Turkish clearing house move halts sharp decline in some bank shares

Borsa Istanbul

Turkish clearing house Takasbank took action to provide liquidity to brokerages and take on some stock as collateral, the market authority said on Thursday, stabilising shares in Turkish lenders Sekerbank and TSKB.

Banking shares on the Borsa Istanbul fell sharply in recent weeks, after surging more than 150 percent up to mid-September from the beginning of the year. The decline was largely due to margin calls on futures positions.

The fall in TSKB and Sekerbank shares, which traded limit down for nine consecutive trading days, continued longer than the other big banks as investors held leveraged positions.

A fund manager said the transfer of the shares to the clearing house has allowed the selling pressure on stocks to ease by reducing open positions.

Shares corresponding to 13.05 percent of the capital of Sekerbank and 7.22 percent of the capital of TSKB were submitted to Takasbank, a statement sent to the stock exchange by the central registry agency (MKK) said.

Traders and analysts have said the sharp falls in banking stocks earlier in September were due to margin calls on futures positions.

Investors in these futures contract 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.

As a last resort clearing house Takasbank’s guarantee fund is used.

Ankara might move to limit futures contracts on shares of small or medium-sized companies with low trading volume vulnerable to price manipulation, analysts said last week.

President Tayyip Erdogan said on Wednesday that authorities were looking into the issue and that an announcement would be made soon.