Türkiye’s capital markets regulator announced new restrictions on hedge fund activities, establishing maximum holdings based on an issuer’s publicly tradable shares. The rules allow hedge funds to hold between 2% and 8% of shares depending on a company’s free-float ratio.
Additionally, hedge funds face a constraint preventing them from allocating more than 20% of their assets into securities issued by affiliated or controlled companies. The regulator also limited large individual positions, requiring that securities representing more than 5% of a fund’s assets cannot collectively exceed 20% of the total portfolio.
Hedge funds were granted a compliance timeline, with portfolios required to meet the new requirements by 31 December. Holdings exceeding the limits must be reduced by at least one-third by 31 October and by at least two-thirds by 30 November.
The regulatory action stemmed from concerns regarding potential market manipulation in Türkiye’s capital markets. Certain funds had maintained substantial control over trading liquidity in stocks with limited market activity, while investment funds delivered strong returns and some shares experienced significant price increases. These developments raised questions about whether prices could be artificially inflated or whether transactions between related accounts might be affecting valuations.
Previous regulations had imposed single-stock limits on equity-focused funds based on fund size but did not extend to hedge funds. Earlier in the period, Türkiye’s largest mutual funds had advocated for stricter enforcement measures, citing the possibility of exclusion from major equity benchmarks.
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