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One foot in Europe, one in Asia
28 April 2026
Hansa Tote explores Turkey’s securities finance market, discussing market volatility, reactive regulators, and short selling bans amid geopolitical tensions
Image: stock.adobe.com/boule1301
A country full of delights, Turkey is famed for its coffee, food, and white sandy beaches. It is also a country that has deep roots in finance, with historical records showing that the first coin to be minted took place in Lydia (modern day western Turkey) circa 600BCE.
Geographically, Turkey straddles both Europe and Asia, with the economy being widely considered European — despite 97 per cent of the country being in Asia — due to its deep integration with the EU. Turkey’s economy currently ranks 16th in the world, according to the International Monetary Fund (IMF), and is a member of the Organisation for Economic Cooperation and Development (OECD).
James Cherry, head of collateral, securities lending and liquidity solutions, business development at Clearstream, likens Turkey’s market to the emerging markets of South Africa, Poland, and Brazil, though with some key differences between those and Turkey.
“In Turkey, there is a visible relationship between policy and the securities lending market itself, there have been instances in the recent past where the Turkish authorities will step in and either impose limits on securities lending practices, or they will ban short selling,” he explains.
Cherry details that regulatory uncertainty can be created when authorities involve themselves, for example, by capping market activity or enforcing the uptick rule, requiring short sales to be executed at a price higher than the last trade in order to protect the market, and prevent short sellers from intentionally driving down the price of stocks during periods of high market volatility.
According to Jan Willems, head of global markets at Clearstream, Turkey’s foreign bank ecosystem is “healthy”, with a number of large global banks having a presence. He also highlights that, aside from HSBC, there have not been any foreign banks leaving the region. Willems suggests that this points to the firms believing strongly in the long term macroeconomics of the country.
A representative for Takasbank explains that securities lending transactions are predominantly carried out in over-the-counter (OTC) markets, with the Takasbank Securities Lending Market (SLM) serving as the sole organised market for equity lending.
“The SLM facilitates the matching of participants’ bids and offers within a centralised system, ensuring that all transactions are executed under a standardised regulatory framework. Instruments eligible for trading on the SLM include shares listed on Borsa Istanbul (BIST) Stars and BIST Main indices, which are eligible for margin trading and short selling, as well as ETF participation certificates traded in the equity markets,” they note.
Facts and figures
Securities lending activity in Turkish equities rebounded “sharply” in 2025 as the market moved through a shifting short selling regime, according to Matt Chessum, executive director, equity analytic products at S&P Global Market Intelligence.
He explains that, on 6 February 2023, the Capital Markets Board of Türkiye (CMB) fully banned short selling following the earthquake that occurred in the region. The ban persisted into 2024–25, with regulators partially lifting the ban for Borsa Istanbul (BIST)‑50 shares, with the decision announced on 5 December 2024, and effective from 2 January 2025.
He continues, highlighting against that backdrop, 2025 lending revenue rose 560 per cent to US$36 million, as average balances expanded to US$2 billion — a 662 per cent increase year-on-year (YoY). This offset the lower average fees — 1.77 per cent in 2025 compared to 2.5 per cent in 2024, down 29 per cent YoY — something Chessum describes as a “clear signal” that 2025 performance was primarily balance/utilisation-driven, rather than price-driven.
On 23 March 2025, the CMB reintroduced temporary measures including a broad short selling ban across Borsa Istanbul equities, later extended through 29 August 2025 amid volatility concerns.
After the temporary measures expired on 29 August 2025 and were not extended, returning to the earlier BIST‑50‑only short selling regime, activity re‑accelerated into year‑end, with September–November balances above US$2.5 billion and fees firming to around two per cent in October–December, culminating in a standout fourth quarter:: US$13.36 million revenue (up 1,089 per cent YoY) on US$2.59 billion of quarterly average balances.
