Wondering About Forex Trading in Turkey? Read our Guide to CMBT Forex Brokers
Once upon a time, not so very long ago, Turkey’s Forex trading market was a little chaotic. There were a wealth of unregulated brokers creaming cash from Turkish investors. It’s always a worry for investors when they have little choice but to trade with this type of broker, but today’s Forex trading market is all about regulation. And now it is the same in Turkey. So who is the regulatory body responsible for Forex brokers in Turkey?
Introducing the CMBT
You’ve probably heard of the more well-known regulatory bodies such as the FCA, CySEC, and BaFIN, but have any of you heard of the CMBT? CMBT stands for the Capital Market Board of Turkey and this is the regulatory agency responsible for the financial markets in Turkey. It is responsible for monitoring and managing the operations of the financial market, protecting consumers and supervising stock market participants. The Board was created in 1982, but it is only more recently it has become very involved with CMBT regulated brokers. It was established following the Capital Markets Law in 1981 and has also been the subject of a number of additional laws and decrees which served to expand its functions. It’s not really necessary to mention them all but we should mention the most significant change followed Law No. 4487 which was passed at the end of 1999. A set of amendments were added to the Capital Market Law to expand the scope of the Board and its duties. The changes included making the markets more flexible and able to use information technology, allowing dematerialisation of stocks, and increasing protection for consumers.
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Forex trading in Turkey and CMBT Forex brokers
Since 2011, Forex trading and Forex brokers in Turkey have been regulated by the CMBT. The Board also prohibits non-licensed Forex brokers in Turkey from handling retail investors trades. The prohibition was introduced to limit the uncertainty which had taken hold of the Forex trading market. Initially, the news wasn’t taken very well by the unlicensed brokers which made up a large section of the market, as it would mean having to comply with very stringent rules developed to regulate transactions. Turkish Forex traders welcomed the new rules with open arms as they were tired of the uncertainties. It had been a common occurrence for brokers to go bust and lose their clients money. Not so with the new regulations as it was a requirement for licensed and regulated brokers to hold collateral in a settlement and custody bank.
The choice of regulated Forex brokers in Turkey is increasing
Things have improved for Forex traders in Turkey with the number of regulated Turkish Forex brokers steadily increasing. Before the improvements in Turkish Forex regulation, the markets were out of control. Brokers were taking investors money and giving very little back in return. Nowadays, there is a much more formal market infrastructure, which is bound to be a good thing. With traders being able to quickly determine whether a broker is licensed and thereby make the best possible choice. It also seems the better-regulated, quickly expanding domestic trading market is now able to entice much bigger foreign brokerage firms to set up operations in the country, keen to cash in on the action. Before the regulations took hold, very few major Forex players were interested in investing in Turkey, now there is an increasing number of CMBT licensed and regulated Forex brokers to choose from.
How the CMBT aims to protect the rights of investors
The mission of the CMBT is to preserve fair, transparent, efficient and safe capital markets. It also aims to protect interests and rights of investors, allowing the general public every opportunity to participate in economic development. But how does it plan to achieve this? There are a number of different roles the CMBT uses to reach its goals:
Overseeing – All capital market participants are monitored including Forex brokers in Turkey, publicly held corporations, stock and derivative exchanges, clearing and custody systems and other related agencies
Regulating – The CMBT establishes rules and makes changes where necessary to ensure the regulatory structure is flexible and able to adapt to new circumstances
Issuing – It issues guidelines in line with international standards
Monitoring and supervising – To reduce the risks of non-compliance and to ensure soundness of the financial market, auditing and rating agencies and firms, requesting annual reports and financial statements, imposing statutory filings and preventing market abuse
Encouraging – All participants to employ the best practices
Registering and approving – All publicly held companies and capital market instruments
Authorizing – Ensuring all organizations meet the qualifications required to operate
Enforcing – Collecting evidence through formal inquiries, examinations and other methods and any serious breaches brought before the Public Prosecutor
Licensing – Ensuring all professionals who work in the capital market institutions undergo licensing examinations to determine qualifications, knowledge, capabilities, and experience
The Board is divided into 12 different departments. Those of you looking to trade with CMBT regulated brokers will be interested in the Department of Intermediary Activities. This Department is responsible for reviewing and examining applications by intermediary institutions, including Forex brokers in Turkey, and ensuring compliance with all requirements. It also regulates stock exchanges and other markets where instruments are traded. It provides advice, sets regulations regarding custody, settlement and materialization, as well as investor compensation schemes. So the future is definitely rosy for any Turkish investors looking to trade in foreign currency pairs. No longer is the industry unregulated which means investors can rest assured there is far more protection. Should you find yourself looking for CMBT Forex brokers it is easy to perform your own due diligence. The CMBT website has an easily accessed list of licensed institutions so it is just a simple case of looking down the list. Unfortunately, very little detailed information is available about the different licenses but at least you can find out whether there is one and when it was issued.