New market regulation in pipeline

New market regulation in the pipeline

As Turkish investors get acquainted with hedge funds, leading analysts and academics, including Bing Liang of the University of Massachusetts, gathered at a conference, titled ?New Horizons In The Investment World? Friday. A draft to make sure the Capital Markets Board (SPK) regulation is compatible with international norms is expected to be turned into law by the end of the year.

The conference, organized by Koç University and Turkish Institutional Investment Managers' Association (TKYD), was held in Istanbul.

The fact that hedge funds entered the Turkish economy not before the current international credit turmoil is a ?chance,? said Gür Ça?da?, chairman of TKYD, reminding that hedge funds are among the major actors of the U.S.-based credit crunch. ?Total assets in investment funds, excluding retirement and hedge funds, exceed $23 trillion worldwide. The net assets of investment funds in Turkey totaled YTL 26 billion in March 2008,? said Ça?da?.

?Investment funds constitute 3 percent of Turkey's Gross National Product (GNP), while the rate of investment funds to GNP is, on average, 40 percent worldwide. This fact indicates that Turkey's market has a significant growth potential,? he added.

?The main target of hedge funds is expected to be wealthy individual investors and investment funds, not small individual investors,? said Alp Keler, chief executive officer of Fortis Investment Turkey. ?This is due to the hedge fund motto which can be summarized as "High risk, high gain.'?

New Capital Markets Board (SPK) draft regulation compatible with the European Union [norms] will be submitted for approval to Parliament by the end of the year, Turan Erol, chairman of the SPK said.

?We are operating to enhance the independence of the [investment] fund sector from the banking sector. Fund sector will be more flexible and more independent, thus it will operate more efficiently,? Erol said.

?It is an advantage that there are bold and certain separating lines between the banking sector and capital markets in Turkey that enable us to recognize the risk at a crisis moment,? Erol explained. ?The recent crisis taught us the importance of determining where crises can occur and who may be affected once again.?

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