Changes on the Way in Turkey -CMB Possibly Raising Capital Requirements & Margin

According to Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates sources, the Capital Markets Board of Turkey (CMB) is evaluating the application of stricter regulations. Proposed rules include an increase of capital requirements for financial firms licensed under the regulator as well as to decrease Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term usage. In terms of the margin proposal, expectations are for leverage to drop to 25:1 from 100:1. Although the leverage limits are expected to greatly impact existing brokers, apparently the CMB is interested in decreasing the number of Turkish brokers operating in the country. Why this is so, isn’t exactly known. Possibly, the CMB believes that in leading a decline on Turkish brokers that currently number in the hundreds to well below that mark; they will nurture a smaller but stronger financial industry.

According to the information gathered from our sources, proposals for the increase in margin are in the advanced stages at the CMB, with a letter to brokers expected soon. However, raising capital requirements has still a ways to go before being applied. If implemented, the changes would be the first major policies applied since the CMB decided to regulate the forex market in 2011. At the time, the new regulation drove out foreign firms and led to a sharp decline in trading volumes. Since then though, as new firms have received licensing from the CMB as well as many foreign brokers partnering with local companies, volumes have rebounded back above pre-regulation levels.