Market Abuse Actions in Accordance With Capital Markets Law
Introduction
The Capital Markets Board adopted the Communiqué on Market Abuse (VI-1.104.1) (“Communiqué”) in order to determine the acts and transactions that result in the distortion of the reliability, transparency, and stability of stock markets and other organized markets, which cannot be justified through reasonable economic or financial grounds, and sanctions upon those persons who do such acts and transactions. The Communiqué was published in the Official Gazette on 21.01.2014, and came into effect the same day. The Communiqué sets forth market abuse actions, and actions that are not deemed as market abuse.
Market Abuse with respect to Inside or Periodic Information
Persons that have inside or periodic information prior to the public disclosure of such information pursuant to the capital markets law, shall keep such information confidential until the disclosure thereof. The disclosure of such information by the persons in question before the public disclosure, and the execution of capital markets transactions based on direct or indirect knowledge of such information shall be deemed as market abuse.
Transactions regarding relevant capital market instruments by persons having inside or periodic information, or by the spouse, children, or cohabitants of such persons during the period starting from the day after the end of the accounting period regarding financial statements and reports of issuers, or independent audit reports, until the date of disclosure of those statements and reports to the public in accordance with legislation, is considered and treated as market abuse.
Transactions regarding relevant capital market instruments by persons having inside or periodic information or by the spouse, children, or cohabitants of such persons, during the period starting from the date of the finalization of inside or periodic information until the date of disclosure of such information to the public in accordance with legislation, is considered and treated as market abuse.
Market Abuse Actions with respect to the Orders or Transactions
Actions and acts by persons acting alone, or together, through stock markets, or in other organized markets, which may be deemed as material or effective, taking into account the determined value of the capital market instruments, price variations, transaction volumes, transaction amounts, transaction rates, order amounts, order rates, order cancellation amounts, order cancellation rates or order execution rates, distorting the reliability, transparency and stability of stock markets and other organized markets, or creating wrong or false impressions regarding prices, price variations, supply and demand of capital market instruments, or preventing competitive environments of the market, or formation of fair or correct prices:
a) by selling and purchasing, executing account activities, giving orders, or cancelling or changing orders; or
b) transmitting orders at different price levels; or
c) by giving reverse orders within a period of less than one minute, such as a selling order at a price equal to or lower than the best purchase price in the market, or a buying order at a price equal to or higher than the best sale price; or
d) executing transactions with itself or reciprocal transactions; or
e) by executing transactions with the purpose of affecting opening or closing prices;
f) executing transactions with the purpose of affecting the end-of-day or end-of-maturity settlement prices; or
g) executing transactions with the purpose of increasing, decreasing, or maintaining the price; or
h) exceeding the position limits provided for all accounts associated with a registry, or on a market basis in futures and options markets; or
i) executing transactions that are similar to transactions executed in the relevant underlying asset market in futures and options markets
are considered and treated as market abuse actions.
Market Abuse through Communication or Correspondence
To indicate false, wrong or misleading information, spread rumors, inform, make material disclosures, make comments, or prepare reports that can affect prices, values of capital market instruments, or the decisions of investors, or which are capable to effect market indicators that may affect relevant indicators, is considered as market abuse. Furthermore, the execution of such action by persons who know, or should have known, that such actions are false, wrong or misleading, is considered as market abuse (For instance: board of director’s members, managers, specialists, etc.).
Non-disclosure of information that is required to be disclosed pursuant to the Regulations by the Capital Markets Board regarding material disclosure, and which may affect the prices, values of capital market instruments, or the decisions of investors are also considered as market abuse.
In addition, selling a capital markets instrument despite giving a recommendation to purchase or hold, or purchasing a capital markets instrument despite giving a recommendation to sell, after making comments, or giving advice about such capital market instruments through newspapers, television, internet, or similar other media instruments, until the date of revising such comments or advice, or in any event, within 5 business days thereafter, is deemed as market abuse.
Other Market Abuse Actions
Prior to the transmitting of orders to investment companies, relevant stock market, or other organized markets that are capable of affecting the price or value of capital market instruments, to give orders regarding the capital market instrument in question or other relevant capital market instruments with advance knowledge on order of the investors, or to change or cancel such orders, or to transfer the information on the orders in question to third parties are considered as market abuses.
Following transactions in stock markets or other organized markets that are absent a power of attorney issued by a Notary Public, are considered as market abuse:
a) to transmit orders, execute transactions, or make transfers by using the account of another person; or
b) to allow other persons to transmit orders, execute transactions, or make transfers by allowing others to use his/her account.
In the event that the shareholders having control plans to sell their shares in the stock market, which exceed 10% of its share capital, or 50% of the value of their shares on de facto circulation in any twelve month (12) period, the relevant shareholders shall issue an information form in accordance with the legislation, and the form shall be approved by the Capital Markets Board prior to the sale. The form approved by the Capital Markets Board shall be announced through a Public Disclosure Platform. Non-compliance with aforementioned Article 27 of the Communiqué on Shares (VII-128.1) and the principal decision of the Capital Markets Board shall be deemed as market abuse.
