By Bosphorus News Economy Desk
Türkiye's parliament passed a law on October 22 allowing eligible investors caught in September's fund crisis to receive advances of up to TL1 million. The money will come from assets held by funds in liquidation, while new provisions allow the authorities to pursue assets improperly transferred out of those funds.
Law No. 7596 covers funds ordered into liquidation by the Capital Markets Board of Türkiye (SPK) on September 17, provided liquidation is still under way when the law is published. Other investment funds are not covered. As of October 23, parliament's record showed no publication date in the Official Gazette.
Who can receive an advance
The SPK will determine payments using each investor's net cash investment and the money available in the fund. For investments below TL1 million, an advance cannot exceed the eligible net amount. Larger holdings are subject to the TL1 million ceiling. Any advance will be deducted from the final liquidation payment.
If cash is insufficient, the regulator may prioritize smaller investors or set a minimum advance. In funds other than money-market funds, an advance also cannot exceed the calculated value of the investor's remaining units. Treasury and Finance Minister Mehmet Şimşek has said public money will not be used.
66 of 131 funds liquidated
Şimşek said on October 20 that 66 of the 131 funds placed in liquidation had completed the process. Payments totaling TL40.8 billion had reached 45,747 accounts. Three of the seven affected portfolio management companies had also completed liquidation, leaving 65 funds still in the process at that point.
Investors' recoveries varied by fund type. In equity-heavy funds containing shares whose prices Şimşek described as inflated, investors had recovered an average of 58% of their September 17 portfolio values. Investors in money-market funds liquidated through the ordinary process had received slightly more than their valuations on that date, on average.
Asset recovery and blocked sell orders
The law empowers the SPK to assess losses from improper transfers of fund assets and identify those responsible. The Savings Deposit Insurance Fund (TMSF) can then pursue recovery from liable portfolio managers and other parties. Recovered money and proceeds from relevant seized assets will be held in accounts for the affected funds before distribution to investors.
The September intervention was followed by a criminal investigation into fund transactions and withdrawals. Authorities imposed asset freezes covering 46 legal entities, 18 funds and 42 individuals while prosecutors examined transfers before the freeze. The measures do not establish criminal guilt.
A change adopted during parliamentary debate also covers investors whose sell orders reached the Türkiye Electronic Fund Trading Platform (TEFAS) by September 17 but went unexecuted because of a fund default or the absence of a published price. Their blocked units will be treated as fund holdings for liquidation. Opposition lawmaker Rahmi Aşkın Türeli warned that the change could weaken the claims of investors who regarded themselves as creditors after submitting sell orders.
Şimşek said on October 20 that the government was preparing separate legislation on market oversight and penalties for abuse. The liquidation law does not address the market-access issues behind MSCI's restrictions on Turkish equities.
Sources: Grand National Assembly of Türkiye, Mehmet Şimşek's October 20 interview, Anadolu Agency, Bosphorus News review and reporting.