Turkey intervenes to support markets as fund liquidity crisis spreads

Turkish authorities took emergency measures Thursday to shore up financial stability after a liquidity crunch in investment funds triggered sharp declines in Istanbul stocks.

• The central bank increased repo financing to 300 billion lira ($7.21 billion) and raised interbank borrowing limits tenfold.
• The Capital Markets Board suspended trading and ordered the liquidation of funds worth about 891 billion lira ($21.4 billion) managed by seven firms on the Tefas platform.
• Tera and Pusula portfolio managers failed to meet investor redemption requests this week, after new fund rules took effect in late August.
• The Financial Stability Committee met in Ankara on Thursday and said the problems were confined to a specific fund segment, posing no broader structural risk.