Chessum states revenue concentration by name highlights where borrow demand was most persistent. Eregli Demir ve Celik was the top revenue generator at US$2.91 million, followed by Sasa Polyester US$2.39 million, both in Materials sector, reinforcing that cyclicals and petrochemical-linked equities were key drivers of borrow demand. Industrial and domestic cyclicals also featured prominently, led by Astor Enerji (US$1.98 million), Tofas (US$1.83 million), and Sise ve Cam (US$1.78 million), with additional meaningful contributions from Tupras ( US$1.56 million), Mia Teknoloji (US$1.43 million), and Enka Insaat (US$1.35 million). Taken together, the top earners skew toward materials and industrials/capital goods, consistent with broad, liquid borrow demand and substantial loan values, while selected names (notably Mia Teknoloji) also monetised higher effective spreads.
Overall, Chessum says 2025 Turkish equity lending scaled up structurally in balances as the short‑sale framework intermittently reopened and then re-tightened, before stabilising again after late August. Data shows that even with lower average fees, the expansion in balances, especially the post‑August surge into Q4, drove a step-change in revenue, with the largest contributions coming from a mix of materials, capital goods, autos, energy, and select higher‑spread growth names.
The short of it
Turkey’s market is ever changing, with the CMB often banning short selling in order to stabilise the market.
At the time of writing, the most recent ban, initially meant to take place from 2–6 March 2026, has been extended until 10 April 2026, amid rising geopolitical tensions due to the conflict between Iran, Israel, and the US, and was imposed to ensure the functioning of capital markets in a reliable, transparent, and stable environment, while protecting the rights and interests of investors, according to the CMB.
Cherry considers the changing regulation surrounding short selling the biggest barrier to entry into the market. “Foreign intermediaries and foreign participants want regulatory certainty that enables them to enter a market and practice the transactions that you would like in a relatively predictable way,” he states.
Cherry adds that while bans limit the amount of time participants can be in the market, the infrastructure is there — “everything is in place” for those wanting to take part.
“You have all the ingredients for securities lending and the markets to develop further, but there is a regulatory uncertainty, and that is the dominant feature that puts people off participating,” he notes. He explains that shifting regulations and bans will “always” impact the wider market, beyond securities finance, with the prohibition of securities lending reducing the market’s ability to maintain price transparency — therefore taking it away would be negative for the market.
Due to equities and bonds still requiring “cumbersome” beneficial owner registration, Willems pinpoints that effectively has two different market structures — a modern, omnibus-style market for government bonds, and a more traditional setup for equities and corporate bonds. He highlights that this is a stark difference from those seeking to participate in local Turkish government bonds, as they have been moved to a standard omnibus setup at Merkezi Kayıt Kuruluşu A. Ş. (MKK). This does not differ from how the European capital markets work, meaning it is very easy to participate from a fiscal point of view.
Am I overreacting?
When asked to describe the market, Cherry states that “there is no way to phrase it other than reactive”, noting the short selling rules that are typically implemented following instances of market volatility.
Take the recent extension of the ban on securities lending — the country’s CMB released a statement highlighting it imposed the ban to ensure the functioning of capital markets in a reliable, transparent, and stable environment, while protecting the rights and interests of investors in response to the current war in the Middle East. Three weeks later, the board reevaluated their decision, and chose to extend the ban as a result of the conflict not ceasing to reduce market volatility.
Other examples of Turkey’s market being reactive include Borsa Istanbul closing the stock exchange following the 2023 earthquake that saw high levels of panic selling of stocks, resulting in a loss of US$35 billion from the benchmark Borsa Istanbul 100 Index.
The CMB of Turkey also banned short selling in 2020 during Covid-19 in response to market volatility caused by the combination of geopolitical tensions and the beginning of the pandemic.
Flowing forward
As we look to the future of the Turkish market, it is expected that it will develop steadily, through incremental gains rather than any dramatic changes. Cherry anticipates “incremental increases in institutional flows” and sees no reason to suggest anything other than continued progress, resulting in increased foreign participation.
A spokesperson for Takasbank states that increased participation from institutional investors and portfolio management companies will strengthen market liquidity by expanding the supply of lendable securities.
Discussing Turkey’s move to T+1, the spokesperson anticipates that the securities lending market will play a critical role for capital markets. They highlight that the shorter settlement cycle will require the more effective use of the securities lending mechanism in managing delivery obligations, resulting in the market being expected to become more actively utilised, especially in terms of managing delivery obligations and supporting market liquidity.
