Authorities in Turkey are continuing to sharpen their efforts to curb trading on foreign exchange markets. The Turkish Council of Ministers has outlined the latest set of measures against traders that use leverage, basing their decision on a law that has been initially tailored to stem speculation with the local currency.
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The new measure, which is being deliberated but hasn’t been turned into law yet, forbids Turkish residents from opening accounts with foreign brokers. What is crucial about this law is that the actual clients may be facing a fine if they violate the regulation.
According to the proposal, the law would forbid Turkish residents from having an account with a brokerage which is not regulated by the Capital Markets Board of Turkey.
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The constitutionality of the measure may be questionable according to sources with extensive knowledge of Turkish law, but that hasn’t stopped Turkish authorities on other fronts in recent years.
Turkish Lira Justification
The Turkish government is basing its decision on a law that was drafted in 1989 during the term of military leader Kenan Evren. FX transactions that are included in the new provision include spot FX and all derivatives.
A Turkish legal expert that Finance Magnates spoke to outlined that there is no law limiting the ability of a Turkish citizen from opening an account with a foreign brokerage.
Turkish authorities have engaged in a crackdown on speculation with leverage, leading to a massive decline in available leverage for retail traders, curtailing it to a maximum of 1:10. In recent weeks, two companies from the industry suspended the operations of their local subsidiaries – XTB and Saxo Bank.