Brokerage Referral to Overseas Forex Firms: SPK Fine Upheld

If a brokerage firm in Türkiye that is authorised by the Capital Markets Board directs its own customers to overseas companies carrying the same logo, which rule does it break? In a case arising at the time when leverage limits and an initial margin requirement came into force, this question reached the administrative courts. The 13th Chamber of the Council of State (Danıştay) upheld the rulings dismissing the case brought against an administrative fine of TL 478,846.00 imposed on the brokerage firm; however, the decision was by majority, and a dissenting opinion questioned whether the provision of the Communiqué on which the fine rests could be applied to this case.

In its decision of 13 January 2025, Docket No. (E.) 2022/2647, Decision No. (K.) 2025/159, the 13th Chamber of the Council of State upheld the dismissal of an annulment action brought against an administrative fine decision of the Capital Markets Board, together with the decision rejecting the appeal against that dismissal.

📉 The 2017 Leverage Rules and the Shift Abroad

According to the assessment recounted in the administrative court's decision, the Capital Markets Board lowered leverage ratios by its decision of 10 February 2017 and introduced an initial margin requirement of TL 50,000.00 or the equivalent in foreign currency for persons applying to brokerage firms for leveraged trading. The decision records that after this date, investors who did not want to trade with low leverage turned to overseas companies that offered high leverage and asked for no initial margin.

The same assessment states that leveraged transactions, and derivative instruments subject to the same provisions, may be bought and sold by persons resident in Türkiye only through brokerage firms authorised by the Board, and that a person cannot carry out leveraged trading through entities resident abroad, even on their own initiative. The dispute arose in this context, from the relationship that a brokerage firm authorised to operate in Türkiye had with overseas companies.

🔍 The Board's Findings at the Brokerage Firm

The review began with two companies established in New Zealand and Azerbaijan, in connection with unauthorised leveraged trading activity. The main findings listed in the decision are:

The decision also recounts that, according to the New Zealand company's account movements, citizens of the Republic of Türkiye sent USD 1,605,904.08 to this company between 3 July 2017 and 25 March 2019, that the senders included customers of the brokerage firm, and that statements taken said the overseas companies were promoted by the brokerage firm.

🏛️ From the Administrative Court to the Council of State

The brokerage firm brought an action for annulment of the Board's administrative fine decision. The proceedings went through three stages with the following results:

• Administrative court: It accepted that the promotion and marketing activities carried out through the brokerage firm neutralised the initial margin requirement and the lowered leverage ratios in the legislation, and that there was no unlawfulness in imposing the fine at the maximum level given the seriousness of the breach; it dismissed the case.
• Regional administrative court: It found the first instance decision in accordance with procedure and the law, and rejected the appeal under Article 45, paragraph 3, of the Administrative Procedure Law No. 2577.
• 13th Chamber of the Council of State: It did not see the grounds of appeal among the grounds for reversal listed in Article 49 of the Administrative Procedure Law, and upheld the decision on 13 January 2025, finally and by majority.

On appeal, the brokerage firm argued that the sanction in Article 103 was vague, that no expert examination was carried out, that its executives were acquitted in the criminal case concerning them, that Article 9 of the Communiqué regulates entities abroad, and that imposing the fine at the upper limit was unreasoned. Without discussing these claims separately, the Council of State regarded the first instance reasoning as sufficient.

📜 What Does Article 9 of the Communiqué Regulate?

At the centre of the decision is Article 9 of Communiqué No. III-37.1, titled "Activities of entities resident abroad". According to the text quoted verbatim in the dissenting opinion:

The first instance court, and the majority of the Council of State that upheld it, read the words "through persons or institutions resident in Türkiye" in the second paragraph as also covering a situation in which the brokerage firm in Türkiye is used as a tool for this promotion and marketing. A licensed brokerage firm acting as the domestic arm of an overseas company was thus deemed to have acted contrary to the Board's regulations.

Article 103/1 of Law No. 6362, on which the fine rests, attaches an administrative fine to breaches of regulations made under the Law and of Board decisions, while Article 45/1 gives the Board the authority to set the principles and rules that investment institutions must follow.

⚖️ The Two Objections in the Dissenting Opinion

The dissenting opinion departed from the majority on two points.

First objection: the scope of the underlying provision. According to the dissent, Article 9 of the Communiqué regulates the activities of persons resident abroad. The claimant, which was granted an operating permit by the Board and authorised as a brokerage firm with broad powers, was fined on the basis of this article, yet the matters found do not fall within the scope of the second paragraph.

Second objection: the reasoning for the upper limit. The dissent drew attention to Article 17, second paragraph, of the Misdemeanours Law No. 5326. Under this provision, where the lower and upper limits of a fine are set out in law, the amount is determined by taking into account together the unlawful content of the misdemeanour and the offender's fault and economic situation. The dissent also recalled that, under the Board's principle decision No. 10/363 of 26 March 2013, reasons must be clearly stated when departing from the lower limit, and noted that the administration had not shown, with concrete information and documents, why the fine was imposed at the upper limit.

For the general framework of the reasoning problem, see our article on the duty to give reasons in SPK administrative finesTR, and for another sanction imposed on brokerage firms, our article on the fine for outsourcing at a brokerage firmTR.

🧩 Technical Evidence and Proof

In this case the referral was shown mainly through technical records. The Board assessed together the live-support conversations, the code on the website, the mobile application software, the administrator settings on the trading platform and the customer account movements, and the court treated these findings as a whole.

The defence based on the acquittal in the criminal case did not change the outcome. The Council of State found the first instance reasoning, built on breach of the Board's regulations, sufficient, and gave no separate explanation on the relationship between criminal proceedings and the administrative sanction.

🆕 What the Decision Means for Investors

The decision is not a direct investor case; it is an administrative dispute between a brokerage firm and the Board. It nevertheless contains important information for investors:

Our article on the separation of referred transactions in forexTR, which deals with the private-law side of referred transactions, can be read together with this decision.

Note: Sentences based on turnover and profit for legal entities were added to the first paragraph of Article 103 of Law No. 6362 by Laws No. 7222 and 7518; the decision does not refer to these additions.

❓ Frequently Asked Questions

For detailed information and legal support, you can contact Savun Law & Consultancy. Contact details are on the contact page, and similar decisions are in the Precedent DecisionsTR archive.