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Mehmet Ali Akben, President of the Banking Regulation and Supervision Agency (BRSA), gave the following answers to your questions about the details of the steps taken within the scope of the new type of coronavirus (Kovid-19) and the new regulation on manipulation. and deceptive transactions in the financial markets:
QUESTION: With the Board’s decision, three foreign banks were banned from conducting foreign currency transactions with a branch of the Turkish lira. How will the process work? In what situations can banks face similar penalties?
ANSWER: “Last week, three London-based foreign banks bought foreign exchange from Turkish banks, but did not pay the TL they had to pay in exchange for the foreign currency, and fell into default. Foreign banks continued to sell and receive foreign exchange even as long as They were in default. On the opposite side of the transactions, the need has arisen to take precautions against the risk of damaging banks and financial stability. Article 93 of the Banking Law gives our institution the obligation to avoid any type of transactions and practices that can cause significant losses in the banking sector and the economy.
‘WE HAVE EXPRESSED WHAT WE WILL APPLY
Our institution will fulfill the necessary determination against similar initiatives to protect all the stakeholders of the banking system against the manipulation processes that threaten the financial system. Within this framework, we made a decision of the Board last week. We have banned foreign banks from foreign banks that sold TL to deficiency, that did not have TL and that did not meet their TL obligations, and for foreign currency transactions with Turkish banks and a branch of TL. We have also stated that we will impose sanctions on banks that operate against this decision.
Following the Board’s decision, if the foreign banks in question meet their obligations, the lifting of the transaction ban may be taken into account. Investigations and investigations into whether the transactions to which these three banks are part constitute exchange rate manipulation will continue and conclude. “
‘THE EU REGULATION IS BASED’
QUESTION: “Mr. President, with the regulation on manipulation and misleading transactions in the financial markets, bank transactions within the scope of manipulation were determined. Can we get information on the scope of the regulation?”
ANSWER: “As is known, the amendment to the law, which brought about important changes in Bank Law No. 5411, was published in the Official Gazette on February 25, 2020. Some of the existing amendments and provisions were changed, and added new provisions with some of the amendments. This is article 76 / A where manipulation and deceptive transactions are regulated in the financial markets. This article, which you have been working on for a long time, is based on the ‘Regulation of Market Abuse ‘of the European Union, which is the basis of 2014 and, therefore, what transactions and practices they are The framework has been determined regarding acceptance as manipulation and deceptive transactions in financial markets. The Board also determines which transactions and practices will be covered by the manipulation and the deceptive transactions and practices.
The Regulation on manipulation and deceptive transactions in the financial markets, which is on the agenda today and published in the Official Gazette on May 7, 2020, is a sub-regulation of Article 76 / A of the Law. The provisions of the regulation have been drafted in accordance with the relevant articles of the 2014 EU regulation, the terms and expressions in the articles and the comments and explanations on these articles.
‘THE GOAL OF THE REGULATION IS NOT TO BLOCK NEWS’
It should be particularly emphasized that, although there are other regulations in the legislation related to misleading news and comments, the recipient of such BRSA regulation is manipulative bank transactions. Our institution does not have the restrictive or obstructive objective of commenting on financial markets and assets based on news and analysis. Claims in this direction are misleading and unfounded. “
‘THE APPLICATIONS WILL RETURN TO THE OLD’
QUESTION: The impact of the epidemic on both financial markets and economic dynamics forced him to act many times in regulating the banking sector. Exchange decisions, restriction of TL placement abroad and regulation of the active relationship are some of them. How are the initial results of the regulations? What steps should be expected from the institution in the near future?
ANSWER: “As BRSA, we have begun to implement the necessary measures quickly and decisively from day one of the epidemic’s effects to maintain confidence in financial markets. Due to the Kovid-19 epidemic, there are excessive fluctuations across all World financial markets, which are interest rates and To minimize the negative effects of this pressure on capital adequacy and the net general position in foreign currency of such pressure, some temporary practices are applied in the calculation procedures regarding equity , capital adequacy, overall net foreign currency position and minimum levels of liquidity level It was felt that going would be beneficial and the necessary decisions were made to provide flexibility.
It is important to note that our banking sector has a strong capital structure that is well above what is necessary in its strong position against the simultaneous effect of the risk of global recession and the shock of financial markets.
Furthermore, our approach to minimize the negative impact of the process in which we live in our economy, in the market, in production and employment, to guarantee the most efficient use of the resources available to banks and to fulfill its essential functions. to be continue. In this context, the Board decision dated May 5 aimed to limit the placement of Turkish lira banks in financial institutions residing abroad until the effects of Kovid-19 wear off, and to ensure that banks are focus on their core functions by transferring resources to those in need at the national level. Being proactive, flexible, and able to act quickly, making arrangements on time is extremely important to limit and reduce risks in our financial system. In this period, I hope that all stakeholders in the financial system live up to their responsibilities and not fight around sector regulations and I would like to remind all stakeholders that we will follow this 24/7. “
Claiming that they take precautions in EU rules so as not to harm financial stability, Akben said “the target of the regulation is manipulative bank transactions. Our goal is not to avoid analytical news and commentary.”
