Turkey plans fund crisis repayments and legislative reforms

Following a recent fund crisis, new details have emerged regarding the repayment process for affected investors in Turkey. Advance payments are expected to begin next week once reconciliations between banks and the Central Securities Depository (MKK) are finalized.

Authorities plan to use a formula consisting of the principal amount plus the Consumer Price Index (TÜFE) to calculate repayments. Under the proposed plan, investors with claims up to 1 million TL will receive their full amount in the first stage. For claims exceeding 1 million TL, an initial payment of 1 million TL will be made, with the remainder to be distributed in subsequent phases.

In response to the crisis, legislative work is underway to amend the Capital Markets Law. The proposed changes aim to strengthen investor protection through an ‘early warning and automatic action system’ and increased oversight by the Capital Markets Board (SPK). The draft regulation, which includes approximately 30 articles, focuses on three pillars: investor protection, early intervention by the SPK, and increased accountability through deterrent sanctions. The new framework would grant the SPK broader powers to intervene when market health or investor interests are at risk, including mandates for reporting unusual fund returns, liquidity issues, or abnormal investor outflows.