Establishment and Operating Principles of Intermediary Institutions
12 Eylül 2025
Authors: Intellectual Property Law Department, Att. Azat Ekici, Att. Mustafa Şahin INTRODUCTION Invalidity is a fundamental mechanism of termination...
Establishment and Operating Principles of Intermediary Institutions
Authors: Capital Markets Law Department, Prof. Dr. Ali Paslı, Att. Mustafa Şahin
INTRODUCTION
The orderly functioning of capital markets is ensured by investors carrying out their transactions solely through authorized investment institutions. Pursuant to Article 37 of the Capital Markets Law No. 6362 (“CML”), the entities that will perform investment services and activities may only be investment institutions authorized by the Capital Markets Board (“Board”). Intermediary institutions are investment institutions authorized exclusively to perform the activities set out in subparagraphs (a), (b), (c), (e) and (f) of Article 37/1 of the CML. In this context, the establishment and operating principles are regulated by the Board’s Communiqué on the Establishment and Operating Principles of Investment Institutions No. III-39.1 (“Communiqué 39.1”).
In this article, the establishment conditions of intermediary institutions, the operating license process, types of authorizations, the investment and ancillary services they may offer, and obligations regarding organizational structure and internal systems will be examined within the framework of Communiqué 39.1 and the Communiqué on Principles Regarding Investment Services and Activities No. III-37.1 (“Communiqué 37.1”); the updated capital amounts for 2025 will also be addressed.
A. Establishment Conditions
In order for intermediary institutions to be established, it is mandatory to obtain an establishment permit from the Board. Pursuant to Article 5 of Communiqué 39.1, the establishment must (i) be in the form of a joint stock company, (ii) have all its shares registered and issued in cash, and (iii) have an initial capital not lower than the amount stipulated in the Board’s regulations on capital adequacy. In addition, the articles of association must be prepared in compliance with the CML and related regulations (Art. 5/1-d), the shareholding structure must be transparent (Art. 5/1-g), and the founders must meet the financial strength, integrity, and reputation requirements under CML Art. 38.
Article 6 of Communiqué 39.1 lists one by one the prohibitions and adverse qualifications regarding founders; it is expressly stipulated that those who have gone bankrupt or declared concordat, those with final convictions for certain offenses, or those whose financial capability is insufficient cannot be founders. In the establishment application, the documents listed in Article 5 of the Communiqué (draft articles of association, information on founding shareholders, capital payment plan, etc.) are submitted to the Board. If the Board deems it appropriate, an establishment permit will be granted.
At this stage, it should be emphasized that the grant of an establishment permit by the Board does not mean that the intermediary institution may commence operations. This permit only enables the company to apply to the trade registry for registration in the form of a joint stock company. After completion of the registration, it is mandatory to obtain an operating license through a second application to the Board.
Nevertheless, it is not sufficient for intermediary institutions to be established solely as joint stock companies and to meet the minimum capital requirements; their trade names must also include the phrases prescribed by the Communiqué. Pursuant to Article 7 of the Communiqué, in order to indicate their investment services and activities, the trade names of intermediary institutions must include one of the phrases “menkul değerler” or “menkulkıymetler”.
For broadly authorized intermediary institutions, it is additionally mandatory to include one of the phrases “yatırım menkul değerler” or “yatırım menkul kıymetler” in their trade names. This regulation is intended to prevent investors from being misled regarding the scope of activities and to ensure transparency in the market through trade names.
B. Transition to Operation and Operating License
Following the establishment permit, in order for intermediary institutions to commence operations, they must fulfill the general conditions stipulated in Article 9 of Communiqué 39.1. These conditions include:
i. The establishment conditions remain unchanged,
ii. The establishment capital has been fully and in cash paid up,
iii. Compliance with the Board’s capital adequacy regulations has been ensured,
iv. The organizational structure stipulated in Article 10 of Communiqué 39.1 has been established.
The organizational structure covers the establishment of service units, clear job descriptions and delegations of authority, the formation of internal systems consisting of internal control, risk management and inspection, and the employment of a sufficient number of qualified personnel. If the Board deems the application appropriate, it issues a single authorization certificate (Art. 9/4) and the intermediary institution may commence operations with this certificate.
In practice, during this process the Board generally requests additional information and documents, and in particular demands detailed explanations on information technology infrastructure, personnel adequacy and risk management procedures. In this respect, the transition to operation requires not only the fulfillment of formal conditions, but also the demonstration before the Board that the intermediary institution is operationally ready to commence activities.
C. Classification of Intermediary Institutions and Minimum Capital Amounts for 2025
Pursuant to Article 8 of Communiqué 37.1, intermediary institutions are divided into three classes in terms of the activities they perform. Accordingly:
a. Narrowly Authorized Intermediary Institutions: may only perform order transmission intermediation and investment advisory activities (Art. 8/2-a).
b. Partially Authorized Intermediary Institutions: in addition to the authorities of narrowly authorized intermediary institutions, they may also perform execution-only brokerage, individual portfolio management, best-efforts underwriting in public offerings, and limited custody services (Art. 8/2-b).
c. Broadly Authorized Intermediary Institutions: in addition to all the authorities of partially authorized intermediary institutions, they may provide all investment services and activities listed in Article 4 of Communiqué 37.1. In addition, they have the authority to perform firm-commitment underwriting in public offerings and to provide general custody services (Art. 8/2-c).
