Fifth update in our series on the Turkish investment fund crisis.
Beyond the liquidation of 131 funds and the pressure on the real economy through pledged shares covered in our earlier updates, two further, independent sources of risk are now in play: broker bond redemptions and record exchange leverage.
Broker bond redemptions
Brokerage firms fund their margin lending to clients by issuing their own bonds. There are currently 124 such issues outstanding, worth roughly 3.2 billion lira in total, with redemptions due over the coming months and into 2027. The largest buyers of these bonds have traditionally been money market funds, precisely the funds now experiencing outflows and facing close scrutiny of their holdings from investors.
If demand for broker bonds from funds dries up, brokerage firms have few options left: find replacement buyers, or sell their own liquid assets, including listed shares, to raise redemption cash. The second path creates an additional wave of selling on the exchange, separate from the 131 funds already in liquidation.
One detail worth flagging: one of the investment entities under investigation for manipulation has its own bond issue of 50 billion lira outstanding. Redemption trouble at that scale could add further pressure on the equity market.
Record margin leverage
According to the Turkish Capital Markets Association (TSPB), margin trading volume reached 129.2 billion lira at the end of August 2026, across 46,081 accounts carrying open leverage. In total, 652,377 investors hold margin agreements, and the average loan per account reached 2.8 million lira, a record since January 2025.
High leverage means falling prices hit holders of that debt harder: margin calls processed through Takasbank reached 1.13 billion lira early in the week, easing to 589.8 million the following day. This is the same pressure mechanism on the real economy covered in our previous update, applied here to leveraged private investors rather than corporate borrowers using shares as loan collateral.
Different risk profiles within the same firm
Worth understanding: not all liquidating funds are alike, even within the same management company. One of the largest groups placed into liquidation runs two funds with fundamentally different profiles. The first, a free fund formally rated 7 out of 7 for risk, held over 87% of its portfolio, as of the review date, in shares with artificially inflated prices: the liquidation value of those holdings will be well below the stated figure. The second, a money market fund formally rated just 2 out of 7, turned out to be involved in large reverse-repo transactions worth tens of billions of lira with insufficiently transparent counterparties, which is what caused the payment default despite the low nominal risk rating. This confirms an earlier point: a fund's stated risk level does not guarantee liquidity, and the counterparties behind its internal transactions matter as much as its portfolio composition.
How companies should treat losses from liquidating funds
A separate practical question for corporate entities holding units in the affected funds: can the loss be recognised for corporate tax purposes now? The answer is no, not until liquidation is complete.
A loss on investment fund units does not qualify as a doubtful receivable (şüpheli alacak) for tax purposes, so no tax provision can be booked for it. A provision for impairment of securities is not available either, since the exact scale of the loss is not yet determined, it will only be known once the liquidation process concludes.
Until then, valuation follows the rules set out in Article 279 of the Tax Procedure Law: units of funds where at least 51% of the portfolio consists of shares in Turkish companies are valued at acquisition cost; units of other funds and other securities are valued at the exchange price.
Once liquidation is complete and the loss amount is final, it is taken into account in calculating the company's taxable profit. One important exception: if the fund itself was exempt from corporate tax, a loss on units in that fund is not deductible.
Did your company hold units in one of the liquidating funds, or do you carry a loan secured by shares and want your exposure to current volatility assessed? Contact us.