The effect of foreign exchange volatility on brokerage firms revenue, evidence from Turkey between 2012-2016

Abstract

Leveraged transactions, widely known as forex trading in Turkey is regulated by the Capital Markets Authority since August 2011 and only brokerage firms are allowed to trade in this industry. Employing the regression analysis, we investigate the effect of foreign exchange volatility on brokerage firms between 2012 and 2016. Our results indicate that, the volatility in foreign exchange rate have a significant positive effect on the revenue of forex trading of brokerage firms. The movements in the direction of foreign exchange rates have a bigger effect on the profit of brokerage firms.