Türkiye has expanded measures to address payment problems in the fund market, suspending trading in funds run by seven asset managers on its electronic fund platform while the Central Bank increased liquidity support following a sharp stock market sell-off.
The Capital Markets Board (SPK) ordered a halt to purchases and sales on TEFAS, Türkiye’s electronic fund trading platform, for all funds established by Tera Portföy, Pusula Portföy, Hedef Portföy, Atlas Portföy, A1 Portföy, Pardus Portföy and Bulls Portföy that trade on the platform.
The board also ordered the liquidation of specified funds established by these companies, under procedures it would determine.
In a separate measure, the SPK allowed brokers to lower the minimum maintenance margin for securities bought on credit from 35 percent to 20 percent. Brokers may apply the lower requirement in line with their risk policies, taking client requests into account.
The temporary arrangement runs through the close of trading on Oct. 2, subject to further announcements by the board.
The measures followed a Sept. 17 meeting of the Financial Stability Committee, chaired by Treasury and Finance Minister Mehmet Şimşek. The committee described the fund market problems as “temporary and manageable” and pledged swift action to ease the liquidity squeeze and prevent contagion.
In a statement released by the Treasury and Finance Ministry, it attributed market volatility to credit and liquidity problems at some funds managed by a limited number of portfolio management companies.
It said there was no fundamental or structural risk to the functioning of Borsa Istanbul or the capital markets, with the difficulties concentrated in a particular segment of the fund market.
The Central Bank announced that it would increase funding through one-week repo auctions, taking liquidity conditions into account. It subsequently opened a 300 billion Turkish Lira auction on Sept. 17, up from 1 billion liras the previous day, Bloomberg HT reported.
The bank also said it would update banks’ borrowing limits in its Interbank Money Market to reflect the banking system’s current balance-sheet size. Bloomberg HT, citing sources, reported that those limits had been increased tenfold to 510 billion liras.
The Central Bank will also reduce collateral haircuts in its markets, allowing banks to borrow more against eligible assets.
The benchmark BIST 100 index fell 5.54 percent to 13,122.58 on Sept. 16. It opened 1.32 percent lower the following day but reversed those losses, trading more than 2 percent higher by 10:28 a.m., according to Bloomberg HT.
Fund disclosures had outlined the payment difficulties. Pusula Portföy announced on Sept. 15 that some funds it managed had defaulted on payments to investors seeking to redeem their holdings.
Tera Portföy subsequently reported redemption payment defaults in its lira money market fund and an equity fund. Tera Holding Chairman Emre Tezmen described the difficulties at certain funds as a temporary liquidity shortage and said group companies continued to operate.
Atlas Portföy said on Sept. 17 that redemption payments at its PSE money market fund were delayed while it worked to strengthen the fund’s liquidity.
The Financial Stability Committee said regulators would continue to act against those found to have engaged in market-disrupting activity. The Central Bank said it would monitor liquidity conditions closely and take further measures if needed.
