Capital Markets Board Statement on Settlement Finality and Share Blocking

The Capital Markets Board (CMB) has issued a written statement regarding the public concerns over settlement finality and share blocking within the scope of the Draft Law currently being discussed in the Grand National Assembly of Turkey.

The first paragraph of Article 79 of the Capital Markets Law stipulates that settlement instructions and transactions as well as payment transactions regarding capital market instruments cannot be reversed or cancelled, even in the event of the suspension of activities or the commencement of liquidation processes of the relevant institutions. The purpose of this provision is to protect confidence in the capital markets by introducing the principle that the settlement obligations arising from completed transactions are executed in an irreversible manner. However, the provision in question does not imply that it must be applied to all instructions given through TEFAS regardless of the stage at which the transaction is. Unlike classical organized markets, TEFAS is a platform that allows investors to purchase mutual fund participation shares from the fund founder and return them to the founder. Therefore, every sell order given in TEFAS is not inherently a completed settlement transaction.

During the liquidation process, particularly for investors with the status of share blocking sub-account (PBLK), the mere fact that sell orders have been given or that a certain record exists in the system does not mean that the settlement has commenced. The settlement transaction is completed by transferring the cash to the investor's account and removing the record of fund participation share ownership after the order is received. Therefore, including instructions whose settlement has not yet been completed within the scope of liquidation will contribute to the fair distribution of fund assets among investors. Indeed, individuals with a share blocking record are also among the 455,758 fund share holders and do not constitute an additional group. The regulation included in the Draft Law does not affect completed transactions and only covers instructions whose settlement process has not yet been completed.