TCMA 2020 ANNUAL REPORT

Action plans were created for the projects covered under the above mentioned topics which are led by the members of our Association’s Boards of Directors and Auditors, and related work began. VaR Model in Mutual Funds Our Association took steps for the replacement of the 250-business day observation period in the calculation of the Value at Risk (VaR) in Mutual Funds, which will be performed to determine the maximum loss a fund portfolio value might sustain during a given period of time, with a shorter observation period given the extraordinary times we are going through. Accordingly, our Association submitted its feedbacks and recommendations to the CMB for determination of a shorter observation period by the CMB and for contributing to ensure uniformity in practice across the sector. Revision in CMB Fees to be Charged to Mutual Funds The CMB allowed provision setting on a daily basis instead of on the last business day of the quarterly periods for the CMB fee calculated based on the net asset value of mutual funds. Introduced at the initiative of our Association in May 2020, this new rule is intended to ensure fair calculation of the unit share values of mutual funds with respect to investors receiving or returning fund participation shares at different times, minimization of the effect of fund costs on fund unit share price by spreading them over time, and alignment with the periodicity concept. Service Provision by Asset Management Companies to Other Asset Management Companies At the initiative of the Association, the CMB allowed asset management companies with limited operations to receive service in relation to internal control, internal audit, research, risk management, fund service units and accounting from other asset management companies starting from May. Valuation of Foreign Currency Hedge Funds Based on a Presidential decree, the withholding rate calculated on the asset management of foreign currency hedge funds was raised from 0% to 15% in June 2020. Our Association made attempts before the CMB and the Revenue Administration for the determination of provisioning for foreign currency hedge funds, due to the differences in the valuation procedures stipulated by the Tax Procedural Law and the CMB regulations. New Rule for the CMB Fee in Alternative Mutual Funds Similarly to the procedure in place for securities mutual funds, the CMB decided that the CMB fee charged on real estate mutual funds, venture capital mutual funds and exchange traded mutual funds were to be calculated according to the number of days within the related quarter in relation to the days on which fund unit shares are put on sale upon the Association’s initiative to this end. The decision is intended to prevent investors’ aggrievement due to heavy fund inflows/ outflows on various dates. Questionnaire on Online Delivery of Investor Orders to Fund Distributors The requirements enforced by the Capital Markets Board of Turkey (CMB) in 2019 obligated the use of head offices, branches and internet branches of fund distributors companies for the delivery of investor orders through the TEFAS (Turkey Electronic Fund Trading Platform) regarding hedge funds. However, due to the fact that the necessary hardware and infrastructure for transacting via internet branches are not available at all distributors, our Association administered two questionnaires, after which the deficiencies and needs of the sector were shared with the CMB. Cash Movements in Mutual Fund Portfolios The Association made attempts before the Capital Markets Board of Turkey (CMB) for transfers from cash accounts of mutual funds opened with third parties to be sent without hitting the portfolio custody accounts, provided that the transaction documents are delivered to the portfolio custody the same day. Valuation Working Group Established A “Valuation Working Group” was set up at the Association consisting of İstanbul Settlement and Custody Bank TCMA 2020 ANNUAL REPORT 29