The manipulative trades and misleading transactions of banks in financial markets in Turkey have been defined under Article 76/A of the Banking Law No. 5411 ("Law"), which is recently included to the Law, as part of the amendments made in the Law through Law No. 7222, amending the Banking Law and Other Codes, published in the Official Gazette dated 25 February 2020 and No. 31050 ("Law No. 7222").
Based on Article 76/A under the Banking Law, Banking Regulation and Supervision Authority ("BRSA"), today, issued the Regulation on Manipulation and Misleading Transactions in the Official Gazette No. 31120 dated 7 May 2020 ("New Regulation"). The New Regulation takes effect as of its publication date, 7 May 2020.
The New Regulation expanded the list of the bank trades in Turkey that will be considered as manipulative trade, misleading transaction and practice in the financial markets as set forth below. These manipulative trades of the banks will be considered in violation of the Law and New Regulation.
- Involving, mediating, placing orders or engaging in transactions, knowingly, that keeps or may keep the price (including the interest and exchange rate) of the financial instrument at an abnormal or artificial level or that gives or may give false and misleading impression regarding the supply, demand or price of the same instrument,
- Involving, mediating, placing orders or engaging in transactions which affects the price, interest rate, exchange rate, reference values such as CDS of the financial instrument in a manner that will negatively impact the financial market by taking advantage of the volatility or shallowness of financial markets at the moments when the supply demand balance is not operating normally,
- Any practices that breaches BRSA decisions and restrictions with respect to i) currency swap, forward, option and such other derivative transactions to be engaged by banks with foreign counterparties in exchange of TRY and FX or ii) banks' TRY liquidity transactions with foreign parties by way of indirect methods including early redemption, extension of the maturity of transactions or failure to meet the obligations or mediating or engaging in any acts or practices that avoids such BRSA decisions,
- Involving, mediating, placing orders or performing activities that would affect the price (including the exchange rate and interest rate) of the financial instrument by way of deceptive mechanism or set-up,
- Dissemination of false and misleading information and rumours through internet or other mass communication means that keeps the price (including the interest and exchange rate) of the financial instrument at an abnormal or artificial level or that gives or may give false and misleading impression regarding the supply, demand or price of the same instrument,
- Influence or trying to influence the price (including the interest rate and exchange rate) of the financial instrument for which already a position is taken in the market, by providing an opinion regarding such position through internet or such other mass communication means whereas, at the same time, conflict of interest regarding such position is hidden from the public,
- Conveying false and misleading information or providing false and misleading inputs regarding a reference value or performing behavior that would manipulate the calculation of the reference value although such bank knew or should have known that the information is false and misleading,
- Performing acts that would cause sale and purchase price of the financial instrument to be fixed or cause unjust enrichment by using its dominant position over the supply and demand of the financial instrument,
- Misleading the investors that have engaged into a position according to the sale and purchase prices by way of carrying out the sale and purchase transactions that affect or may affect the opening and closing price, interest rate and exchange rate of the financial instrument, at the opening and closing of the financial markets,
- Misleading the right holders by providing false and incorrect information,
- Dissemination of information and rumours that would damage the financial system and lead to systemic risks due to the loss of trust to the financial system.
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.