Turkey

Turkey once had one of the largest retail forex markets in Europe and the Middle East. In 2017 its regulator changed the rules so sharply that the market contracted by an order of magnitude within months, and the episode is worth understanding as a case study in intervention.

What changed

The Capital Markets Board imposed two measures together in February 2017:

• Leverage capped at 10:1 for retail clients — far tighter than Europe's later 30:1 — after Turkish retail investors had been trading at levels up to 100:1.
• A minimum account balance of TRY 50,000, a substantial sum locally, effectively excluding small retail accounts entirely.

The combination was deliberate. The CMB's concern was that a large population of small, inexperienced accounts was being destroyed by leverage, and rather than only capping leverage it also raised the threshold for participating at all.

What happened

Client numbers and volumes fell dramatically, several brokers closed, and much activity moved to unlicensed offshore platforms — the outcome regulators always fear when they tighten. Turkey responded with website blocking against unauthorised platforms, and access to many offshore broker sites is restricted from Turkish connections.

Both halves of that story are real, and neither settles the argument: the domestic retail market was substantially protected, and some activity was pushed somewhere with no protection at all.

The lira

The lira has depreciated dramatically over the past decade, with periods of very high inflation and unorthodox interest rate policy. That produces genuinely extreme conditions in TRY pairs — enormous carry, sudden gaps, and overnight financing costs that dominate the position. A carry trade in a currency depreciating faster than the yield is not a carry trade, and TRY has repeatedly taught that lesson expensively.

Checks

Verify a broker on the CMB's list of licensed intermediaries, and note that an offshore firm marketing into Turkey is operating outside the regime entirely.