Recent Developments In Turkish Capital Markets

Turkish Capital Markets

Issuances Approved by the Capital Markets Board of Türki̇ ye September 2024

Capital Markets Board's Resolution i-SPK.35.B.1 (Dated 19/09/2024 and No. 1484):

Within the scope of the announcement dated 02.07.2024, various regulations concerning capital markets and crypto assets were made pursuant to the amendments in the Capital Markets Law No. 7518 and the addition of Provisional Article 11 to the Capital Markets Law No. 6362. These regulations contain significant provisions aimed at ensuring the healthy functioning of the sector regarding the receipt and safekeeping of customer funds, the proper execution of orders, and the listing of crypto assets. The principles outlined below have been established to prevent potential negative outcomes in activities related to capital markets and crypto assets.

• Safekeeping of Customer Funds in Banks:
  • Customer funds must be held in accounts opened in their name, separate from the platform's own assets.
  • All fund transfers must be conducted through authorized institutions; platforms cannot directly accept or store funds.
• Receipt of Customer Orders:
  • Orders must be placed only through the platform's official website, mobile applications, or authorized phone lines.
  • Orders cannot be accepted through social media platforms (e.g., WhatsApp, Telegram).
  • The security and accuracy of order records must be ensured, and electronic logs and voice recordings of orders must be securely maintained without alteration.
• Crypto Asset Transactions:
  • Platforms cannot engage in regular crypto asset trading activities akin to exchange offices.
  • Unauthorized peer-to-peer (P2P) crypto asset service providers must cease operations by November 8, 2024.
• NFTs and Virtual Game Assets:
  • Unique NFTs and crypto assets used exclusively in virtual games are outside the scope of supervision and regulation under the Capital Markets Law.
  • Clear information must be provided to investors in markets where these assets are traded, and investors must confirm that they have read and understood this notification.
• Authorized Platforms:
  • Platforms involved in crypto asset activities are required to establish the necessary technical infrastructure to transfer data to the Central Securities Depository (MKK).
• Advertising and Promotions:
  • Platforms cannot engage in deceptive, misleading, or exploitative advertisements that take advantage of customers' lack of experience or knowledge.
  • Promotions that promise guaranteed returns or provide benefits are prohibited, and any ongoing promotions must be terminated within 15 days.
• Crypto Asset Custody:
  • If customers do not store their crypto assets in their own wallets, platforms must have control over the wallet keys.
  • It is prohibited for third parties to have any control over customer assets, and leveraged or lending transactions are not allowed.
• Authority and Regulations of Other Institutions:
  • When crypto assets are used in activities that fall within the jurisdiction of other regulatory institutions, such as commodities and real estate, the relevant regulations must be adhered to.
  • The issuance of capital market instruments as crypto assets requires approval from the Capital Markets Board (CMB), and current regulations do not yet cover the issuance of crypto assets as capital market instruments.
  • These principles are designed to ensure that crypto asset platforms operate in a legal framework that is secure and transparent, with the goal of protecting investors.

Capital Markets Board's Resolution i-SPK.128.23 (Dated 19/09/2024 and No. 1508):

The Resolution on Sales Methods and Distribution Principles to be Applied in Initial Public Offerings (IPOs) has been taken to ensure that investor demand is effectively met in the initial public offerings of non-public companies. Regulations regarding the sales methods and distribution principles that must be followed during IPO processes have been introduced through the application of the relevant provisions of the Communiqué on the Sale of Capital Market Instruments (Communiqué No. II-5.2). The following provisions will remain in effect until a new decision is made.

Sales Methods Based on the Market Value of Shares:

• If the market value of the shares being offered is 750 million TL or below, the stock market sales method must be applied.
• If the market value of the shares being offered is above 750 million TL, the offmarket demand collection method may also be used. In the case of using the off-market demand collection method for offerings exceeding this threshold:
  • For domestic individual investors, an equal distribution will be made in accordance with Article 20, paragraph 2 of the Communiqué.
  • Up to 10% of the total offering may be allocated to the group of investors who will make high demand. This group can be allocated through either an equal or proportional distribution. In the case of proportional distribution, collateral in the form of BIST30 index shares amounting to 120% of the requested amount must be provided.
  • At least 50% of the shares allocated to domestic institutional investors must be reserved for investment and pension funds. The allocation to any single institutional investor cannot exceed 1% of the total offering. For portfolio management companies (PMCs), this limit is 3%.
  • PMCs and related legal entities with capital ties may request up to 2% of the total offering, provided there is sufficient demand.
  • Requests from investors with individual portfolio management agreements will not be considered part of the institutional investor group.
  • Individuals with inside information and their close relatives may not place orders from groups other than the domestic individual investors group.
  • If sufficient demand is received from any investor group, no reallocation to other groups is allowed. However, in cases of insufficient demand, unallocated shares may be transferred to other groups.

Non-Transferability of Shares by Institutional Investors:

• Shares purchased by institutional investors for their own portfolios cannot, under any circumstances, be transferred to individual investor accounts.

90-Day Restriction:

• Investors who acquire shares during the public offering cannot sell, transfer to other accounts, or engage in bulk sales of these shares outside the stock market for 90 days after the shares are credited to their accounts.
• For the shares held by existing shareholders, this restriction applies for 180 days, including stock market sales.

Responsibility:

• Issuers, the public offering companies, authorized institutions, and consortium leaders are responsible for ensuring the distribution is carried out in accordance with the prospectus, the Communiqué, and this Principle Decision. They are liable for any shortcomings in line with their faults and the circumstances.

Repeal of Previous Decision:

• The Principle Decision i-SPK 128.21 (Dated 30/03/2023 and No. 20/412) has been repealed.

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.