Country Governance Briefing: Türkiye's fund crisis tests its market regulators

Türkiye's governance agenda this autumn is set by a collapse in part of its investment fund market. President Recep Tayyip Erdoğan said on 16 October that the government had brought the problem under control "with the decisive steps we have taken since Sept. 17", Hürriyet Daily News reported. The paper put the damage at an estimated $20 billion across nearly 456,000 investor accounts. Erdoğan set three priorities: pay out the savings in funds slated for liquidation, hold those who profited through manipulation accountable, and protect the capital markets.

The institutions involved are the Capital Markets Board (SPK), which on 17 September closed trading on the TEFAS fund platform in all funds founded by seven portfolio managers, Tera, Pusula, Hedef, Atlas, A1, Pardus and Bulls, and ordered listed funds into liquidation, its bulletin 2026/60 shows; a second bulletin the same day put İş Bankası and Ziraat Bankası in charge of the liquidations. Also involved are the Treasury and Finance Ministry, the Financial Crimes Investigation Board (MASAK), the Savings Deposit Insurance Fund (TMSF) and the Istanbul Chief Public Prosecutor's Office. Parliament is the venue for the fix. Its speaker, Numan Kurtulmuş, called the alleged diversion of investors' savings "immoral and dishonorable" and said the public expected accountability in the courts, in an interview cited by Hürriyet Daily News. On the political calendar, the president's chief adviser Mehmet Uçum said on 15 October that the next elections were likely in March or April 2028, according to the same paper. On a new constitution, Uçum said public demand should be read through citizens' expectations of how the state functions, citing proposals for recalling lawmakers, regulating prices and a minimum income.

Open reforms

• Fund liquidation bill. Parliament's Plan and Budget Committee began work on 14 October on the bill on certain investment funds whose liquidation has been decided. One of its sponsors, Ersan Aksu of the ruling AK Party, told the committee that the SPK had ordered 131 of the more than 2,000 funds on the market into liquidation, equal to 4.6 per cent of funds and 7.7 per cent of total portfolio value, or 2.4 per cent of household financial assets, Oksijen reported from the session. He said no Treasury or budget money would be used. Investors would be paid from each fund's own assets and from sums recovered from those responsible, on the basis of their net investment, calculated from actual inflows and outflows and indexed to the average of consumer and domestic producer price inflation. Interim payments of up to 1 million lira per investor would go first to the smallest holders, Hürriyet Daily News reported. Opposition members asked for a sub-committee and a fuller impact assessment. On 15 October the SPK started liquidation of the Hedef Portföy funds under the rules already set for three other managers, its bulletin 2026/70 shows.
• Capital market crimes. Treasury and Finance Minister Mehmet Şimşek said on 16 October that legal changes to strengthen the fight against capital market crimes, including coordinated trading by funds, would be completed by the start of 2027, the paper reported. He cited an SPK fund guide from the end of August that introduced weekly disclosure of hedge fund portfolios, announcements when funds on the TEFAS platform cross shareholding thresholds, concentration limits and a requirement that fund borrowing take place on organised markets against collateral.

Court and regulator actions

• Asset tracing. MASAK has made 48 requests to 29 countries for information on the accounts and cash and crypto assets of 278 individuals and legal entities, and chief prosecutors' offices are involved through judicial assistance channels, Deputy Treasury and Finance Minister İlhan Hatipoğlu told the committee, Hürriyet Daily News reported. The TMSF would pursue the personal assets of portfolio company owners, founders and managers held liable.
• The former regulator. Şimşek authorised an investigation into İbrahim Ömer Gönül, a former SPK chairman, after a preliminary report by the ministry's Inspection Board, which he ordered on 2 October following a request from the Istanbul prosecutor, according to the same report.

Programme conditions

Türkiye has no IMF lending arrangement; the IMF's country page shows the last Article IV board consultation on 6 February 2026. The published package says the deficit "was reduced substantially in 2025", that "inflation is falling slowly" from 31 per cent in December and that elevated inflation "is taking a toll on the financial sector and inequality".

The most specific conditions now come from an index provider. MSCI froze increases in foreign inclusion factors and share counts, additions to its Türkiye investable market index and upward size migrations, citing investor concerns about coordinated trading through funds affiliated with smaller listed companies, Hürriyet Daily News reported. It asked for granular and timely beneficial ownership disclosure, surveillance and enforcement against coordinated trading, and rules for securities with distorted free float. If progress is not evident by June 2027, MSCI said it would consider a consultation on reclassifying its Türkiye indexes from emerging to frontier or standalone status.

Those requests overlap with Şimşek's early-2027 legislative target. The government's 2027 budget proposal, presented on 16 October, assumes growth of 4.2 per cent next year after 3.3 per cent in 2026, the paper reported.

What to watch: the committee and floor votes on the liquidation bill, the text of the capital market crimes amendments, the decision on Gönül and MSCI's June 2027 review.