.
In parallel to the fundamental portfolio management
principle envisaging the separation of client assets from the
assets of PMCs, client monies and fund units shall be kept in a
custodian. For conducting the cash operations, PMCs are entitled to
use pool accounts opened in custody institutions.
PMCs, authorized to provide intermediary services for
distribution of fund units, are deemed as intermediary institutions
limited to such activity and, upon securing the authorization,
shall make a membership filing with the Association of Capital
Market Intermediary Institutions of Turkey within a three month
period. As PMCs are deemed as intermediary institutions, they are
required to comply with certain principles of traditional
intermediary services (e.g. signing a framework agreement with the
client, complying with the principles governing sales/purchases via
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.
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Under Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories ("EMIR")...
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