Şimşek answered questions about the agenda in the joint broadcast of BloombergHT and HaberTürk.
Emphasizing that the liquidation process regarding the fund issue is going at the speed and within the framework they envisaged, Şimşek said that they have determined the basic principles such as transparency, efficiency and justice with the liquidation.
Şimşek reminded that the draft law on liquidation was discussed in the Grand National Assembly of Türkiye for the interim payment and stated that after the law is passed, payments up to 1 million lira will be made quickly, depending on the status of the resources in the funds.
Pointing out that the Capital Markets Board (CMB), Central Registry Agency (MKK) and all other relevant institutions have completed their preparations, Şimşek stated that they divided the liquidation into two: "ordinary" and "extraordinary".
"66 of 131 funds were completely liquidated"
Pointing out that ordinary liquidation is implemented for portfolio management companies whose financial structures are relatively manageable, Şimşek continued as follows:
"In total, 131 funds within 7 portfolio management companies were liquidated. 66 of the 131 funds taken into liquidation were completely liquidated. The full liquidation of 3 out of 7 portfolio management companies was completed. 40.8 billion lira was paid to 45 thousand 747 accounts and the normal liquidation was carried out successfully. Money market fund investors in the 3 portfolio management companies subject to normal liquidation and whose liquidation was completed, let alone suffered losses, on average compared to September 17. They received an additional dividend return of 1.43 percent. Since the values of the stocks were inflated, that is, the values increased fictitiously and independently of the fundamentals of the company, investors in the stock-intensive funds received an average of 58 percent of the portfolio value on September 17. In other words, they received a 42 percent lower payment, but this is entirely due to the decrease in the values of the stocks.
"As of the weekend, the normal liquidation of 4 out of 7 portfolio management companies will be completed."
Minister Şimşek stated that last week the CMB decided to subject the funds of Hedef Portfolio Management Company to normal liquidation. Stating that there are 31 funds in Hedef Portföy Management Company, 4 of which are money market funds, Şimşek said, "There are 23 thousand 925 accounts in total. The aim of our institutions is to subject Hedef Portföy Management Company to the normal liquidation process and complete this process as of this week. Probably by the end of this week, the normal liquidation of 4 out of 7 portfolio management companies will be completed. Why is this important? Because this process is managed in a transparent, effective and fair manner." he said.
"The owners of Atlas have been in dialogue with the liquidator institution for a while"
Stating that there are three relatively large portfolio management companies left, Şimşek said, "Tera, Pusula and Atlas are subject to extraordinary liquidation as of today. The owners of Atlas have been in dialogue with the liquidator institution for a while and have shown a will to return some assets, values or fund resources that were taken out. There is a negotiation process. Measures have been taken regarding the owners. According to what the institution responsible for the liquidation told us, some resources were taken out of the fund, we are talking about the return of that resource." he said.
Şimşek stated that immediately after the bill in the Turkish Grand National Assembly is accepted, a process will be followed to prioritize small investors and money market fund investors up to 1 million liras in companies subject to extraordinary liquidation, and said, "Here, approximately 390 thousand accounts will be cleared if they have the ability to pay up to 1 million liras. We are not talking about accounts subject to normal liquidation, but extraordinary liquidation." he said.
"If they do not extradite them voluntarily, the legal process will be handled by our Ministry of Justice."
Emphasizing that PMSF, the Ministry of Justice and the Central Registry Agency worked together, and with the developed algorithm, all those who participated in market distortion activities and gained profit from these funds in the period from their birth to their death, Şimşek said:
"These were given to the SDIF and the Ministry of Justice as a list. In the process managed by the SDIF, we opened 131 accounts for 131 funds. Plus, we opened a general refund account. 132 accounts were opened. Resources will come to these 132 accounts through two channels. Voluntary refunds. A process is in progress here. We have determined all the threshold values. All the data remains, but first, those who have gained 10 million lira or more in real terms will be applied for. There is an algorithm, "It will be adapted with WPI-CPI. Companies and individuals who benefit from this will be invited, because they may be involved in manipulation or evaluated. If they return it voluntarily, there is no problem, if they do not, of course, a legal process will be carried out by our Ministry of Justice."
