Investor protection in intermediation for trading in securities in Capital Markets Law

Investors who are willing to trade in secondary markets, according to capital markets law, cannot trade without an intermediary. Investors must sign a brokerage agreement with an authorized intermediary and be clients of that intermediary to trade. Intermediaries carry out trading activities on behalf of or for account of investors. Intermediaries trade in accordance to investors' orders and use investors' capital markets instruments or cash in legal transactions with third parties, on behalf of or for account of investors. While trading, intermediaries can engage in illegal activities such as unauthorized using or trading of investors' capital markets instruments or cash, committing fraudulent acts, unnecessary trading for excessive commission fees, acting against client orders, avoiding to provide information to clients; and thus violate investors' rights. Investors can face material loss due to those illegal activities. In this study, we examine regulations and solutions for investor protection against such illegal activities of intermediaries.