As of 2025, pursuant to the Board’s decision dated 26.12.2024, the minimum paid-in capital amounts required for these three classes have been updated and are set out below. The Board updates the minimum capital amounts each year; therefore, the amounts for 2026 should be monitored through the Board’s bulletins.
i. Narrowly Authorized Intermediary Institution: Minimum TRY 35,000,000
ii. Partially Authorized Intermediary Institution: Minimum TRY 150,000,000
iii. Broadly Authorized Intermediary Institution: Minimum TRY 300,000,000
iv. Newly Established Intermediary Institutions / Institutions to Acquire Authorization Certificate: Minimum initial capital of TRY 350,000,000
D. Investment Services and Activities
Investment services and activities are transactions that fulfill the most fundamental functions of the capital market and, pursuant to Article 4 of Communiqué 37.1, may only be performed subject to obtaining authorization from the Board. The Communiqué 37.1 lists these activities under nine headings:
1. Reception and Transmission of Orders (Art. 4/1-a): Receiving orders from clients regarding capital market instruments and transmitting such orders to other institutions authorized for execution or to authorized institutions abroad. This activity is specifically referred to as “order transmission intermediation” and is most frequently performed by banks and narrowly authorized intermediary institutions.
2. Execution of Orders (Art. 4/1-b): The purchase and sale of capital market instruments on behalf of and for the account of the client or in the institution’s own name for the client’s account. This activity is also known as “execution-only brokerage” and is one of the core functions of partially/broadly authorized intermediary institutions.
3. Dealing on Own Account (Art. 4/1-c): The intermediary institution’s purchase and sale of capital market instruments in its own name and for its own account. This activity also lays the groundwork for the institution to act as a market maker.
4. Individual Portfolio Management (Art. 4/1-ç): Managing clients’ portfolios in line with their risk–return preferences. It must be performed by portfolio managers holding the relevant authorization certificate.
5. Investment Advisory (Art. 4/1-d): Providing clients with individual or general recommendations regarding capital market instruments. This activity is tightly framed by regulations to enable investors to make informed decisions.
6. Underwriting in Public Offerings (Firm Commitment) (Art. 4/1-e): The intermediary institution purchasing or undertaking to purchase capital market instruments from the issuer and acting as underwriter during the public offering.
7. Intermediation in Public Offerings without Underwriting (Art. 4/1-f): A model where the intermediary institution provides mere intermediation services and assumes no obligation if the sale does not occur.
8. Operating Multilateral Trading Facilities (Art. 4/1-g): Establishing and operating an organized trading venue outside the exchange. This authorization is generally granted to broadly authorized intermediary institutions.
9. Custody and Management Services (Art. 4/1-ğ): The custody and management of capital market instruments in the name of the client.
For any of these activities to be carried out as a regular occupation, commercial or professional activity, it is mandatory to obtain the Board’s authorization (Art. 5/1). In addition, investment services may only be performed by investment institutions (Art. 5/2).
E. Ancillary Services
Ancillary services are complementary transactions that support investment services and activities and enable investment institutions to provide clients with integrated financial services. According to Article 6 of Communiqué 37.1, investment institutions may, depending on the investment services they are authorized for, provide the following ancillary services subject to notification to the Board:
1. Capital Markets Consultancy (Art. 6/1-a): Providing consultancy services to investors on legal, financial and technical matters related to capital markets.
2. Credit and Lending Transactions and Foreign Exchange Services (Art. 6/1-b):Extending credit or lending and carrying out necessary foreign exchange transactions in client transactions, limited to investment services and activities.
3. Investment Research and General Recommendations (Art. 6/1-c): Preparing reports on capital market instruments, conducting market analysis, or providing investors with general recommendations.
4. Services Related to the Conduct of Underwriting (Art. 6/1-ç): Providing administrative and operational services related to the conduct of underwriting in public offerings.
5. Intermediation in the Provision of Financing (Art. 6/1-d): Providing consultancy and intermediation in obtaining financing through borrowing or other means.
6. Wealth Management and Financial Planning (Art. 6/1-e): Offering long-term planning and asset management services aligned with clients’ financial goals.
7. Other Services to be Determined by the Board (Art. 6/1-f): Other ancillary services to be determined by the Board in the future.
No separate authorization certificate is required for these services; however, pursuant to Article 7 of Communiqué 37.1, notification to the Board is mandatory. Following notification, if the Board does not express a contrary view within 20 business days, the ancillary service activity may commence (Art. 7/3).
F. Organizational Structure and Internal Systems
It is not sufficient for intermediary institutions to meet only the minimum capital and founder qualifications in order to commence operations; they must also fulfill the organizational structure requirements stipulated in Article 10 of Communiqué 39.1. This article mandates that the intermediary institution be fully equipped operationally and administratively before commencing operations.
