Proposal for financial reporting of brokerage firms in line with international financial reporting standards

In capital market legislation, intermediation is described as ?buying and selling of capital market instruments by authorized institutions in their own name and for their own account, in the name and for the account of another, and in their own name and for the account of another; while the capital market activities which brokerage firms are allowed to engage in are determined as intermediation for public offering, intermediation for the trading of capital market instruments, repurchase and reverse-repurchase transactions, investment consultancy and portfolio management. Consequently, brokerage firms are exposed to varied risks arising from these activities. Surveillance of the these risks are crucial for all market participants and for the effective market functioning and information displayed in the financial statements are of utmost importance. The Capital Markets Board, in order to track the risks of brokerage firms and to provide public disclosure in full and in time for all related parties, constituted a special chart of accounts for brokerage firms and formed the regulations regarding capital adequacy in harmonization with the International Financial Reporting Standards. On the other hand, it has been confirmed that the publicly available financial statements do not reflect the operational and financial results on firm and industry level. In this respect, financial statements are examined and solutions are developed/proposed for the problems identified while illustrative financial statement formats are also formed for brokerage firms based on International Financial Reporting Standards.