Capital Markets Board Initiates a New Era in Investment Funds
The Capital Markets Board has enacted a new regulation containing strict rules for free funds and money market funds aiming to protect investors and ensure market stability.
Comprehensive changes were made to the Guide on Investment Funds announced by the Capital Markets Board over the weekend, introducing new rules regarding the establishment, management of funds, and the capital adequacy of portfolio management companies.
Fund Count Limit for Portfolio Management Companies
With the new regulation, a limit has been introduced on the number of free funds that portfolio management companies can issue. The number of free funds that a company can issue, including private funds, cannot exceed the number of portfolio managers within its structure, and a manager can manage a maximum of seven funds.
Portfolio Allocation and Investment Restrictions
The total of large investments exceeding five percent weight in the fund portfolio cannot exceed twenty percent of the vault. In addition, a maximum total of twenty percent investment can be made in shares tied to one's own fund and own holding, and free funds are strictly prohibited from buying and selling partnership shares over-the-counter.
Ratios Imposed on Stock Purchases
A maximum of eight percent of the circulating lots can be purchased in shallow boards where the actual circulation is below twenty-five percent, and a maximum of two percent in those above seventy-five percent. No restrictions were imposed on BIST 30 shares.
Reporting and Phased Compliance Process
A weekly disclosure obligation was imposed on portfolio companies. Funds that have already exceeded the limits are required to make phased sales of one-third by the end of October and two-thirds by the end of November in order to melt down the excess shares they hold.