Accordingly, intermediary institutions must establish service units suitable for their preferred investment services and activities, provide adequate premises and technical equipment in these units, and employ unit managers possessing the minimum qualifications stipulated in the legislation as well as a sufficient number of personnel (Art. 10/1-a). In addition, a responsible unit to carry out document, record and accounting transactions must be established and sufficient personnel must be employed in this unit as well (Art. 10/1-b).
The Communiqué also requires that the management structure of intermediary institutions be sound and effective. In this context, job descriptions and delegations of authority and responsibility of the personnel must be clearly defined, and the organization must be formed in compliance with the Board’s regulations on internal audit systems (Art. 10/1-c). The organizational structure must include an internal oversight mechanism consisting of (i) internal control, (ii) risk management, and (iii) inspection systems (Art. 10/1-ç). Thus, oversight and control functions are operated for both daily transactions and extraordinary situations.
Another important obligation is the prevention of conflicts of interest. Article 10/1-d of Communiqué 39.1 requires that the organizational structure be designed in accordance with the principles on conflicts of interest set out in Articles 11 and 12. In this way, potential conflicts between investor transactions and the institution’s own interests are prevented.
It is possible for intermediary institutions to move their units other than the non-central organization to other buildings; however, these units may under no circumstances operate as a non-central organization (Art. 10/3). Such relocations may be carried out provided that the workflow is not disrupted and the Turkish Capital Markets Association is informed; otherwise, there is a risk of sanctions before the Board.
Conclusion
The establishment and operating principles of intermediary institutions form the basis for the Turkish capital markets to function in a reliable, transparent and sustainable manner. The regime of establishment permits, minimum capital requirements, operating licenses, organizational structure and internal systems aims to protect investors and ensure market integrity through a holistic framework.
As of 2025, the increased minimum capital amounts encourage the commencement of operations by actors with higher financial capacity and stronger corporate governance, thereby contributing to the deepening of capital markets on a sounder basis. The regulations regarding organizational structure and internal control systems guarantee that intermediary institutions remain under effective oversight and supervision not only at the commencement of operations but also throughout their activities.
In this framework, full compliance with the legislation by intermediary institutions from the establishment phase onwards is of critical importance for the protection of investor confidence, the safeguarding of market stability, and the development of Turkish capital markets in alignment with international standards.
No separate authorization certificate is required for these services; however, pursuant to Article 7 of Communiqué 37.1, notification to the Board is mandatory. Following notification, if the Board does not express a contrary view within 20 business days, the ancillary service activity may commence (Art. 7/3).
F. Organizational Structure and Internal Systems
It is not sufficient for intermediary institutions to meet only the minimum capital and founder qualifications in order to commence operations; they must also fulfill the organizational structure requirements stipulated in Article 10 of Communiqué 39.1. This article mandates that the intermediary institution be fully equipped operationally and administratively before commencing operations.
Accordingly, intermediary institutions must establish service units suitable for their preferred investment services and activities, provide adequate premises and technical equipment in these units, and employ unit managers possessing the minimum qualifications stipulated in the legislation as well as a sufficient number of personnel (Art. 10/1-a). In addition, a responsible unit to carry out document, record and accounting transactions must be established and sufficient personnel must be employed in this unit as well (Art. 10/1-b).
The Communiqué also requires that the management structure of intermediary institutions be sound and effective. In this context, job descriptions and delegations of authority and responsibility of the personnel must be clearly defined, and the organization must be formed in compliance with the Board’s regulations on internal audit systems (Art. 10/1-c). The organizational structure must include an internal oversight mechanism consisting of (i) internal control, (ii) risk management, and (iii) inspection systems (Art. 10/1-ç). Thus, oversight and control functions are operated for both daily transactions and extraordinary situations.
Another important obligation is the prevention of conflicts of interest. Article 10/1-d of Communiqué 39.1 requires that the organizational structure be designed in accordance with the principles on conflicts of interest set out in Articles 11 and 12. In this way, potential conflicts between investor transactions and the institution’s own interests are prevented.
It is possible for intermediary institutions to move their units other than the non-central organization to other buildings; however, these units may under no circumstances operate as a non-central organization (Art. 10/3). Such relocations may be carried out provided that the workflow is not disrupted and the Turkish Capital Markets Association is informed; otherwise, there is a risk of sanctions before the Board.
Conclusion
The establishment and operating principles of intermediary institutions form the basis for the Turkish capital markets to function in a reliable, transparent and sustainable manner. The regime of establishment permits, minimum capital requirements, operating licenses, organizational structure and internal systems aims to protect investors and ensure market integrity through a holistic framework.
As of 2025, the increased minimum capital amounts encourage the commencement of operations by actors with higher financial capacity and stronger corporate governance, thereby contributing to the deepening of capital markets on a sounder basis. The regulations regarding organizational structure and internal control systems guarantee that intermediary institutions remain under effective oversight and supervision not only at the commencement of operations but also throughout their activities.
In this framework, full compliance with the legislation by intermediary institutions from the establishment phase onwards is of critical importance for the protection of investor confidence, the safeguarding of market stability, and the development of Turkish capital markets in alignment with international standards.
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