The Capital Markets Board of Turkey ("CMB"),
authorized by the Omnibus Law No. 6111 for the supervision and
surveillance of the leveraged forex transactions, has announced
that it has finalized the intense work on the regulatory regime of
leveraged forex transactions and sent the relevant
Communiqué to the Official Gazette for publication. The
Communiqué which will be in force as from 31.08.2011 will
have a revolutionary effect in the market, as it will only pave way
for CMB licensed Brokerage Firms and Derivatives Intermediary
Institutions to act as fundamental service providers and close the
door for entities currently conducting leveraged forex
transactions. The Communiqué, together with other measures
provided by the Capital Markets Legislation, will provide the
long-awaited protective umbrella to investors dealing with those
Below are the fundamental headlines of the CMB announcement
regarding the Communiqué which is expected to be published
within the course of this week:
Under the new legal framework Brokerage Firms can act as market
makers, white label brokers or introducing brokers in relation to
leveraged forex transactions whereas Derivative Intermediary
Institutions can only act as introducing brokers for Market Maker
Brokerage Firms. However, it is required that Brokerage Firms and
Derivative Intermediary Institutions shall obtain necessary
licenses from the CMB before initiating leveraged forex trading
Banks, unlike Brokerage Firms and Derivative Intermediary
Institutions, cannot act as fundamental service providers, but are
entitled to provide agency services to CMB licensed Brokerage Firms
on a limited basis. In this respect, Banks can only promote
leveraged forex trading services of Brokerage Firms and provide
intermediary services to their clients for opening leveraged forex
trading accounts with those Firms. The CMB regulation does not
cover liquidity and pricing services that may be provided by Banks
to Market Maker Brokerage Firms.
Any unlicensed activity will be considered as violation of
Capital Market Law as from 31.08.2011 and, accordingly, will be
punished. However, Brokerage Firms currently conducting leveraged
forex transactions as market makers will be entitled to continue
their activities provided that they make the necessary licensing
filing within a period of two weeks following 31.08.2011. As per
the legal perspective all other entities shall terminate leveraged
forex trading services until 31.08.2011.
The new legal framework requires that trading margins collected
from investors shall be deposited to institutions domiciled in
Brokerage Firms and Derivatives Intermediary Institutions
intending to provide leveraged forex trading services shall fulfil
certain conditions regarding organizational structure, capital
adequacy requirements, IT infrastructure, risk management, internal
control, documentation, reporting and advertisements.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
A trustee in bankruptcy's rights to obtain a possession order and order for sale against a bankrupt's property will not be suspended indefinitely even where there are exceptional circumstances.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).