Capital Markets Board of Turkey has made an Announcement Regarding Reporting and Depositing of Derivative Transactions

Summary

Capital Markets Board of Turkey (“CMB”) has made an announcement on April 20, 2020 regarding reporting and depositing of derivative transactions. Through this announcement it is mentioned that in order to strengthen financial stability and infrastructure, reporting must be made in accordance with the principles regarding transparency of over the counter derivative transactions and risk monitoring. For companies which do not comply with the reporting obligations administrative fines may be applied.

Please find our summarized explanations regarding the announcement as follows:

·        Explanations regarding the reporting obligation of derivative instrument contracts which are concluded without intermediation of an investment firm

Under Article 6 of the Communiqué on Principles Regarding Reporting to the Trade Repository Institutions numbered IV-87.1 (“Reporting Communiqué”), it was regulated that the parties of the derivative instrument contract and the central counterparty service providers shall report the details of the derivative instrument contracts to the Trade Repository Organization (“TRO”).

In the announcement published by the CMB it is determined that the derivative instrument contracts executed by and between firms specified in the relevant article of the Reporting Communiqué, publicly held corporations and legal entities incorporated in Turkey which as of the last business day of the accounting period have foreign currency indexed loans and foreign currency cash loans provided from Turkey or abroad amounting to 15 million US dollars as specified in the Regulation on Procedures and Principles Regarding Monitoring Transactions Affecting the Position of Foreign Currency by Central Bank of Republic of Turkey, (except for the investment firms) or through foreign organized or over the counter markets, without the intermediation of an investment firm licensed by CMB, shall be reported by the legal entities incorporated in Turkey.

·        How will the reporting be performed?

From the effective date of the Reporting Communiqué (27.10.2018), investment firms and legal entities that are parties to and/or that have intermediated the derivative transactions have been transferring the information on transactions they have executed and the information listed in the Annex of the Reporting Communiqué with specified format and details to the e-VEDO Platform as of 01.02.2019.

Parties subject to reporting obligation are obliged to evaluate the contract values and collateral values of their outstanding derivative positions that they have reported, on a daily basis according to the market price. Notifications regarding the valuation will be reported to the TRO.