Between 16 and 19 September 2026 Turkey went through the harshest collective-investment shock in years: redemption defaults at several asset managers, a single-day index drop of more than 6%, the forced liquidation of 130 funds and criminal cases. This account is built from primary sources and answers the investor's main question: does this affect me.
Timeline
On 15-16 September investors pulled roughly TRY 150 billion, about USD 3 billion, out of investment funds in two days, mostly from money market funds. The asset manager Pusula Portföy announced it could not honour redemption requests for some of its funds; Tera Portföy and Atlas Portföy then made similar statements for individual funds. The panic spilled into the exchange: on 16 September the BIST 100 index lost more than 6%, automatic trading halts triggered, and margin calls jumped.
On 17 September the Financial Stability Committee met before the open. The official position: there is no structural risk to the exchange or the capital market; the problem is concentrated in one segment of the fund industry. During the day three regulators rolled out a package of measures.
The Capital Markets Board (SPK) suspended trading on the TEFAS platform for all funds of seven management companies: Tera, Pusula, Hedef, Atlas, A1, Pardus and Bulls. That is 222 funds with more than TRY 1 trillion in assets and over 934,000 investors. 130 of these funds were sent into forced liquidation. The minimum own-funds threshold for margin positions was temporarily cut from 35% to 20% until 2 October to stop the wave of forced selling.
The central bank raised weekly repo funding from TRY 1 billion to TRY 300 billion, increased banks' borrowing limits on the interbank market tenfold to TRY 510 billion and lowered collateral haircuts. The goal: give banks liquidity so funds would not dump assets at any price.
The banking regulator (BDDK) allowed banks not to deduct from Tier 1 capital any own shares bought back from 16 September until year-end. That opened the way for banks to support their own share prices. The sovereign wealth fund appeared as a buyer on the exchange. By the close the BIST 100 had recovered 2.9% and the banking index 8.8%.
Between 17 and 19 September the SPK filed criminal complaints against 38 individuals and Pusula Portföy itself for manipulating the share prices of three companies, imposed a two-year trading ban and revoked the licences of 11 market participants. Executives of several holdings were detained and searches were carried out. The Istanbul prosecutor's office opened proceedings against 246 social media accounts for speculative posts about securities.
Why it happened
This was not a sudden collapse but the resolution of a process the regulator had been watching since late 2025.
Structural cause
Some smaller management companies used hedge funds and money market funds to support the share prices of affiliated companies with a low free float. A fund would buy shares of a related company and take unsecured financing inside the group through repo transactions between related parties. Prices detached from economic reality and funds showed returns that could not be explained fundamentally. The regulator recorded this in the fourth quarter of 2025 and brought it to the Financial Stability Committee on 2 December 2025.
Regulatory cause
In June 2026 the index provider MSCI warned three times that without progress on the actual free float of Turkish securities it would start reviewing their status by November. Two tightenings followed over the summer (a free float recalculation and new TEFAS collateral rules), and on 28 August the SPK published a revised Investment Funds Guide: limits on related-party repo, concentration caps, weekly portfolio disclosure and a four-month phase-down of positions. The regulation was right in substance, but it forced the scheme-driven funds to unwind leveraged positions all at once.
Trigger
The first redemption default turned an orderly reduction into a run: mass exit requests, sales of everything liquid, falling prices, higher margin requirements, more sales. A classic liquidity spiral, amplified by social media.
Who is affected
Three categories of investors carry direct risk.
- Holders of units in any fund of the seven named companies. These assets are frozen until liquidation ends; the regulator has not yet announced timelines or recovery ratios. Some money, above all in money market funds with transparent assets, will return faster; some will be tied up in disputes and criminal cases for months.
- Investors with leveraged positions in low free float Turkish shares. The margin relief until 2 October is a delay, not a solution.
- Companies and individuals connected in any capacity to the groups under criminal proceedings.
What this episode does not mean. It is not a banking crisis and not a sovereign debt crisis. Banks acted as recipients of liquidity and buyers of their own shares, not as the source of the problem. Deposits in Turkish banks, brokerage accounts and funds at large bank-owned asset managers, operating companies and real estate were not hit. Banking system liquidity is currently above normal, not below.
What comes next
The key date is November 2026 and the MSCI decision. The episode gives the index provider arguments both ways: the regulator proved it is willing to act, but the very need for such an operation confirms the diagnosis about free float quality. A downgrade of the Turkish market would hit portfolio inflows harder than the September shock did.
The industry faces consolidation: small independent managers are losing ground to bank-owned structures, and licensing and fund supervision are tightening. Exchange volatility will persist until the liquidations are complete.
What an investor should do
- Check whether you hold units of funds run by the seven named companies. If in doubt, review your brokerage statement or send it to us.
- Do not make sudden large transfers out of Turkish banks just in case. There is no risk there, and a sudden large transfer will now attract enhanced compliance review with no gain in safety.
- Assess how your capital is spread across jurisdictions. September showed clearly that inside one country the rules can change abruptly, and risk concentrates in opaque local structures. For those who hold both an operating business and capital only in Turkey, this is a reason to discuss a second layer for holding assets, for example a holding structure under English law in the AIFC.
The main practical conclusion for an investor is not about the country but about the manager: a return that cannot be explained by the portfolio composition is not a find, it is a warning.
If you hold investments in Turkish funds or have questions about how your capital is structured, we will review your situation and propose a solution. Get in touch.