Capital Market Board of Turkey

A brief timeline and milestones of the Turkish capital markets are presented below: 1981 Capital Markets Law passed Capital Markets Board established Istanbul Stock Exchange established First mutual fund issued.

1991 Bonds & Bills Market established within ISE Repo-Reverse Repo Market established within ISE Settlement and Custody Bank (Takasbank) was formed. Istanbul Gold Exchange established. New Companies Market established within ISE. International Securities Market established within ISE.

1997 Banks are forbidden to trade equities, but may establish brokerage subsidiaries. First asset management company established First credit rating agency established Client-based custody at Takasbank Market making system introduced for government bonds. First venture capital trust offered to public.

2001Investors' Protection Fund established. Futures market established within ISE. Central Registry Agency established Pension system regulation passed Corporate governance principles published. First private pension fund established. International Financial Reporting Standards adopted First Exchange Traded Fund established Turkish Derivatives Exchange established. Dematerialisation of equities completed Dematerialisation of corporate bonds and mutual funds completed.

2007 Opening auction introduced at ISE for the first session. Mortgage Law passed. Eurobond market established within ISE New IFRS regulation adopted. New anti-money laundering regulations in line with 2010 First warrant issued. 2012New Capital Market Code entered into force.

REGULATORY STRUCTURE OF THE FINANCIAL SYSTEM The Turkish financial system has a fragmented regulatory structure. Banking Regulation and Supervision Agency (BRSA) is in charge of the banking system, whereas the Capital Markets Board of Turkey (CMB) is the main regulator of the capital markets. The Undersecretariat of Treasury, on the other hand, oversees the insurance industry.

Capital Markets Board of Turkey (CMB) is the regulatory and supervisory authority in charge of the securities markets in Turkey. Empowered by the Capital Markets Law (CML), which was enacted in 1981, the CMB has been making detailed regulations for organizing the markets and developing capital market instruments and institutions for the past 31 years in Turkey December new Capital Market Code passed in TGNA and expected to be published in Offical Gazette soon.

2. Based on the main objectives of fair and orderly functioning of the markets and protecting the rights of investors, the CMB has a wide range of responsibilities. Depending upon the development stages of the markets and the state of the country's economy, the list of priorities changes from time to time. However the major objective remains the same: to take the necessary measures for fostering the development of capital markets, and hence to contribute to the efficient allocation of financial resources in the country while ensuring investor protection.

The purpose of CMB stated in art. 1 of Capital Market Code is to regulate and control the secure, transparent and stable functioning of the capital market and to protect the rights and benefits of investors with the purpose of ensuring an efficient and widespread participation by the public in the development of the economy through investing savings in the securities market.

Legal Framework of the Capital Markets in Turkey The legal framework of the Turkish capital markets consists of three major legislations, one of which is specifically devoted to this area, the Capital Markets Law (CML). The others are the Decree with force of Law No. 91 concerning the securities exchanges and the Turkish Commercial Code.

The objective of the CML is to regulate and control the secure, fair and orderly functioning of the capital markets and to protect the rights and benefits of the investors. Following the enactment of the CML in 1981, the necessary regulations have been made by the CMB in order to organize the markets and the capital market institutions. Joint stock corporations with more than 500 shareholders or which offer their shares to the public were subject to the CML. Joint stock corporations having more than 500 stockholders are considered to have been offered to the public and such companies are subject to the provisions applicable to publicly held joint stock corporations.

The principles for the establishment, operation and the auditing of the stock exchanges are determined by the Decree with force of Law No. 91 enacted in The legal structure pertaining to the operation of the secondary markets is formulated by this Decree. The Turkish Commercial Code, enacted in 2011, regulates the establishment and operation of companies and defines and regulates financial instruments in general. Thus, joint stock corporations subject to the CML are required to comply with the provisions of the Commercial Code whenever there is no provision in the CML.

Apart from the above mentioned legislation, another important regulation affecting the development process of the securities markets is the Decree No. 32 about the Protection of the Value of the Turkish Currency. This Decree enacted in August 1989, aims at further liberalization of the financial system and allows not only nonresidents to invest in the Turkish securities, government bonds and Treasury Bills, but also permits the outflow of domestic capital into foreign securities etc. through financial intermediaries authorized by the CMB.

The Capital Markets Board as a Regulatory Body The CMB implements the duties vested by the CML with due diligence. The CMB, empowered by the CML, is authorized in and responsible for the following areas: - regulation and supervision of the securities markets and institutions within the scope of the CML, - determination of the operational principles of the capital markets, - protection of the rights and interests of the investors.

In this framework, CMB regulates and supervises the following institutions: - corporations offering their securities to the public, - securities market intermediaries, - mutual funds and investment companies including real estate investment companies and venture capital investment companies, - independent external auditing firms offering services to capital market institutions, - stock exchanges and the secondary markets in general, - precious metal exchanges and derivative exchanges, - other related institutions operating on the capital markets such as rating agencies, clearing and depository institutions.

Organizational Structure of The CMB The Chairman and CEO The Chairman and Chief Executive Officer (CEO) is at the top of the hierarchy and has two major responsibilities: - Acting as the chairman of the decision making body, that is, the Executive Board, and - Presiding over the executive vice-presidents under which the main Departments of the CMB are organized.

The Executive Board and the Chairman. The Chairman who is also the CEO is the top executive who is responsible for the administration and representation of the CMB. The Executive Board consists of seven Members/ Commissioners. The Council of Ministers will appoint members and the chairman. All Commissioners are appointed by the Council of Ministers for a five-year period.