Turkey caps hedge fund holdings in single issuers

The Capital Markets Board amended fund rules to impose issuer-level limits on hedge funds, restricting holdings to between 2% and 8% of an issuer’s free-floating shares depending on the company’s free-float ratio. The change extends limits that previously applied mainly to equity-focused funds.

Investments in securities issued by companies affiliated with a fund’s management cannot exceed 20% of a fund’s assets. A separate concentration rule covers positions that individually exceed 5% of fund assets: those holdings, taken together, may not make up more than 20% of the portfolio.

Funds with holdings above the new thresholds have until the end of 2026 to comply. The regulator requires excess positions to be cut by at least one-third by October 31 and by two-thirds by November 30, with full compliance required by December 31.

The regulator has cited concerns about potential market manipulation, unusually large gains in some shares and funds, and cases where concentrated or coordinated trading appears to affect prices and valuations.

Earlier concentration limits mainly targeted funds with heavy equity exposure and did not cover hedge funds in the same way. The amended rules apply issuer-level and related-party caps across hedge fund portfolios.

Major index providers have raised questions about shareholder transparency, free-float calculations and market access in Turkey. Those issues could prompt a review of the country’s standing in emerging-market indexes.

Free float is the share of a company’s stock that is available to public investors. The CMB’s tiered caps limit how much of an issuer’s tradable stock a single fund can hold. Fund managers will need to adjust holdings and trading plans to meet the limits and the staged reduction timetable.