Turkey Stiffens Manipulation Penalties in Banking Overhaul

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(Bloomberg) -- Turkey is planning to stiffen punishments for insider trading and market manipulation as part of a broad overhaul of laws regulating its banking industry and capital markets.

Turkey’s main stock index reversed from gains to losses following the news. Its banking sub-index, which tracks listed lenders accounting for more than a quarter of the benchmark list’s market capitalization, erased all gains.

The proposal submitted to parliament by President Recep Tayyip Erdogan’s AK Party significantly increases regulatory authorities’ sway over the nation’s lenders.

The central bank will now set fees and commissions charged by lenders to their clients, increasing the monetary authority’s power over streams that account for about 12% of total banking revenue. The minimum jail sentence for anyone manipulating the price of financial securities or benefiting from information obtained illegally will be raised to three years from two.

Below are other highlights of the so-called omnibus bill that’s been seen by Bloomberg and is now before parliament, where the ruling party has the votes to ensure its passage.

  • The sovereign wealth fund, known as TWF, joins the list of state institutions that can issue debt and conduct transactions without being subject to credit limits.
  • Banking executives whose actions may endanger the industry or the financial system will be temporarily stripped of some of their authority
  • As part of compliance with new global regulation, lenders will be required to prepare preemptive recovery plans and submit those to the banking regulator
  • The changes will also reduce the cost of mandatory share call to minorities, making it easier for listed companies to go private, announce mergers or ownership changes

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