Two Significant Changes in Investment Funds by the Capital Markets Board

The Capital Markets Board (CMB) has made significant changes in the capital markets with two new principle decisions concerning investment funds. The new regulations introduce important innovations regarding the structure and management of investment funds.

Changes to the Investment Funds Guideline With the decision dated November 21, 2024, the Board has made amendments to certain articles of the previously accepted Investment Funds Guideline. Regulations have been established in sections 1.2, 1.6, 2, 3, 4.9, 6.5, 8.4, and 13, along with the definitions section, creating new responsibilities for fund managers and investors. These changes aim to enhance transparency and accountability in fund management.

Under the new guideline, "Principles of Responsible Management" have also been adopted. These principles aim to provide investors with a safer and more accountable fund structure and encourage portfolio management companies to operate within a transparent system, particularly regarding securities investment funds.

Mandatory Government Domestic Debt Instruments for Money Market Funds As part of the regulations, money market funds that do not include the term "participation" are required to invest at least 10% of their portfolios in government domestic debt instruments. Compliance with this requirement will be necessary by February 28, 2025. The Board will not seek approval for amendments in fund information documents related to the implementation of these changes.

It is expected that a demand of 110 billion TL for government domestic debt instruments will arise from money market funds, which have a total size of approximately 1.1 trillion TL. This move aims to increase interest in government borrowing instruments while establishing a new balance in the markets.