FEAS Yearbook FEAS Yearbook 2003 | Page 10

TAKASBANK Confidence and Reliability in Securities Services Emin Çatana Chairman Takasbank provides ISE members with an organized Money Market and banking services including cash credits, securities lending/borrowing, and cross-border custody and settlement services. INTRODUCTION Takasbank is the “Central Securities Depository of Turkey”, “Clearing and Settlement Center for the Istanbul Stock Exchange (ISE)” and the “National Numbering Agency of Turkey”, authorized by the Capital Markets Board. Apart from these unique services for the Turkish capital market, Takasbank provides ISE members with an organized Money Market and banking services including cash credits, securities lending/borrowing, and cross-border custody and settlement services. Established under the Turkish Banking Law and classified as a "Bank that cannot accept deposits", Takasbank is a special purpose bank dedicated to securities services in Turkey. Takasbank is owned by the ISE (23.9%) and ISE members (22 banks and 72 brokerage houses with 40.5% and 35.6% stake in the share capital, respectively). REGULATORS AND LEGAL FRAMEWORK Related with its securities services and functions, Takasbank is supervised by the Capital Markets Board. The Banking Regulation and Supervision Board and the Central Bank of Turkey are those authorities for the supervision of Takasbank related with its banking operations. The Capital Markets Law, Related Decrees of the Capital Markets Board, Settlement Regulations of the ISE constitute the legal framework for Takasbank’s securities services operations Operational rules (regarding settlement, custody and other services) that are announced by Takasbank in the form of General Letters and the related standard service level agreements specify the rights and obligations of its members. PROTECTION OF CUSTOMERS’ ASSETS The Customer Name Based Custody System set up by Takasbank upon the requirement of the Capital Markets Board oversees a two-tier level of custody records; in the first level for these intermediaries (banks and brokerage houses) and in the second level for customers of these members. The records of this system are recognized as proof of ownership, and therefore, protect the customer’s assets against any attachment on the member’s assets. CONTACT INFORMATION Contact Name TAKASBANK International Department E-mail [email protected] Website www.takasbank.com.tr Alo-Takas and TakasNet services provide investors with the facility to reach the information on their sub-account balances recorded at Takasbank, which enables them to cross check the information that they get from the brokerage house or custodian banks related with their holdings. Investors are also able to put blockage on their assets held with their intermediary, which ultimately prevents any misuse of their holdings. Related with the protection of customer assets in the case of the insolvency of an intermediary, rules are defined in Capital Markets Law No: 46 pp. 2 and 5. The Law, which states that in case FEDERATION OF EURO-ASIAN STOCK EXCHANGES YEARBOOK 2003/2004 PAGE 8 of the prevention of intermediary’s operations by the Capital Markets Board due to its financial weakness or insolvency, client assets are protected against the intermediary’s creditors. Clients access their holdings through the Investment Protection Fund which is in charge of carrying out the progressive and administrative liquidation process upon the decision of the Capital Markets Board. The data out of the Customer Name Based Custody System of Takasbank is accepted as the official data by the Investor Protection Fund, which protects the assets of the customers against the claims of the insolvent intermediary’s creditors. Against any loss that might be incurred by any client of the intermediary, which is subject to progressive and administrative liquidation, indemnification out of the Investment Protection Fund is set at a maximum of TL 36.6 billion per investor in 2004 (app.US$ 27,000 per investor). Immobilization/Dematerialization of Securities and Transfers of Securities by Book-entry. According to the Commercial Code, securities are required to be in physical form in Turkey. Authorized by the Capital Markets Board, Takasbank is the central securities depository for equities in Turkey and no financial institution other than Takasbank is permitted to safekeep share certificates. Though not required namely by law, equities are immobilized at Takasbank. Settlement rules and regulations require that the settlement related transfers are realized in book-entry form. The Capital Markets Law was amended in December 1999 to regulate general aspects of the dematerialization of securities in Turkey. Capital markets instruments and the rights linked to these will be kept in a computer environment by the central registry. The Central Registry Institution (CRI), that will act as the central registrar for the dematerialized securities market in Turkey, was established and received commercial registration in September 2001. Dematerialization is planned to start by the end of 2004. PRE-SETTLEMENT CONFIRMATION Equity trading is not permitted over-the-counter for the members of the ISE, except on odd lot securities, and the ISE Equities Market is the sole market in Turkey where equities can be traded. The ISE trading platform is an automated blind order entry system and trade contracts are legally binding. While direct market participants are not expected to actively confirm the trades on T+0, the trades realized at the ISE are binding contracts and direct market participants receive the results of their trades from the ISE after each trading session (T+0) as a `trade book'. Therefore, the trades are deemed to be 100% confirmed by the direct participants on T+0. There is a separate but linked (to the ISE settlement) DVP settlement system operated by Takasbank in which mainly indirect participants