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Legal Alerts

26/03/2020

COVID-19: Capital Markets Precautions

Legal Alerts
Capital Markets
General

Recent Development

The Capital Markets Board (“CMB“) and Borsa Istanbul A.Ş. (“Borsa Istanbul“) have taken important measures regarding the COVID-19 outbreak.

In addition to the previous precautions taken by other authorities, the CMB and Borsa Istanbul made certain arrangements for the markets, public companies and investor in order to mitigate the effects of the COVID – 19 outbreak.

Precautions Taken by the CMB and Borsa Istanbul

Price Volatility

The short-selling restriction will continue to be in force until further notice.

The CMB’s decision entitling public companies to buy back their own shares from the market without being subject to any limit will continue to be in force until further notice. Accordingly, public companies can continue to buy back their shares under an existing buy-back plan or pass a board resolution to conduct a new buy-back plan.

The collateral ratio in credit sales will be 35%. If the collateral ratio falls below 35%, this ratio must be recovered to 35%, rather than 50%.

Notifying the Borsa Istanbul about persons that do not fulfill their obligations to cure collateral ratio or clearing obligations, and the Borsa Istanbul’s announcement concerning these persons has been postponed until further notice.

The Borsa Istanbul changed the price margin; the circuit breaker triggering rate; the circuit breaker order collection period; and the daily price limits applied in the single stock and equity index futures. The relevant changes have been applicable since March 13, 2020 and they will be valid until further notice.

Changes in respect of the transactions taking place in Borsa Istanbul Star Market (“Star Market“) and in the Borsa Istanbul Main Markets (“Main Market“):

  • The price margin (for determining price limits) is reduced to 10%.
  • The downstream price change triggering a circuit breaker is reduced to 5%.
  • The circuit breaker call period will be 30 minutes.
  • The price margin (for determining price limits) in exchange traded funds, real estate certificates, real estate investment funds and venture capital investment funds is reduced to 10% from 20%.

Changes in respect of the transactions taking place in the Borsa Istanbul Derivatives Market:

  • Daily price limit of single stock and equity indexes (BIST30, BIST Bank, BIST Industrial, BIST Liquid Bank and BIST Liquid 10 Ex Banks) futures contracts is decreased to 10%.

Investment Institutions and Public Companies

Investment institutions’ employees are allowed to work part-time, in alternate shifts, through remote access and/or other similar procedures to be determined by the investment institutions.

Investment institutions will be able to process customer orders through mobile applications (such as WhatsApp) or e-mail addresses. However, investments institutions are required to inform their customers about the changes to the order process methods and to establish efficient mechanisms for recording the transactions.

Investment institutions must inform their customers about the changes to the order process methods through their websites.

Public companies and investment institutions can submit all applications and notices to the CMB via CMB’s registered e-mail.

In addition, under the Presidential Decrees dated March 20 and March 22, 2020, all events and meetings, including general assembly meetings are postponed until the end of April, and all employees of governmental institutions will also work in alternate shifts, or through remote access, to the extent possible.

Financial Reporting and Disclosures

Public companies whose securities are traded on an exchange or an organized market will have a 30-day extension to disclose their financial statements. Public companies subject to special financial reporting period will also benefit from the 30-day extension.

Portfolio management companies and brokerage firms have until the end of the month following the expiry of the disclosure date for their 2019 financial statements and 2020 three-month interim financial statements to disclose their statements.

The financial statements of investment funds and the annual reports of pension funds for the 2019 financial year can be disclosed until 30 April 2020.

Public companies whose securities are not traded on an exchange or an organized market have until the end of the month following the expiry of the disclosure date for their 2019 financial statements to disclose their statements.

Conclusion

The CMB and Borsa Istanbul are closely following the latest COVID-19 outbreak developments in Turkey. The organizations adopt any necessary measures to ensure the smooth operation of the Turkish capital markets and to avoid any fluctuations that might adversely affect the market actors.

The abovementioned measures undertaken by the CMB and Borsa Istanbul aim to support investors, public companies and investment institutions.

Please refer to https://www.esin.av.tr/coronavirus-desk/ for our client alerts regarding the legal consequences of COVID-19 on capital markets and other areas.