Takasbank says that, the development and digitalisation of operational infrastructure will support the more efficient execution of securities lending transactions. “In light of these developments, it is assessed that the securities lending market in Turkey will reach a stronger position in terms of both trading volume and participant diversity in the coming years.”
Geographically, Turkey straddles both Europe and Asia, with the economy being widely considered European — despite 97 per cent of the country being in Asia — due to its deep integration with the EU. Turkey’s economy currently ranks 16th in the world, according to the International Monetary Fund (IMF), and is a member of the Organisation for Economic Cooperation and Development (OECD).
James Cherry, head of collateral, securities lending and liquidity solutions, business development at Clearstream, likens Turkey’s market to the emerging markets of South Africa, Poland, and Brazil, though with some key differences between those and Turkey.
“In Turkey, there is a visible relationship between policy and the securities lending market itself, there have been instances in the recent past where the Turkish authorities will step in and either impose limits on securities lending practices, or they will ban short selling,” he explains.
Cherry details that regulatory uncertainty can be created when authorities involve themselves, for example, by capping market activity or enforcing the uptick rule, requiring short sales to be executed at a price higher than the last trade in order to protect the market, and prevent short sellers from intentionally driving down the price of stocks during periods of high market volatility.
According to Jan Willems, head of global markets at Clearstream, Turkey’s foreign bank ecosystem is “healthy”, with a number of large global banks having a presence. He also highlights that, aside from HSBC, there have not been any foreign banks leaving the region. Willems suggests that this points to the firms believing strongly in the long term macroeconomics of the country.
A representative for Takasbank explains that securities lending transactions are predominantly carried out in over-the-counter (OTC) markets, with the Takasbank Securities Lending Market (SLM) serving as the sole organised market for equity lending.
“The SLM facilitates the matching of participants’ bids and offers within a centralised system, ensuring that all transactions are executed under a standardised regulatory framework. Instruments eligible for trading on the SLM include shares listed on Borsa Istanbul (BIST) Stars and BIST Main indices, which are eligible for margin trading and short selling, as well as ETF participation certificates traded in the equity markets,” they note.
Facts and figures
Securities lending activity in Turkish equities rebounded “sharply” in 2025 as the market moved through a shifting short selling regime, according to Matt Chessum, executive director, equity analytic products at S&P Global Market Intelligence.
He explains that, on 6 February 2023, the Capital Markets Board of Türkiye (CMB) fully banned short selling following the earthquake that occurred in the region. The ban persisted into 2024–25, with regulators partially lifting the ban for Borsa Istanbul (BIST)‑50 shares, with the decision announced on 5 December 2024, and effective from 2 January 2025.
He continues, highlighting against that backdrop, 2025 lending revenue rose 560 per cent to US$36 million, as average balances expanded to US$2 billion — a 662 per cent increase year-on-year (YoY). This offset the lower average fees — 1.77 per cent in 2025 compared to 2.5 per cent in 2024, down 29 per cent YoY — something Chessum describes as a “clear signal” that 2025 performance was primarily balance/utilisation-driven, rather than price-driven.
On 23 March 2025, the CMB reintroduced temporary measures including a broad short selling ban across Borsa Istanbul equities, later extended through 29 August 2025 amid volatility concerns.
After the temporary measures expired on 29 August 2025 and were not extended, returning to the earlier BIST‑50‑only short selling regime, activity re‑accelerated into year‑end, with September–November balances above US$2.5 billion and fees firming to around two per cent in October–December, culminating in a standout fourth quarter:: US$13.36 million revenue (up 1,089 per cent YoY) on US$2.59 billion of quarterly average balances.
Chessum states revenue concentration by name highlights where borrow demand was most persistent. Eregli Demir ve Celik was the top revenue generator at US$2.91 million, followed by Sasa Polyester US$2.39 million, both in Materials sector, reinforcing that cyclicals and petrochemical-linked equities were key drivers of borrow demand. Industrial and domestic cyclicals also featured prominently, led by Astor Enerji (US$1.98 million), Tofas (US$1.83 million), and Sise ve Cam (US$1.78 million), with additional meaningful contributions from Tupras ( US$1.56 million), Mia Teknoloji (US$1.43 million), and Enka Insaat (US$1.35 million). Taken together, the top earners skew toward materials and industrials/capital goods, consistent with broad, liquid borrow demand and substantial loan values, while selected names (notably Mia Teknoloji) also monetised higher effective spreads.
