The amendment that entered into force on 10 September 2026 requires that, in transactions on the Borsa Istanbul Repo and Reverse Repo Market for which central clearing is not provided, the collateral be notified to Takasbank on the same day and blocked in the relevant account in the name of the fund. The substance of the rule is to make the link between the repo transaction and the underlying security more visible, verifiable and secure.
What Is the CMB’s Repo and Reverse Repo Amendment?
The Capital Markets Board of Türkiye (CMB) has introduced a material change concerning transactions on the Borsa Istanbul Repo and Reverse Repo Market for which central clearing is not provided. Under the new provision added to Article 33 of Borsa Istanbul A.Ş.’s Regulation on the Principles of Exchange Activities, securities underlying repo transactions must be notified by the time specified by Takasbank on the trade date and blocked in the relevant account in the name of the fund.
If notification and blocking are not completed within the prescribed period, the repo transactions in question will be treated as invalid and cancelled by the Exchange upon Takasbank’s notification. The amendment entered into force on 10 September 2026. In repo transactions for which central clearing is not provided, timely identification and actual blocking of the collateral have thus become one of the basic conditions of the transaction’s validity. In other words, it is no longer sufficient that the trade has been executed on the Exchange; the collateral must also be matched with the transaction on the same day.
What Are Repo and Reverse Repo?
Repo and reverse repo are the two sides of the same short-term financing transaction. The party entering into a repo provides cash by transferring a security it holds to the counterparty for a specified period and repurchases that security at maturity on pre-agreed terms. Economically, therefore, a repo may be thought of as short-term borrowing against securities collateral. The party entering into a reverse repo is the provider of cash. That party temporarily receives the security in return and, at maturity, returns it and collects principal together with interest. Reverse repo is accordingly a short-term placement instrument for an investor or institution with surplus cash. Put simply: a repo means “I need cash and I am pledging my security as collateral”; a reverse repo means “I have cash and I am lending it short-term against collateral”. The safety of the repo market depends on the link between the cash and the security pledged against it being established in a clear, timely and verifiable manner.
What Changes in Repo Transactions under the New Rule?
The new rule requires that, once a repo has been transacted, the underlying security must also, on the same trade date, be identified, notified to Takasbank and blocked in the relevant account in the name of the fund. Repo is one of the principal instruments of short-term liquidity management. An institution that holds securities can raise cash by using those securities in a repo; the cash provider relies, in return, on a security that serves as collateral. The safety of the system depends on a robust link between cash and collateral.
Viewed in this light, the amendment is a constructive step for financial stability and investor protection. In particular, in transactions for which central clearing is not provided, it reduces risks such as the collateral not being ready in time, being misreported, or not being blocked, even though a trade appears to have been executed. In other words, the rule aims to remove uncertainties of the “the trade exists but the collateral is not yet complete” kind from the repo market.
The amendment in particular safeguards repo transactions executed on the Exchange Repo and Reverse Repo Market in the name of funds, but for which cash and securities settlement is not completed automatically within Takasbank’s ordinary central clearing system. If such a transaction has been executed, it is no longer sufficient that the trade has been matched on the Exchange; the security underlying the repo must be notified to Takasbank on the trade date, transferred by the specified time into the relevant account opened in the name of the fund, and placed under block. Otherwise the trade executed on the Exchange becomes invalid and is cancelled by the Exchange upon Takasbank’s notification.
Which Risk Does the Amendment Reduce?
Three risks stand out in the technical logic of the amendment. The first is verification that the security underlying the repo actually exists and that the correct security has been notified. The second is segregation of the security in the name of the fund. The third is a reduction in the possibility that the same security might be shown, in an uncontrolled manner, as backing more than one obligation.
A careful distinction is required here: the new rule should not be read as a finding that such an irregularity has in fact occurred in the market. The more accurate statement is that the amendment places the existence of the collateral, the fund to which it belongs and the transaction with which it is matched under a stronger operational control.
If a fund is providing cash through a reverse repo, the mere existence of a receivable record is not sufficient. The corresponding security must also be identified, segregated in the name of the fund and blocked. The new rule may therefore be assessed as “a safety standard that strengthens trade–collateral matching”.
What Are the Effects on Money Market Funds?
The safety to be obtained will have a cost. The new practice will, we may say, require more planned intra-day liquidity management, particularly in money market funds and debt-instrument funds. The amendment will narrow fund managers’ room for manoeuvre.
In money market and debt-instrument funds, investor inflows and outflows change throughout the day. The fund manager may wish to meet a cash need that arises later in the day by repoing securities held in the portfolio. The requirement that the security be notified and blocked by the final time specified by Takasbank will, however, require the abandonment of a “I will repo at the end of the day if needed” approach in favour of more careful planning.
The rule may lead some funds, as a precaution, to hold higher liquidity. These possible costs are not the direct cost of the amendment, but a scenario that may arise under particular assumptions.
Does the New Repo Rule Carry Liquidity and Market Risk?
The point that most deserves attention is periods of stress and crisis. If, on a day of large investor redemptions, the repo transaction the fund expected is cancelled because of the notification or blocking condition, the fund may have to find alternative liquidity at short notice. If alternative financing cannot be obtained, bonds or other securities in the portfolio may have to be sold. In such a case the cancellation of the repo can turn into a cash shortfall, and the cash shortfall into forced securities sales. If that channel becomes widespread, additional pressure on prices and interest rates is possible, particularly on days when market liquidity is thin.
It would not be correct to look only at the adverse side-effects of the amendment. Greater certainty of collateral in transactions for which central clearing is not provided will reduce counterparty risk and post-trade uncertainty. Blocking in the name of the fund will make it easier to track for which transaction and which fund the collateral has been set aside. It may also encourage market participants to shift towards operationally safer, centrally cleared transactions. That in turn helps the market infrastructure become more resilient.
More Safety, Less Liquidity Flexibility
A classic financial trade-off is at work: higher settlement and collateral safety in exchange for lower liquidity flexibility. Under normal market conditions the effect may remain limited. The real test of the amendment will come in periods when fund redemptions rise, intra-day cash needs change rapidly and market liquidity declines.
The question may be put as follows: will the advantages arising from the reduction in risk provided by the new safety standard exceed the additional costs that funds will bear in liquidity management? From the standpoint of financial stability, the desired outcome is of course that they will.
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