"Capital markets are very valuable to us"
Şimşek stated that the remaining rights of the citizens in the funds are reserved and that they will take action legally, and that the personal assets of those who act together will also be taken into consideration.
Stating that the capital markets will emerge from this process with a much healthier structure, Şimşek said, "While sending the temporary liquidation regulation to the Parliament, we, as the Ministry of Treasury and Finance, also worked on the permanent reform regulation and turned it into a draft. However, we rightly said, 'Let's prioritize the liquidation and make the permanent structural regulations with a calmer mind.' we said. Because capital markets are also very valuable to us."
Minister Şimşek stated that they will not take an approach that would disrupt the development of capital markets and said:
"Market distortion activities, coordinated movements, dealings with insider information, we will take a very comprehensive approach regarding all these, which will seriously increase the sanctions and strengthen the surveillance and control before the sanctions. Let me say this clearly, we will strengthen the institutional capacity of our relevant institutions. Why is this important? Because the market is very sophisticated, there are very advanced algorithms and concerted movements. We will also need to use these technologies. Therefore, one of our ideas is to strengthen the human capacity and resources in these higher boards. If necessary, from wage regulations." "If necessary, we have over 7,100 inspectors in our Tax Inspection Board, if I remember correctly. From there, we will transfer a few hundred experienced tax inspectors to our relevant institutions by subjecting them to a certain process. There are independent regulatory and supervisory institutions here, and if we have a strong legislative capacity, this will also be resolved."
"We are trying to make a further arrangement"
Stating that the capacities of the institutions that will carry out auditing and surveillance will be strongly redesigned and strengthened, Şimşek said, "There are trained human resources in the Ministry of Treasury and Finance. We will transfer a significant temporary or permanent human resource to these areas with the legal regulation." he said.
Giving information about the preparations for the new regulation, Şimşek made the following assessment:
"Most of the gaps that increased transparency and were used in manipulations were closed with the fund guide. This is an important step, but it is not enough. Therefore, we are trying to make a further regulation and I believe that our party group will finalize these regulations and present them to the Turkish Grand National Assembly this year and hope that they will be accepted. The implementation of the fund guide will not be postponed. Because everyone should do their calculations accordingly in terms of making the right decision and compliance. The risks that the rich take with their own money are called private funds in the world, in our country they are called hedge funds. "If it had not been opened to TEFAS, there would be no problems at today's level."
"Whatever is necessary will be done to prevent the funding issue from happening again."
Emphasizing that they will also take the risk of over-regulation into consideration, Şimşek stated that they will also be in dialogue with the sector.
Şimşek said, "I told my friends, 'Let's meet with the managers of 20 important funds that are not involved in manipulation in the sector, we want to listen to them.' I said. Because we will also consult with the sector about these regulations. But if, according to the information given to me by the CMB, we had taken into account the demands of the sector during the fund guide process, there would be no such thing as a guide.
Emphasizing that continuous sanctions and actual circulation rates for coordinated transactions are very important for them, Şimşek said:
"It is very important for us that the declared actual circulation rates are verified by an independent institution. Because a significant part of the manipulation stems from the problems in this actual circulation. Studies are being conducted to determine whether the actual circulation rate is sufficient or not. The issue of whether the funds to be sold to citizens will be open to TEFAS or not is being evaluated. Ultimately, a comprehensive regulation will be prepared. Consultations will probably be held with the sector within the next month. Then, in the final instance, our group will submit it to the will of the Supreme Parliament. This type of fund issue will never be discussed again." "Whatever needs to be done will be done to prevent this from happening. Because capital markets are an area that we value and that is critical for the real economy. This is an area that is too valuable to leave to greedy people and fraudsters."
