President Recep Tayyip Erdoğan met with his economic team and the heads of relevant institutions on Sept. 29, as Türkiye weighs further measures in response to turmoil in the investment fund market.
Vice President Cevdet Yılmaz, Treasury and Finance Minister Mehmet Şimşek, and the heads of Borsa İstanbul, the Capital Markets Board (SPK) and the Banking Regulation and Supervision Agency (BDDK) attended the meeting.
The crisis surrounding Turkish investment funds accused of operating Ponzi-style schemes has impacted around 500,000 people, while authorities ordered the liquidation of roughly 130 funds with a combined value of $17 billion earlier this month.
Speaking after the cabinet meeting on Sept. 28, Erdoğan said the state would confront anyone found to have harmed the public or manipulated markets through investment funds, while stressing that the problems were limited and posed no broader risk to Türkiye’s financial system.
“Whoever reaches for the rights, law, property or assets of the nation will find us and the state standing against them,” Erdoğan said.
“The problem that has occurred is limited to a small part of the fund market. There is no risk that has spread to our financial system,” he said.
Erdoğan emphasized that Turkish capital markets remain resilient and have “solid foundations", saying they have sufficient capacity to overcome the current test.
The turmoil in the fund market has brought oversight mechanisms in capital markets to the forefront of discussions in Ankara, with potential new measures aimed at preventing similar problems from recurring now under consideration, daily Milliyet has reported.
Following the turmoil, the ruling Justice and Development Party (AKP) has been evaluating potential measures, including limits on the combined positions held in individual stocks by funds managed by the same portfolio management company, minimum liquidity thresholds linked to stress tests, and the establishment of an early warning system for real-time monitoring of risks.
The Capital Markets Board (SPK), which had already launched a regulatory process before the crisis, has introduced a number of measures aimed at reducing risks, particularly in money market funds and equity hedge funds. These steps include restrictions on unsecured borrowing between related parties and regulations designed to prevent unusual price movements.
One of the proposals under consideration within the AKP is the introduction of limits on the aggregate exposure of funds managed by the same portfolio management company to a single stock. Rather than reviewing each fund’s position separately, regulators could calculate the combined holdings of all funds under the same manager and impose binding caps, particularly for stocks with low free-float levels.
As the judicial investigation into the fund crisis expands, AKP officials are also assessing its political implications alongside its economic and legal dimensions. After parliament reconvenes for the new legislative year on Oct. 1, the party may consider launching a parliamentary enquiry into all aspects of the crisis.
