CMC'S DECISIONS DATED SEPTEMBER 17, 2026: LIQUIDATION OF 131 INVESTMENT FUNDS AND RELAXATION OF THE EQUITY RATIO FOR MARGIN TRADING

CMC'S DECISIONS DATED SEPTEMBER 17, 2026: LIQUIDATION OF 131 INVESTMENT FUNDS AND RELAXATION OF THE EQUITY RATIO FOR MARGIN TRADING

The decisions of the Capital Markets Board, published in Bulletins No. 2026/60 and 2026/61 dated September 17, 2026, constitute a regulatory measure rarely seen in the portfolio management sector in terms of their scope. The main points of the decisions and their implications for the sector are summarized below.

1. Decision on Collective Liquidation and Suspension of Unit Transactions

Taking into account developments in the markets of Borsa Istanbul A.S., the Board, pursuant to the first paragraph of Article 96 of the Capital Markets Law No. 6362, decided to suspend both buying and selling transactions for all investment funds established by seven portfolio management companies and whose participation shares are traded on TEFAS; and that the 131 investment funds listed in the list updated by Bulletin No. 2026/61 be liquidated in accordance with a method to be determined by the Board.

The decision also covers distribution channels outside of TEFAS; as of September 17, 2026, purchase and redemption orders for participation shares cannot be executed through the founders or other distribution entities. Asset and transaction orders issued on or before the aforementioned date for which settlement has not yet taken place will be completed within the normal process.

2. Conducting the Liquidation Through a Non-Founder Entity

The procedures and principles of liquidation are set forth in Bulletin No. 2026/61. Two banks have been appointed as the fund’s portfolio custodians and as the entities responsible for conducting the liquidation process; these banks have been authorized to perform the duties and transactions mandated by law for the fund sponsor and necessary for the execution of liquidation proceedings. The duties and responsibilities of the banks arising from their role as portfolio custodians remain in effect. This structure represents a model—with few practical precedents—in which the sponsor’s authority to represent and manage the fund has been effectively transferred to another entity by decision of the regulatory authority.

3. Timeline and Reconciliation Obligations

• Within two business days following the entry into force of these procedures and principles, a reconciliation regarding the total number of outstanding participation shares, individual custody accounts by registry, and pledges, attachments, injunctions, and other encumbrances shall be conducted between MKK and the banks.
• Reconciliation of debts and receivables arising from repo, reverse repo, stock exchange money market, equity repo, committed and promised transactions, as well as deposit and participation accounts and credit and participation financing transactions, shall be completed between the previous custodian, the bank, and Takasbank within 10 business days at the latest.
• Assets in the fund portfolio will be converted to cash at a frequency determined by the bank, taking into account investor interests, market depth, and liquidity conditions; the cash obtained will be transferred to individual custody accounts for which reconciliation has been completed, in proportion to the participation shareholding.
• The fund management fee in effect as of the transfer date will be accrued on behalf of the bank conducting the liquidation; other expense items will continue in accordance with the prospectus.
• The liquidation will conclude on the first business day following the expiration of a maximum three-month period starting from the announcement date; this period may be extended if deemed appropriate by the Board.

4. Status of Unfulfilled Redemption Orders

For notice funds, redemption orders submitted after 1:30 p.m. on September 17, 2026, and for money market funds, those submitted after the end-of-day value date cutoff time specified in the prospectus, are subject to the liquidation rules. Amounts arising from redemption instructions for which a sell order was placed via TEFAS but which were not executed will be recorded as a liability in the fund’s account and will be paid off first with cash proceeds from the sale of assets. This regulation establishes an actual order of priority for payments among unit holders; whether the amount in question will be calculated based on the unit price at the time of the instruction or on the value resulting from liquidation will be among the topics of discussion in the coming period.

5. Equity Protection Ratio in Margin Transactions

The Board has also decided that the equity protection ratio—which must be at least 35% during the duration of margin capital market instrument transactions pursuant to Article 17 of Communiqué No. 65 of Series V—may be applied flexibly, to the extent it aligns with brokerage firms’ own risk policies and while taking customer requests into account, until a second announcement is issued and until the close of trading on October 2, 2026, provided that it aligns with the brokerage firms’ own risk policies and takes customer requests into account. The purpose of this regulation is to alleviate the chain reaction of selling pressure caused by margin calls and forced sales. Since the implementation is left to the discretion of the brokerage firm, it requires a review of framework agreements, risk disclosure forms, and internal risk policies, as well as an asessen of the legal consequences of differing practices among clients.

Sectoral Assessment

The decisions indicate a very significant increase in oversight processes targeting business models centered on equity-heavy hedge funds and algorithmic and statistical arbitrage strategies.

For portfolio management companies, liquidity management, valuation, related-party transactions, contingent and committed transactions, as well as internal control and risk management systems must be reviewed with urgency; for distributor institutions, investor disclosure and order management processes must be reviewed with urgency.

For investors, monitoring the liquidation process, verifying encumbrance and reconciliation records, and evaluating administrative and legal recourse options regarding potential loss of rights will be top priorities.