Capital Markets Board extends equity protection ratio in Turkey

The Capital Markets Board of Turkey (SPK) has extended the measure to keep the equity protection ratio for leveraged transactions at 20% instead of 35% until October 30, 2026. This decision aims to prevent a chain reaction of forced liquidations and market panic following a recent fund crisis that saw over 130 investment funds liquidated.

Economists describe the move as a vital “safety valve” for Borsa Istanbul, providing investors more time to meet margin calls and preventing a potential market crash. While the extension offers stability, the underlying fund crisis has drawn international attention. Moody’s noted that while the direct credit risk from the fund run is limited, the episode highlights significant gaps in oversight and supervision within the Turkish financial system. Meanwhile, Fitch has assessed the outlook for the Turkish banking sector as “deteriorating,” citing rising non-performing loans and pressures from a high-interest-rate environment.