Turkish authorities will strengthen the oversight and supervisory capabilities of capital market regulators, the country's treasury and finance minister said Tuesday.
The ministry prepared a draft for permanent structural regulations while sending the temporary liquidation regulation to parliament, Mehmet Simsek said during a joint broadcast by Bloomberg HT and HaberTurk.
Touching on the recent fund market issue in the country, the minister said capital markets will emerge from this process with a much healthier and stronger structure.
He added that they decided to prioritize liquidation and handle permanent structural regulations later because capital markets are of great value to Türkiye.
Simsek said authorities will not adopt approaches that hinder the development of capital markets. Officials will adopt a comprehensive approach to significantly increase penalties for market-distorting activities, coordinated trading activities and insider trading.
Simsek noted that authorities must use advanced technologies because the market features highly sophisticated algorithms and coordinated actions.
Simsek emphasized that the liquidation process for the funds proceeded at the anticipated pace and within the expected framework.
He said authorities will quickly make payments of up to 1 million liras ($20,200), based on the resources in the funds, after parliament passes the law.
He said officials divided the liquidation process into two categories: ordinary and extraordinary.
Simsek noted that authorities implemented ordinary liquidation for portfolio management companies with relatively manageable financial structures.
He added that officials placed 131 funds under seven portfolio management companies into liquidation.
Authorities completely liquidated 66 of the 131 funds involved in the process.
Officials completed the full liquidation of three of the seven portfolio management companies.
Authorities paid 40.8 billion liras ($822.9 million) to 45,747 accounts and successfully completed the ordinary liquidation process.
Investors in money market funds managed by the three fully liquidated companies suffered no losses and instead earned an additional average return of 1.43% compared with Sept. 17.
Investors in equity-heavy funds recovered an average of 58% of their portfolio value as of Sept. 17, as share prices had been artificially inflated beyond levels justified by the companies' fundamentals.
Simsek attributed the 42% shortfall from the Sept. 17 portfolio values entirely to the decline in share prices.
Simsek added that funds without inflated stock prices yielded higher returns for their investors.
