Turkey To Restrict Access To Offshore Forex Trading Sites

Turkey is continuing with its campaign to curb largescale foreign exchange trading by small investors. A recent report released by the government stated that Turkish citizens will be barred from carrying out unauthorized foreign exchange transactions using offshore sites or services.

Deputy Prime Minister Nurettin Canikli announced that legal regulations will be soon passed that will put in place restrictions on Turkish citizens from carrying out transactions without permission or access any site not licensed by Turkish authorities. In a statement Canikli said

If the citizens of the Republic of Turkey have access to the area and site engaged in forex trading abroad without permission, we will prevent the access to those areas.

Canikli stated that these new rules would be enforced shortly. He highlighted that the earlier restrictions introduced by Capital Markets Board (CMB) were already in force. Canikli pointed out that the new rules were saving small investors nearly $300 million per day on an average. A media report stated that the daily trading volume in the foreign exchange market after the new rules were imposed has declined to just $2 billion.

According to Canikli there were no issues regarding the regulation of the country’s foreign exchange market, pointing out that the rules were accurate. He said that if regulations hadn’t been imposed, Turkey would have been converted into a digital gambling house. He blamed the extensive advertising campaigns run by trading sites for luring small and inexperienced investors to the risky foreign exchange market. He observed that the daily trading volume in the country had reached $17 billion and many of the small investors had suffered extensive losses.

The range of restrictive measures issued last month by CMB in foreign exchange trading include lowering of the leverage ratio from 100:1 to 10:1 and setting the minimum deposit limit at 50,000 lira. Canikli emphasized the introduction of new rules did not affect market depth, highlighting that hedging mechanisms available in other markets were still allowed ratio of 20:1.

The new regulations resulted in concerns being voiced by the market participants that it would hamper genuine investors. The country’s brokerage association had also pointed out at that time that the ban might result in Turkish investors using unregulated offshore traders. The latest measure addresses this concern. A media report citing government sources had stated earlier that losses suffered in foreign exchange trading were in the range of $500 million. Around 120,000 people had opened accounts for foreign exchange trading between 2011 and September 2016.

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