Türkiye imposes new hedge fund limits – report

Turkey's capital markets regulator has introduced new restrictions on hedge fund holdings, reported Bloomberg. These rules, as cited in the regulator's statement, set maximum holdings based on an issuer's publicly tradable shares. Hedge funds may hold between 2% and 8% of a company's shares, depending on the company's free-float ratio.

Moreover, they are prohibited from investing more than 20% of their assets in securities issued by affiliated or controlled companies. Additionally, large individual positions exceeding 5% of a fund's assets cannot make up over 20% of the portfolio. Funds have been given until December 31 to comply with these requirements, with holdings above the limits needing to be reduced by at least one-third by October 31 and by at least two-thirds by November 30.

These measures come in response to concerns over potential manipulation in Turkey's capital markets. Certain funds have been accused of exerting significant control over trading liquidity in stocks with limited market activity, leading to questions about artificially inflated prices or transactions between related accounts affecting valuations.

Previous rules had only set single-stock limits for equity-focused funds based on fund size, excluding hedge funds.