If a person who is prohibited from concluding transactions by Capital Markets Board trades in stock markets, or in other organized markets, by using his/her own account, or the account of other persons during the prohibition period, the person in question shall be deemed to have committed market abuse.
Actions Not Considered As Market Abuse
The following transactions are not considered as market abuse actions:
- Transactions in order to ensure the financial stability or implementation of the policies on money, rates of exchange, and management of public debts by the Central Bank of the Republic of Turkey, and other authorized administrative authorities, or those persons who act on their behalf,
- Allocation of shares regarding repurchase programs, share acquisition programs to personnel, or other allocations of shares to the personnel of the issuer or subsidiaries under the regulations of the Capital Markets Board,
- The sale or purchase of capital markets instruments, or giving orders, or cancellation of orders in order to maintain the market price of such instruments in a determined period, provided that such transactions are concluded in conformity with the provisions of Capital Markets Law No. 6362 regarding the transactions on price stability and market making,
- The professional activities of journalists conducted in accordance with journalism ethics and standards provided that;
a) an unfair advantage is not directly or indirectly obtained through the publishing of news or comments; or
b) news or comments are not published in agreement with, or under the guidance of, persons who have committed abuses of information or market manipulation crimes; or
c) the relevant capital markets instrument are not traded with, or such information is not disclosed to, third parties before publishing the news or comments.
Conclusion
The Communiqué of the Capital Markets Board provided for the acts and actions distorting the reliable, open, and stable functioning of stock markets and other organized markets, and the Communiqué defines actions that affect the price of capital market instruments, the decisions of investors, distorting the competition, and the fair and correct functioning of the transactions.
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents
A new legislative package, the Listing Act, was adopted by the European Council on October 8, 2024 to make capital markets within the European Union (“EU”) more attractive and facilitate companies' IPO process. The Listing Act amends the EU Prospectus Regulation, the EU Market Abuse Regulation, the Markets...
Crypto assets have become a significant component of financial markets in recent years, prompting the development of a regulatory framework in response to growing investor interest. In this context, both the amendments to Capital Markets Law No. 6362 (“CML”) and various resolutions issued by the Capital...
New ventures and, in this context, start-up companies have been essential players in economic life for a long time. Significantly in terms of new technologies and creative ideas, instead of established and large structures, new ventures and structures where individuals' personal contributions matter more greatly...
The website is one of the most important tools that reinforces the transparent management approach of companies and enables company stakeholders such as shareholders, company creditors, and those who carry out activities with the company to access important information about the company quickly and...
Crypto assets have created a significant change in the financial system with the emergence of blockchain technology. The decentralized and digital nature of these assets has offered a new method outside of traditional monetary systems...
The Keener decision represents a pivotal moment in interpreting and applying securities laws as it pertains to the definition and regulatory treatment of “dealers” within financial markets.This case arose from actions taken by the Securities and Exchange Commission (“SEC”) against Justin W. Keener, who was accused...
Responsible Management Principles (Stewardship Principles, SP) have been regulated by the Capital Markets Board (CMB) regarding the securities investment funds (Funds) founded by Portfolio Management Companies (PMC)...
Information holds paramount importance in the capital markets. Investors, whether seasoned professionals or newcomers, depend on various sources to guide their decisions amidst the complexities of the capital markets...
In the intricate web of finance and law, the US Court of Appeals for the Second Circuit’s ruling of Kirschner v. JP Morgan Chase Bank, N.A. (“Kirschner Ruling”) stands at the confluence of international banking regulations and securities law, presenting a thorough examination of the legal frameworks governing the...
Sustainability-linked derivatives transactions involve the embedding of a cash flow in derivatives that will change in a sustainability-linked way, and institutions' compliance with environmental, social, and governance (ESG) objectives is monitored using specific performance indicators...
There is no specific procedure in the Turkish Commercial Code (TCC) that publicly traded corporations must follow in terms of providing collaterals, pledges, mortgages and sureties (CPMS). Authority for and procedure of provision of CPMS are determined according to the general rules...
In line with the financing needs of companies and their desire for institutionalization, the number of public offerings shows an upward trend across Türkiye. Looking at the data published by the Capital Markets Board on its website regarding initial public offerings, it is seen that, it is seen that 35 public offerings...
The Communiqué on the Principles Regarding the Companies whose Shares will be Traded on the Venture Capital Market (II-16.3) ("Communiqué") has facilitated for private joint stock companies to sell their shares to qualified investors without a public offering. Thus, a new opportunity is created for joint stock...
Swiss Financial Markets Supervisory Authority (“FINMA”), through its decision dated 19 March 2023, approved the merger of Credit Suisse with UBS Group AG (“UBS”) and to write down the Additional Tier 1 capital bonds (referred to as AT1) issued by Credit Suisse, with a total value of approximately CHF 17 billion...
The Capital Markets Board’s (“Board”) long-awaited Communiqué on Crowdfunding No. III - 35/A.2 (“Communiqué”) entered into force through its publication in the Official Gazette numbered 31641 and dated 27 October 2021...
Mortgage covered bonds are one of today’s most common structured finance products. Although they have a prominent presence in the marketplace today, these bonds have historical roots in the Pfandbrief of 18th century Prussia. In the aftermath of the Seven Years War, King Frederick the Great implemented...