IMKB Introduces The Investor Based Measures System

27/06/2012

By its Circular no. 395, İMKB clearly defines the orders and trades hindering the realization of trades on İMKB in an open, orderly and fair manner, and regulates the principles and rules regarding the measures to be taken by İMKB against the investors that have been found to be engaged in such orders or trades.

According to this Circular, issued based on the articles 14 and 25 of the Regulations Regarding the Establishment and Bodies of Securities Exchanges and article 24/A of İMKB Regulations, the orders and trades on İMKB Stock Market (excluding exchange traded funds and warrants) and İMKB Emerging Companies Market with the following features are considered to be orders and trades that prohibit the realization of trades on İMKB in an open, orderly and fair manner.

a) Single Party Wash Trades:

In the market of any stock, where the number of trades is equal to or higher than 50 percent of the average number of contracts of İMKB Stock Market during a session; if, simultaneously,

1) The number of contracts realized by an investor as a single party wash trade is equal to or higher than 25 percent of the total number of contracts realized on that stock,

2) The volume of shares traded realized by an investor as a single party wash trade is equal to or higher than 25 percent of the total volume of shares traded on that stock,

3) The arithmetical average of the ratio of the number of investor’s single party wash trades’ contracts to the total number of contracts on that stock and the ratio of the volume of investor’s single party wash trades to the total traded volume on that stock [the average of the ratios indicated in the above sub-paragraphs (1) and (2)] is equal to or higher than 40 percent.

b) Multiple split orders:

In the event that the following conditions are met simultaneously on a stock during a trading session;

1) If the investor, within a period of 30 seconds or less, gives active orders of the same direction, at an equal or better price that generate a minimum of 5 contracts, despite the fact there are pending orders in the system that are enough to fulfill such series of orders at once,

2) If the investor repeats the trading pattern mentioned in the sub-paragraph (1) above, for a minimum of 25 times during a trading session, and the arithmetical average of the number of contracts realized with such repeated patterns is at least 25.

If the investor’s number of contracts mentioned in the sub-paragraph (2) above is equal to or more than 40 percent of the total number of contracts realized on that stock; and the investor’s number of contracts featured in the sub-paragraph (2) above is equal to or more than 80 percent of the total number of active orders given by the same investor and that has become trades.

İMKB shall impose the following five different measures successively, against the investors that have been found to be engaged in the activities indicated above, as a result of İMKB’s surveillance and inspection activities. The conditions and terms of such measures are given in the table below:

MEASURE

CONDITION

TERM

1st Phase

Informing the related investor in writing

Occurrence of the actions at least 3 times in any 90-day period

-

2nd Phase

Announcement of the investor’s identity or legal entity information

Following the 1st phase, recurrence of the actions at least 3 times in any 90-day period

-

3rd Phase

Gross settlement requirement for the investor

Following the 2nd phase, recurrence of the actions at least 3 times in any 30-day period

15 days

4th Phase

Pre-deposit requirement for the investor

Following the 3rd phase, recurrence of the actions at least 3 times in any 30-day period

30 days

5th Phase

Temporarily order rejection (Boycott)

Following the 4th phase, recurrence of the actions at least 3 times in any 30-day period

Boycott for 45 days, followed by gross settlement for 30 days

 

Furthermore, any orders or trades by investors that do not exactly meet the ratios, quantities, numbers, and periods indicated above, but that are very close to such ratios, quantities, numbers, and periods on a continuous basis and that are aimed at defrauding this regulation shall be considered as orders and trades hindering the realization of trades on İMKB in an open, orderly and fair manner, and shall be subjected to the relevant measures.

We are in the opinion that this new regulation of taking measures on investor basis will provide highly instrumental in ensuring the realization of trades on İMKB in an open, orderly and fair manner, efficiently fighting against market abusing activities, strengthening investor confidence in the capital markets, and therefore, in the further development of the capital markets and the realization of İstanbul Financial Center vision.

In order to ensure that the investors, market participants and intermediary institutions are well-informed, this new regulation shall become effective on September 3, 2012. Thereafter, in consideration of the functioning, efficiency and effects on the market, İMKB may make revisions on this new regulation as it may deem necessary.

The full text of Circular is available on İMKB’s official web site (www.imkb.gov.tr) and Public Disclosure Platform (PDP) (www.kap.gov.tr).