Overall, Chessum says 2025 Turkish equity lending scaled up structurally in balances as the short‑sale framework intermittently reopened and then re-tightened, before stabilising again after late August. Data shows that even with lower average fees, the expansion in balances, especially the post‑August surge into Q4, drove a step-change in revenue, with the largest contributions coming from a mix of materials, capital goods, autos, energy, and select higher‑spread growth names.
The short of it
Turkey’s market is ever changing, with the CMB often banning short selling in order to stabilise the market.
At the time of writing, the most recent ban, initially meant to take place from 2–6 March 2026, has been extended until 10 April 2026, amid rising geopolitical tensions due to the conflict between Iran, Israel, and the US, and was imposed to ensure the functioning of capital markets in a reliable, transparent, and stable environment, while protecting the rights and interests of investors, according to the CMB.
Cherry considers the changing regulation surrounding short selling the biggest barrier to entry into the market. “Foreign intermediaries and foreign participants want regulatory certainty that enables them to enter a market and practice the transactions that you would like in a relatively predictable way,” he states.
Cherry adds that while bans limit the amount of time participants can be in the market, the infrastructure is there — “everything is in place” for those wanting to take part.
“You have all the ingredients for securities lending and the markets to develop further, but there is a regulatory uncertainty, and that is the dominant feature that puts people off participating,” he notes. He explains that shifting regulations and bans will “always” impact the wider market, beyond securities finance, with the prohibition of securities lending reducing the market’s ability to maintain price transparency — therefore taking it away would be negative for the market.
Due to equities and bonds still requiring “cumbersome” beneficial owner registration, Willems pinpoints that effectively has two different market structures — a modern, omnibus-style market for government bonds, and a more traditional setup for equities and corporate bonds. He highlights that this is a stark difference from those seeking to participate in local Turkish government bonds, as they have been moved to a standard omnibus setup at Merkezi Kayıt Kuruluşu A. Ş. (MKK). This does not differ from how the European capital markets work, meaning it is very easy to participate from a fiscal point of view.
Am I overreacting?
When asked to describe the market, Cherry states that “there is no way to phrase it other than reactive”, noting the short selling rules that are typically implemented following instances of market volatility.
Take the recent extension of the ban on securities lending — the country’s CMB released a statement highlighting it imposed the ban to ensure the functioning of capital markets in a reliable, transparent, and stable environment, while protecting the rights and interests of investors in response to the current war in the Middle East. Three weeks later, the board reevaluated their decision, and chose to extend the ban as a result of the conflict not ceasing to reduce market volatility.
Other examples of Turkey’s market being reactive include Borsa Istanbul closing the stock exchange following the 2023 earthquake that saw high levels of panic selling of stocks, resulting in a loss of US$35 billion from the benchmark Borsa Istanbul 100 Index.
The CMB of Turkey also banned short selling in 2020 during Covid-19 in response to market volatility caused by the combination of geopolitical tensions and the beginning of the pandemic.
Flowing forward
As we look to the future of the Turkish market, it is expected that it will develop steadily, through incremental gains rather than any dramatic changes. Cherry anticipates “incremental increases in institutional flows” and sees no reason to suggest anything other than continued progress, resulting in increased foreign participation.
A spokesperson for Takasbank states that increased participation from institutional investors and portfolio management companies will strengthen market liquidity by expanding the supply of lendable securities.
Discussing Turkey’s move to T+1, the spokesperson anticipates that the securities lending market will play a critical role for capital markets. They highlight that the shorter settlement cycle will require the more effective use of the securities lending mechanism in managing delivery obligations, resulting in the market being expected to become more actively utilised, especially in terms of managing delivery obligations and supporting market liquidity.
Takasbank says that, the development and digitalisation of operational infrastructure will support the more efficient execution of securities lending transactions. “In light of these developments, it is assessed that the securities lending market in Turkey will reach a stronger position in terms of both trading volume and participant diversity in the coming years.”
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