Manipulation in capital market and stock market: The empiric study on Istanbul Stock Market

Capital markets, one of the most important institutions of the economy, operate as the most important organized investment markets where individuals and institutions evaluate their savings. The healthy functioning of the stock exchanges is important for the development of the private sector institutions of the countries and for the opportunity to supply the financing needs at lower costs. If individual investors use their savings by investing in instruments such as interest, foreign currency and precious metals, private sector institutions cannot gain financing from individuals and have to obtain financing from banks at high costs. However, stock markets are investment platforms where private sector companies can provide financing at low cost. In terms of investors, stock markets provide the opportunity to become partners with professional companies and give the opportunity to invest in companies with high return potential rather than fixed income investments such as interest. The first article of the Capital Markets Law No. 6362 declares that capital markets aim to ensure the functioning and development of capital markets at the regulate and supervise capital markets in a secure, transparent, efficient, stable, fair and competitive environment and to protect the rights and interests of investors. In this context, the most important basic condition for the healthy functioning in Capital Markets which is based on the requirement that the companies shares being traded are fairly priced. Investors who trade by affecting the prices of shares traded in stock exchanges are named as manipulators in international literature. Manipulation is defined as manipulators affect the trading prices of the stocks traded on the stock Exchange in the direction they want. The question why manipulations are performed can be based on many reasons and performed with many techniques. In this thesis, the types of manipulation taking place in the Capital Markets will be described with examples, the effects of the manipulation transactions on the Capital Markets will be evaluated and the necessary regulation suggestions to prevent these manipulation acts will be stated. In addition, manipulation techniques and social media manipulations will be specified with using High Frequency Trading and the precautions to be taken will be emphasized. There are a limited number of studies on manipulation transactions in the capital markets in Turkey, and the importance of this study is therefore increasing.