TEFAS is an online platform where investment fund participation certificates can be sold and bought by the creator of an investment fund through distribution service providers who are members of the platform, and can be settled and stored in full automatic mode integrated with the Takasbank (Settlement and Custody Bank) and Merkezi Kayıt Kuruluşu (Central Securities Depository-MKK) systems. Banks, stock brokers and portfolio management companies are obliged to be members of the said platform and to make available to their clients all the funds available on the platform.
Only securities investment funds may be traded on TEFAS, so that stock exchange investments funds and other funds (hedge funds, capital protection funds, venture capital investment funds, real estate investment funds) may be traded only in Istanbul Stock Exchange (BIST), not on TEFAS. Retirement funds may not be traded on TEFAS either. At the discretion of creators, liquid funds (i.e. money market funds) and short-term debenture and bond funds included in securities investment funds may be traded on TEFAS. The profit share ratios for the said trading transactions have been set by a law, so that the seller receives 35% and the fund creator receives 65% of the fund management fee. However, the creator and the distributor may sign a special agreement to agree on different profit share ratios. All securities funds being active in the market must be made available by all banks and stock brokers to their clients. In other words, the bank or stock broker who is the major partner of Portfolio Management Company A may not refrain from selling the securities funds created by Portfolio Management Company B to its clients. The new Capital Market Law orders that investment funds can only be created by portfolio management companies, but considering that the banks are the main distribution channels in this market, one might conclude that the banks will continue to be the principal actors of the market. Considering that each bank owns a portfolio management company, the banks will continue to be the basis of sale and growth of investment funds.
By nature of their operating principles, participation banks may not act as a broker for trading of investment funds. Because acting as a broker for financial instruments lying outside the scope of their business criteria are against the operating principles of participation banks. Therefore they may only act as broker through their own distribution channels for investment funds created in accordance with interest-free financing principles. Clients visiting a branch or the website of a participation bank will see only the investment funds approved by its advisory board, not see any other fund, so that they will not be let buy or sell any other fund. Clients visiting a branch or the website of a participation bank will be ensured to buy or sell only the funs operated in accordance with interest-free financing principles. The back office operation for such buy or sell transaction will be performed by Takasbank in both its system and MKK’s system for that participation bank. Clients will be able to see the funds they bought in their accounts with MKK and to sell their funds on Tefas through the bank or stock broker from which they had bought them.
Since the investment fund sector did not improve as desired and it has based on liquid funds for years, the authorities took an efficient and radical step to establish this system. The success of this system will considerably contribute to improvement of the investment fund sector and, therefore, the capital market sector. When the capital market sector improves, the economy will gain a certain depth and embrace financial stability.