Breaking: Turkish Regulator Reduces Leverage for Small Accounts

Turkey's CMB has abruptly imposed a series of margin changes for all small accounts in the country, catching brokers off

Turkish brokers and market participants were abruptly greeted with a new playing field today, with a number of key margin changes implemented to small-cap accounts, Finance Magnates has learned.

In particular, Turkey’s Capital Markets Board (CMB), the country’s paramount regulatory authority, has mandated a sweeping series of changes to accounts smaller than approximately 20,000 TRY (6,620 USD). As a result of the new edict, spreads have consequently all been altered across popular trading pairs such as the EURUSD, USDTRY, and EURTRY – along with gold, the max leverage will now be set at 50:1. In addition, other currency pairs, including the GBPUSD, GBPCHF, USDCHF, among other instruments, will have their maximum leverage limited to 25:1.

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However, for new or current accounts greater than the 20,000 TRY threshold, the max leverage for the EURUSD, USDTRY, EURTRY pairs and gold will be established at 100:1, with the remaining currency pairs seeing a cap of 50:1 leverage.

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The changes represent an attempt by the CMB to help insulate novice or non-professional traders from incurring sizable losses. Interestingly, the changes come roughly one year after the Swiss National Bank (SNB) convulsed the FX landscape by abandoning its currency peg with the EUR.

Beyond the legal ramifications of implementing such broad-based and encompassing margin changes, Turkish brokers have been caught unawares with changes that few foresaw. A number of brokerages have incurred temporary shut downs or ceases in trading as a result of calibrating their accounts to reflect the new leverage requirements by the CMB. It is highly unusual for a regulatory authority to introduce such sweeping changes with no prior warning.

That many Turkish brokers only suffered from temporary lapses in trading as a result of the new regulations is a relatively impressive feat. By comparison, MiFID II regulation in Europe has been well known throughout the continent amongst every financial service provider, whose regulatory legislation will not take effect for another calendar year at the earliest. Regulatory authorities in Turkey are apparently taking no chances however, as brokers have been forced to adapt to snap margin changes.

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