Turkish retail forex industry confronts regulatory limitations

Turkish retail forex industry confronts regulatory limitations

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Turkish forex market participants are objecting to the new limitation for retail forex trading, which the Capital Markets Board (CMB) of Turkey just introduced, finance online media Finance Magnates reported. Turkish brokers are holding an emergency meeting, at which to discuss how to fight the regulatory limitations.

Turkish brokers fear that the new rules include potentially serious outcomes for both investors and workers within the forex industry. A designated website has been created, ForexTebliginiGeriCek, where industry employees and clients can sign a petition protesting against the new rules.

Under the newly-adopted regulatory changes, retail leveraged trading in Turkey is restricts to investors with a deposit of a minimum TRY 50,000 (about $13,500), or the equivalent in a foreign currency. In addition, the maximum margin rate available for retail traders was reduced to 10:1 from 100:1. The regulator has given market participants a transition period of 45 days, in which to implement the new rules.

According to industry professionals, there are better ways to tackle the problem. Educating traders on the potential risks associated with trading is a better solution than imposing such harsh restrictions, which only affect small investors. In fact, the new regulation may cause traders to turn to non-regulated offshore brokers, exposing themselves to great risks.

Since August 2011, after the CMB introduced regulatory amendments, forex brokers are required to have a Turkish license if they want to operate in the country. There are about 40 licensed brokers in the country, mostly local brands, but also international entities such as Saxo Bank and XTB.

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