Consumer Rights and Investment Instruments

What is VIOP?

VIOP stands for Futures and Options Market. Futures prices of many products traded on capital markets are traded on VIOP. VIOP is a leveraged trading market – leverage allows investors to trade larger volumes with less capital. In order to trade on VIOP, an initial margin is required in the account. All trading platforms other than stock exchanges and other organised markets, such as the Forex market, are referred to as ‘Over-the-Counter Markets’.

Derivatives are instruments whose return is linked to the return of another security, in other words, derived from the return of another security. The most important feature of these products, which are used to hedge against risk or to increase returns by taking a certain level of risk, is that they have variable values due to time and price fluctuations in the spot market. Public interest in investment, especially in VIOP, is increasing gradually – today, a considerable part of the society is interested in investment instruments in order to utilise their savings and to feel more economically secure, while others are interested in investment

instruments as an amateur hobby. In recent years, the contracts signed by individual customers with banks constitute an important part of consumer transactions[i].

As a result of the fact that people from all walks of life take part as investors in the capital markets, which were considered to be a specialised field and only professionals played a role years ago, the question of whether the investor is considered a trader or a consumer before the law comes to the fore 

Are VIOP Transactions Subject to Consumer Law?

In order to make a distinction between consumer and trader, first of all, the articles of the law should be analysed. The concept of consumer regulated in Article 3 of the Consumer Protection Law (TKHK)[ii] refers to ‘a natural or legal person who acquires, uses or benefits from a good or service for non-commercial or

non-professional purposes’. In Article 3/(1)-k of the TPL, transactions arising from banking contracts are explicitly considered as consumer transactions. While performing capital market intermediation activities, investors not only buy and sell securities and derivative instruments, but also benefit from financial intermediation and advisory services provided by banks. In this case, the customer, as a consumer,

should also be considered as a consumer in the contracts regarding capital market instruments where the customer receives consultancy services from the bank.

Is There a Conflict of Interest Between VOIP Intermediary Institutions and Their Clients?

 It is a fact that there is a conflict of interest between the intermediary institution and the customer in VIOP transactions. In investment instruments such as VIOP, the intermediary institution as a counterparty fulfils the trading orders of the customers regarding capital market instruments. As a result of the service provided within the scope of this intermediation, which is called portfolio brokerage, the investor will incur losses while the intermediary institution, which is the counterparty, will make a profit. Investors are made to sign many framework contracts and risk forms within the scope of advisory and similar services provided by intermediary institutions.

Customers often become a party to these agreements, the contents of which they do not know and do not understand the provisions.

 At this point, if the customer is not accepted as a consumer, there is no protection to prevent the intermediary institutions from arranging the contracts in such a way that they will always win and the customers will always lose.

Although there is no provision preventing the application of the provisions of the LPCL in the capital market intermediation framework agreements, it cannot be denied that one party to the framework agreements is in a weaker position since it does not have the chance to bargain over the provisions. Therefore, it is obvious that investors should be considered as consumers within the scope of the LPC[iii]. As a matter of fact, the European Union directives and the decisions of the CJEU, which are in parallel with the provisions of the LPCPL, are in this direction.

What is the European Union’s Opinion?

The Court of Justice of the European Union has recently issued an opinion[iv] on the subject. In the opinion, it is stated that a person operating in a foreign exchange market will be considered a consumer.

Accordingly, the occupation of the person and the capital market instrument used by the person should not be used or even taken into account to determine whether the person is a consumer or a trader. The EU courts have previously stated that the purchase and subsequent sale of movable goods with the intention to resell and make a profit may be considered as a consumer transaction. In EU law, a consumer is defined as a person acting outside his/her profession. In order to determine whether a person is a consumer or not, the boundaries of the concept of consumer should be determined precisely.

According to EU law, a person may be considered as a trader for some of his/her transactions, while he/she may be considered as a consumer for some other transactions. In addition to all these, in order for a person to be considered as a weaker party in a contract, he/she must have entered into the contract in order to fulfil his/her own needs within the scope of personal consumption clauses.

 Due to the obvious conflict of interest between the institutions providing intermediary and advisory services in capital market instruments and the customer and the obvious weak position of the customer, it is essential for the protection of their rights that the persons in these contracts are considered to have the title of consumers, not merchants.

[i] KABAN, İ. (2016). BİREYSEL MÜŞTERİLER VE BANKALAR ARASINDAKİ İLİŞKİLERDE YENİ DÖNEM: TÜKETİCİ KREDİSİ SÖZLEŞMELERİ YÖNETMELİĞİ ÜZERİNE BİR DEĞERLENDİRME. New Era In The Relationship Between Individual Customers AndBanks: An Evaluation On The Consumer Credit Agreements Regulation. Journal of Management and

Economics Research, 14

 

• Tüketicinin Korunmasi Hakkinda (Consumer Protection Law) (2013, 28 Kasım).

Official Gazette (Number: 28835). Access address: https://www.resmigazete.gov.tr/eskiler/2013/11/20131128-1.htm

• Kara, M.S. (2006). SERMAYE PİYASASI ARACILIK FAALİYETLERİNDE YATIRIMCININ KORUNMASI. Ankara Üniversitesi Sosyal Bilimler Enstitüsü,

 

 

Access address: https://dspace.ankara.edu.tr/

 

• Case C-208/18 Jana Petruchová v FIBO Group Holdings Limited ECLI:EU:C:2019:314, [2018]

 

Access address: http://curia.europa.eu/juris/document/document.jsf;jsessionid=CF3 2703BDED9DC4568167A80F1A0048E?text=&docid=212925&pageInd ex=0&doclang=en&mode=lst&dir= &occ=first&part=1&cid=491557