The Capital Markets Board of Turkey ("CMB") adopted the recent amendments on the Draft Amendment Communiqué on Principles Regarding Repo and Reverse Repo Transactions of Intermediary Institutions numbered III-45.2.a, to the Communiqué on Principles Regarding Repo and Reverse Repo Transactions of Intermediary Institutions numbered III-45.2 ("Repo Communiqué"). The amended Repo Communiqué is published in the Official Gazette dated 31 December 2020, numbered 31351.
The significant changes adapted to the Repo Communiqué are as follows:
New Eligible Financial Instruments:
The following financial instruments are defined as eligible for repo and reverse repo transactions.
- Investment fund contribution shares other than hedge funds,
- Debt instruments, lease certificates, real estate certificates, project backed securities, asset and mortgage backed securities and asset and mortgage covered securities issued by Turkey Wealth Fund,
- Real estate certificates and project backed securities issued in Turkey and abroad by Turkish resident issuers,
- Debt instruments, lease certificates, real estate certificates, project backed securities, asset and mortgage backed securities and asset and mortgage covered securities issued by foreign entities in which Treasury and Finance Ministry and Central Bank of Turkey are either members or shareholders.
Valuation and Margining Principles of the New Financial Instruments:
- Investment funds which are not traded
in exchange and settled without any central counterparty
("CCP"),
- are valued in reliance upon principles as per the Communiqué on Principles regarding Financial Reporting of Investment Funds.
- For the margining of these investment funds, the valuation price, which is used for determining the margin required for the respective fund, will be the latest price notified to Takasbank on the repo date and accordingly, the margin ratios will be specified based on this valuation price for each type of fund. The margin ratios are listed under Article 7/6 of the Repo Communiqué.
- The debt instruments, lease
certificates, real estate certificates, project backed securities,
asset and mortgage backed securities and asset and mortgage covered
securities issued by foreign entities in which Treasury and Finance
Ministry and Central Bank of Turkey are either members or
shareholders, which are not traded in exchange and settled without
any CCP,
- are valued in reliance upon Turkey Accounting/Financial Reporting Standards published by Public Oversight, Accounting and Auditing Authority.
- For the margining of these securities above, %100 of the valuation prices shall be taken as the basis.
- The requirement of CMB for a written framework agreement to be executed between parties for the repo and reverse repo transactions, is amended so that to also enable the distance contracts to be executed between the parties of repo/reverse repo transactions as per the principles of Communiqué on Documentation and Record Keeping System Regarding Investment Service and Activities and Ancillary Services.
- A new transaction limit has been imposed towards the intermediary institution regarding the amount of the financial instruments issued by the intermediary institution itself or its affiliates, subsidiaries, entities where the intermediary institution has control over the capital, management and audit of such and the qualified shareholders of the intermediary institution other than deposit and participation banks, not to exceed 10% of the equity capital of such intermediary institution.
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