FCA tightens liquidity rules for open-ended funds

Mr Woolard stressed the FCA wanted to make it clear authorised fund managers were responsible for managing the liquidity risk in their funds and acting in the best interests of investors.

Ryan Hughes, head of active portfolios at investment platform AJ Bell, said: “As expected, the FCA delayed the release of this paper after the suspension of the Woodford fund in order to consider the wider implications of illiquid assets in open-ended funds. 

“The regulator states the Woodford saga highlighted that many investors aren’t aware of the liquidity risk they are exposed to and is looking at whether fund managers need to do more, including reviewing the appropriateness of daily dealing.”

Mr Hughes said AJ Bell welcomed the FCA’s decision to look further into these solutions but urged the regulator to move more rapidly to make changes as they were “real problems” that investors were “facing today”.

He thought the rules meant the industry was likely to see funds suspend dealing more frequently and sooner than they would have done in the past.

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