Türkiye targets early 2027 for new rules to combat capital market abuse

Türkiye plans to complete new legislation by the beginning of 2027 to strengthen the fight against capital markets crimes, including coordinated trading by investment funds, Treasury and Finance Minister Mehmet Şimşek said Friday.

Vice President Cevdet Yılmaz said separately that the government is preparing a broader bill with structural reforms for the markets. Both made the announcements in social media posts as the government works to restore investor confidence after last month’s fund turmoil.

The crisis erupted after several funds said they could not meet investors’ redemption requests during a market sell-off, prompting a wide investigation into suspected price manipulation in a number of thinly traded stocks.

The Capital Markets Board (SPK) suspended trading in 131 funds run by seven asset management companies and placed them into liquidation, affecting nearly half a million investors. The government said it aimed to complete the liquidation of half of the funds by the end of this week.

Prosecutors have issued asset freezes and travel bans and have arrested more than 80 people, including the top executives of the asset management companies.

MSCI freezes index changes

Top officials’ statements came a day after MSCI froze certain changes to its Türkiye equity indexes, saying it needed more time to assess market reforms. The decision leaves Türkiye’s emerging-market status unchanged.

The freeze took effect immediately and will remain in place until further notice. MSCI will not increase foreign inclusion factors or the number of shares used in its indexes, add securities to the MSCI Turkey Investable Market Index, or make upward migrations across size-segment indexes.

MSCI said the decision followed concerns raised during its 2026 Market Classification Review over “possible coordinated trading through fund holdings closely affiliated with certain smaller listed companies.” If sufficient progress is not evident by June 2027, it said, it could take further steps, including consulting on a potential downgrade from emerging-market to frontier- or standalone-market status.

Türkiye’s benchmark BIST 100 is on track for a fifth straight weekly decline and is down more than 20% from its record closing high in May.

New rules, government priorities

Şimşek said the SPK has taken steps to improve transparency and investor confidence, partly in light of assessments by international index providers.

He said these measures have improved the flow of information and made ultimate share ownership more transparent.

Şimşek pointed to the Fund Guide, announced by the SPK at the end of August. Under its rules, hedge funds must disclose their portfolios weekly, and funds traded on the TEFAS electronic platform must announce when their ownership of a company crosses certain thresholds, whether rising above or falling below them. The guide also introduced concentration limits and requires that fund borrowing be collateralized and carried out on organized markets.

The government will closely monitor the results and take additional steps without delay, in consultation with stakeholders, Şimşek said.

Main priorities are completing the liquidation of the problem funds and protecting investors’ rights, according to the minister.

Şimşek said sanctions would be applied firmly against anyone who disrupts the fair and competitive functioning of the markets. The goal, he said, is a transparent, reliable and effective capital market.

Bill expected in Parliament next week

Yılmaz said the necessary steps have been taken regarding the troubled funds and that the process would speed up after a bill expected to be debated in Parliament next week.

Liquidating the funds through ordinary and extraordinary procedures would strengthen the structure of the capital markets, he said, adding that administrative measures had also been taken to prevent similar problems from recurring. Preparations are continuing for a new bill with structural improvements.

The government sees capital markets as an important part of its development policy and will continue to strengthen them in line with international standards, through both administrative decisions and legislation, Yılmaz said.

DAILYSABAH