Turkey's market regulator has raised the threshold for qualified investors fivefold after a fund rout that rocked capital markets and erased billions of dollars of equity value. To qualify as a professional client, investors now need to hold at least 50 million liras ($1 million) in financial assets, up from 10 million liras, according to a statement from the Capital Markets Board on Monday. Those wanting to keep current qualified-investor status must prove they meet the new threshold, or they will only be able to place sell orders in instruments reserved for qualified investors. The regulator, known by its Turkish initials SPK, also raised the required transaction volume to 25 million liras from 5 million liras.
The steps follow a fund scandal last month that has affected at least half a million investors. The crisis erupted after some high-profile firms failed to meet redemptions, stirring market-wide panic. Finance Minister Mehmet Simsek met with dozens of asset managers last week. Haydar Acun, managing director at Istanbul-based asset manager Marmara Portfoy, said the new regulation "is very positive," recalling that before the last threshold increase, anyone with even a modest amount of capital had secured qualified status and joined the so-called crazy hype in Turkish hedge funds.
Authorities have cracked down on what the justice minister has termed a "Ponzi-like scheme," with the SPK ordering 131 funds managed by seven firms into liquidation. Investment firms that delivered suspiciously high returns by concentrating bets in thinly traded stocks are under investigation, and dozens of finance executives are under arrest pending trial. Last week, President Recep Tayyip Erdogan removed SPK chairman Mahmut Sutcu.
On Monday, the SPK extended the deadline for complying with new guidelines to the end of January and ended exemptions for public-sector paper and for real estate and venture-capital funds.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing