Turkey Stiffens Manipulation Rules With Lira at Record Low

(Bloomberg) -- Turkey’s banking regulator expanded the definition of manipulative trades in financial markets as the country’s currency hit a record low.

Bank trades that result in “misleading pricing” or keep asset prices at “abnormal or artificial” levels will now be considered manipulative, according to a new BDDK regulation called “Manipulative and Misleading Trades in Financial Markets.” The regulation complements a February law that stiffened punishments and raised jail terms for insider trading and market manipulation.

The new restrictions, published in the Official Gazette on Thursday, apply to a large range of assets such as foreign exchange, swaps, forwards, options or other derivative trades with foreign investors. They also include trades on credit default swaps “that increase disorder in markets by taking advantage of shallow markets or price fluctuations during offer and demand abnormalities.” Spreading “misleading or wrong information” on financial assets through the news media will also be considered manipulative trading.

The lira weakened more than 17% against the dollar this year, breaching an August 2018 low on Thursday morning and defying efforts by banks to prop up the currency by selling foreign exchange. The currency weakened as much as 0.7% to 7.2496 per dollar.

‘London Manipulation’

In a story published late Wednesday, the state-run Anadolu Agency said London-based financial institutions are facing possible legal action for taking “manipulative positions” against the country’s currency.

The unidentified firms “attempted to rapidly buy large amounts of foreign currency with liras they don’t own” in a manipulative attack, the agency said, citing Turkish bankers it didn’t name.

“It was of note that the banks timed their manipulative attacks with Treasury and Finance Minister Berat Albayrak’s call with investors” on Wednesday, the agency said. Albayrak said he’s optimistic his country will secure foreign-currency swap lines with Group of 20 nations and others, according to participants on the call.

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