Duvar English

Turkey’s Banking Regulation and Supervision Agency (BDDK) has dropped a trading ban imposed last week on UBS, Citigroup and BNP Paribas because they have fulfilled foreign exchange obligations promptly, according to a BDDK letter sent to banks on May 11.

The three foreign banks have now “fulfilled their obligations in a reasonable time frame,” said the letter seen by Reuters and confirmed by a BDDK spokesman.

The short-lived ban was one of a few protective measures adopted by the government on May 7 when the Turkish lira tumbled intraday to 7.269 versus the dollar, its weakest ever.

The BDKK said last week that these banks failed to complete their lira commitments and so defaulted. It said that the move would prevent “transactions and applications that might endanger the operation of banks” as well as ensure the credit system works effectively.

On May 6, Turkey’s state-run Anadolu Agency said unidentified London-based financial institutions were facing possible legal action for taking “manipulative positions” against the Turkish Lira.

Turkey’s banking watchdog introduces new anti-manipulation rules

The BDDK on May 7 expanded the definition of manipulative trades, introducing new regulations that would block institutions spreading “false or misleading information” in financial markets.

According to the new regulations published in the Official Gazette, bank trades that result in “misleading pricing” or keep asset prices at “abnormal or artificial” levels will now be considered manipulative.

The actions covered by the new regulations include involvement in transactions “that affect or may affect the price of a financial instrument, including exchange rate and interest rate, through a deceptive mechanism or fiction.”

Other actions which could be blocked include keeping the price of a financial instrument at an artificial level and conducting transactions that would mislead investors by affecting opening or closing prices or exchange rates.

Transactions that damage financial stability when the supply-demand balance is not operating normally would also be considered manipulation.