In line with the global development in the over-the-counter
(OTC) market, the Capital Markets Board of Turkey (CMB) has
introduced more regulations covering OTC derivatives. These changes
come after the CMB enacted another regulation for OTC derivatives
in July 2014.
In January 2016, the CMB amended Communiqué III/37.1 on
Principles regarding Investment Services, Activities and Ancillary
With this amendment, the CMB introduced new regulations on the
investment firms and intermediary institutions that carry out OTC
According to article 25(a) of the Communiqué, the
investment firms that carry out OTC derivative transactions within
the scope of execution of orders and dealing on own account
activities must prepare a list of the types of OTC derivatives and
They must publish this list on their websites and send it to the
Capital Markets Association of Turkey (CMA).
Intermediary institutions authorised by the CMB to deal
exclusively with the investment services and activities specified
in the Capital Markets Law No. 6362 must prepare a
collateralisation policy with regard to the OTC derivatives and
underlying assets as set out in article 25(b) of the
Communiqué. The intermediary institutions must prepare
collateralisation policies within the scope of internationally
accepted procedures considering the risk status of their customers,
whether they have direct financial obligations to their customers,
possible negative market conditions and other related
According to article 25(ç) of the Communiqué,
intermediary institutions must seek collateral for any OTC
derivative transactions to be carried out with their customers. OTC
derivative transactions cannot be executed without receiving
collateral from customers. The customers must provide at least two
forms of collateral: (i) initial margin; and (ii) maintenance
margin. The initial margin must be provided to initiate the
transactions and the customer must keep the maintenance margin
during the OTC derivative transactions.
Finally, under article 29(b), the intermediary institutions must
notify the CMA of the electronic transaction platforms used for the
OTC derivative transactions together with the programmes, modules
and add-ins within the scope of intermediary activities .
Intermediary institutions cannot use platforms, programmes, modules
and add-ins that are not notified to the CMA. Furthermore, the
intermediary institutions will be subject to two independent
audits. The auditing firms will not give prior notice of these
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.
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