Turkey to toughen insider trading rules with banking bill

Turkey's ruling Justice and Development Party (AKP) submitted an omnibus bill to parliament that foresees more severe punishments for insider trading and market manipulation as part of extensive laws regulating the country's banking industry and capital markets, Bloomberg said on Thursday.

"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," Bloomberg said.

Turkey’s market regulator in 2018 backtracked from a decision which was designed to help firms buy back shares ahead of the announcement of second-quarter earnings, after it had raised concern among the media and investors that rules on insider trading were being relaxed. But, the new laws would significantly increase regulatory authorities’ power over the nation’s lenders.

"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," Bloomberg said.

Turkey stock market was among the biggest losers in emerging markets in the following weeks after President Recep Tayyip Erdoğan appointed his son-in-law Berat Albayrak as minister in charge of the economy and Erdoğan made himself the sole authority to appoint senior central bank officials.

The omnibus bill also suggests Turkey's sovereign wealth fund, joining the list of state institutions that can issue debt and conduct transactions without being subject to credit limits and banking executives whose actions may harm the industry or the financial system will be temporarily stripped of some of their authority, according to Bloomberg.

Below are other highlights of the so-called omnibus bill that’s been reported by Bloomberg and is now before parliament.

  • 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
https://www.bloomberg.com/news/articles/2020-02-06/turkey-to-stiffen-penalties-for-manipulation-in-banking-overhaul