Turkey CMB leverage change impact on Turkish Forex brokers: perspective

Capital Markets Board of Turkey limited the leverage for Forex market to 1:10 last week. What is the Turkey CMB leverage change impact on Turkish Forex Brokers and traders?

14 February, AtoZForex On the 10th of February, AtoZForex has reported that Capital Markets Board (CMB) of Turkey has required a sweeping series of changes to all leveraged products. Thus, it has increased the minimum deposit size to 50,000 TRY (13,610 USD).

Turkey CMB leverage change impact

In addition to the minimum deposit requirement, SPK Türkiye update includes further leverage cut to any leveraged product from 100:1 to 10:1. According to the press release involving the Turkey CMB leverage change impact on Turkish Forex brokers, all the SPK Türkiye regulated financial institutions offering leveraged products need to apply the new leverage cut and deposit requirements within 45 days window starting from 10th of February.

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Moreover, the SPK states that the leverage cut is will serve as an extra insurance for the new Turkish traders. However, given the current Turkish Economy, it appears that the Turkish brokers will be put in a difficult situation in acquiring new client base. By law, only SPK regulated Forex brokers can offer financial services to the Turkish residents. However, these limitations led many Turkish retail traders to become unregulated Forex scam victims.

Zirve Forex: Expect sharp decline in trading volumes

Today, we look into the Turkey CMB leverage change impact on Turkish Forex brokers from brokers' perspective. I have reached out to Head of research at Zirve Forex, Bertug Kocabicak. Mr. Kocabicak was able to provide me with very valuable insights into the current situation in Turkey. He has stated:

“It’s not an easy thing to invest minimum 50.000 TRY in Forex market. Due to that reason, some retail traders want to withdrawal their money from our company.”

He explained that in the wake of the decision, he expects some problems for the market participants. He mentioned:

“Due to less leverage then previous, we expect a sharp decline in trading volumes, which can directly affect the Forex industry. The Forex market may shrink close to 40% in the coming months in Turkey.”

Following on this, Mr. Kocabicak has highlighted that the retail Forex clients, who are willing to use the advantages of more leverage and are not able to invest the required deposit, are now seeking for reliable foreign brokers. He added:

“However, because the clients know that there are some problems in some of the foreign brokerage firms by deposit and withdrawal processes, also in some trading rules, they are afraid of working with them. “

Nevertheless, Mr. Kocabicak believes that despite the disadvantages of trading in such brokerage firms, he expects that in long run there will be certain money flow from Turkey to the foreign countries.

Işık Menkul Değerler A.Ş: Turkey Forex sector might shrink

Another Forex broker from Turkey has shared its views on the situation. Gizmen Nalbantli, Chief Analyst at Işık Menkul Değerler A.Ş, believes:

“The new regulation from the Capital Markets Board of Turkey might mean a considerable downsize for a lot of firms in the sector which employs 6500 people. FX companies most likely lose their advantage and can’t compete with firms from abroad with leverage being cut to 10:1.”

He added that clients, who are not ready to pay 50.000 TL might be headed to other Forex firms without a license or any regulations

Do you work for a Broker? How do you think such update would impact the European Forex Industry? Would MiFID II amend its rules? Think we missed something? Let us know in the comments section below.

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