Turkey’s first commission-free trading platform intends to be ready to start operating early next year, tapping into burgeoning demand among locals to invest in the stock market.
Midas Menkul Degerler AS, founded by 28-year-old high-school friends Egem Eraslan and Umut Bozkurt, aims to be the most-digitalised trading venue among Turkish stock brokers. The company will test its software with a “limited group” of customers over coming months before the full launch of a service that’s drawn comparisons with US no-fee brokerage app Robinhood.
Local mom and pop investors rushed to the equity market this year to escape lacklustre returns on fixed-income assets, a trend that accelerated during the pandemic lockdown. Stock-market accounts at banks and brokerages have climbed by 52% since the end of 2019 to 1.86mn, according to the Central Securities Depository. Despite that surge in interest, opening one remains difficult and access to the market is still unfair, Eraslan said.
“Usually, people who have less money pay more in trading commissions, and we’d like to change that,” he said in an interview. “Making trading free of charge is a step toward that aim.”
Midas will seek to win business away from the websites and apps currently popular with retail investors and operated by the brokerage units of banks – like Is Investment, run by the country’s largest listed lender by assets.
No annual subscription fees or commissions will be charged on the Midas app, which will initially offer trading in Turkish and US equities. Products that involve greater risks and larger-volume trades will carry costs, while it also plans to charge for a premium service that includes access to analyst ratings, financial statistics, real-time data and news.
The founders said their efforts to create a digitalized brokerage predate this year’s buzz around the equity market and the firm has developed in-house software that it may eventually seek to export. Midas is a technology company, not a financial one, and its employees are all engineers, Eraslan said.
Midas, who secured a brokerage licence by the Capital Markets Board on September 24, has a staff of 10, which the founders expect will increase to as many as 20. That’s well below the industry average of 75, according to brokerage association figures.
A low headcount may give Midas an advantage, as the largest cost for brokerages is personnel, said Berra Doganer, an industry veteran of 37 years who is on the board of broker Piramit Securities and has worked at the stock exchange and the markets regulator. Over time, however, the new entrant may have to more closely resemble competitors to grow its business, she said.
“Just executing trade orders, without offering other brokerage services such as research, may only lure daytraders and some of the newcomers that have been trading with a limited budget,” said Doganer. “Given that they’ll charge for higher volume and extra services, that will force them back to a classic brokerage business model.”
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