Key Takeaways
- • The UK Financial Conduct Authority (FCA) has proposed requiring retail investment funds that hold predominantly illiquid assets to impose minimum redemption notice periods of 90 days.
- • The affected asset classes named in the proposal include property, infrastructure and private companies.
- • The stated objective is to prevent liquidity mismatches, where a fund's redemption terms outpace its ability to sell underlying holdings.
Summary
The Financial Conduct Authority, the UK's financial regulator, has put forward proposals that would require retail investment funds holding predominantly illiquid assets to set minimum redemption notice periods of 90 days. The proposals cover funds with significant exposure to property, infrastructure and private companies, assets that cannot typically be sold quickly at fair value.
According to the publisher summary, the FCA's aim is to prevent liquidity mismatches, a situation in which investors can withdraw capital on terms faster than a fund can realize its holdings. Such mismatches can leave remaining investors exposed when redemptions are heavy. The full consultation text, including implementation timing and the scope of qualifying funds, was not available in the source material reviewed for this summary.
According to the publisher summary, the FCA's aim is to prevent liquidity mismatches, a situation in which investors can withdraw capital on terms faster than a fund can realize its holdings. Such mismatches can leave remaining investors exposed when redemptions are heavy. The full consultation text, including implementation timing and the scope of qualifying funds, was not available in the source material reviewed for this summary.
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