On August 1, the Turkish Capital Markets Board (the
"CMB") introduced stricter rules for
bank and brokerage firm record retention for investment activities
and related ancillary services, bringing the rules into alignment
with Turkish consumer protection rules.
What the CMB did
Through its new Communiqué on Documentation and
Record Retention for Investment Services and Related Ancillary
Services No. III-45.1, the CMB has harmonized the rules for
banks and brokerage firm customer agreements with Turkey's
rapidly-developing rules on distance selling and customer
protection. The communiqué also permits all documents to be
in electronic form, eliminating limitations on the medium through
which agreements can be concluded, provided record retention
requirements are satisfied.
To comply with these enhanced requirements, banks and brokerage
Enter into framework agreements with their customers prior to
providing any investment services under
"know-your-customer" rules. Amendments to the framework
agreement require prior customer consent.
Furnish pre-contractual information to customers in writing on
the (i) the services to be provided by the bank or brokerage
firm, (ii) the costs, charges and taxes associated with the
services, (iii) customer cancellation rights and charges, and
(iv) the conditions for unilateral termination and penalties in
line with Turkish distance selling and customer protection rules.
Furnish information to customers, either in person or
electronically, regarding (i) general customer risks, such as price
fluctuations, market risks and regulatory changes, (ii)
customer-specific risks based on the capital market instruments
traded, such as counterparty risks, liquidity risks, and market
risks for leveraged transactions or risks associated with taking
short or long positions for derivatives and options, (iii) the
customer's classification (i.e., general or professional
client), and (iv) their respective rights under the CMB's rules
on providing investment services.
Transparently process orders and provide documentation for
transactions under the previous rules and inform customers of the
transaction date, and provide monthly invoices.
Maintain a record of customer complaints by recording the (i)
name of the complainant; (ii) date of the complaint; (iii) summary
of the complaint; (iv) the alleged violation of capital
markets rules; (v) personnel subject to the complaint; and (vi)
actions undertaken by the bank or brokerage firm.
Maintain physical and electronic records of all transactions
for at least 10 years (up from five years under the previous
rules); maintain audio records for at least three years (up from
two years). These retention requirements apply to bank and
brokerage firm records of (i) customer orders;
(ii) transaction documentation; (iii) investment advisory
services; (iv) custody services; (v) reconciliations with Takasbank
(i.e., the settlement institution); (vi) leveraged transactions;
(vii) general investment advisory services; (viii) analyst
reports; (ix) customer complaints; and (x) advertising and
Have secure information technology systems in place to maintain
instantaneous records of transactions and to protect customer
Framework agreements entered into before the
communiqué's enactment must be renewed within one year
after the CMB sets the mandatory content for framework agreements.
The CMB is expected to issue guidance on the mandatory content for
framework agreements in the near term.
Banks and brokerage firm document retention obligations have now
been expanded in line with increasing consumer protection under
Turkish law. Banks and brokerage institutions providing investment
and related ancillary services must comply with the new rules by
implementing new internal policies under the communiqué.
Please contact us if you have questions about how these changes
might affect your company.
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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