Turkish prosecutors launched an investigation into alleged organized irregularities in stock market transactions after a plunge in equities last month and detained eight people in connection with the probe, according to local media.
Banking shares on the Borsa Istanbul Stock Exchange (BIST) fell sharply in recent weeks, after surging more than 150% until mid-September from the beginning of the year. The decline was largely due to margin calls on futures positions.
Istanbul prosecutors started the probe on suspicion of organized activity that violated Türkiye’s capital markets law and issued arrest warrants for 10 people and police conducted an operation at 17 addresses in four provinces. Two of those sought were abroad, Anadolu Agency (AA) said on Sunday.
The Capital Markets Board (SPK) said a criminal complaint was filed against 10 people over transactions carried out on the Borsa Istanbul Futures and Options Market (VIOP), with the same people and a construction company banned from trading for two years.
A sudden reversal in Türkiye’s stock market saw banking equities drop 39% in a three-week long rout that started on Sept. 13, Bloomberg News said, threatening some brokerages’ financial stability. It estimated that the rout had erased about $14 billion in market value.
President Recep Tayyip Erdoğan last week predicted “speculative moves” during the rout and said the Treasury and Finance Ministry was “reviewing transactions as part of a probe.”
Analysts and participants had said Ankara might move to limit futures contracts on shares of small or medium-sized companies with low trading volume vulnerable to price manipulation.
One source said the futures market positions were largely held by investors trading with five brokerage houses and that if investors cannot meet the collateral requirements they may be reflected in brokerages' balance sheets.
One of the brokerages named by sources among the five was Gedik Investment. Gedik said on Friday it had decided to raise its share capital to TL 505 million from TL 327 million via rights issues due to extraordinary volatility in Borsa Istanbul and VIOP.
Investors in futures contracts have to meet margin calls by showing cash, shares or other securities equal to the margin call to keep their trading positions. Otherwise, brokerages meet them by selling the shares.
Last Thursday, the Turkish clearing house Takasbank acted to provide liquidity to brokerages and take on some stock as collateral, stabilizing shares in Turkish lenders Şekerbank and Industrial Development Bank of Türkiye (TSKB).
