16 April 2020
In an attempt to support financial stability and mitigate the economic risks associated with the global Coronavirus (Covid-19) outbreak, the Banking and Regulatory Supervision Agency of Turkey (the "BRSA") and the Capital Markets Board of Turkey (the "CMB") drastically expanded the restrictions regarding the total notional amount of foreign currency denominated swaps and other derivative transactions carried out by banks and financial institutions operating in Turkey.
The BRSA and the CMB have announced a stricter regime on swaps and other derivative FX trades entered with foreign counterparties in an effort to prop up the Turkish Lira which has fallen 12% against US Dollar so far in 2020 due to the economic impact of the Covid-19 outbreak, amongst other negative factors affecting Turkey's economy. With the new restrictions, the Turkish authorities are seeking to effectively control the liquidity flow to offshore swap counterparties by limiting the transaction amount to 1% of the Turkish bank or financial institution's regulatory capital in FX swap, option, future, forward and other similar derivative contracts entered into with foreign counterparties.
Clifford Chance works in cooperation with Yegin Ciftci Attorney Partnership on Turkish law matters.