UK’s FCA Proposes 90-Day Notice for Illiquid Assets to Prevent Fund Suspensions

LONDON: The UK’s Financial Conduct Authority (FCA) has announced a proposal requiring a 90-day notice period for the suspension of illiquid assets held by investment funds. This measure aims to enhance market stability and protect investors amid growing concerns over liquidity risks.

The FCA’s proposal comes in response to recent market disruptions that have led to several funds suspending redemptions, leaving investors unable to access their capital. FCA Chief Executive Nikhil Rathi emphasized the necessity of this regulation, stating, “We must ensure that investors are adequately informed and protected, particularly in volatile market conditions.”

This regulatory change is expected to have significant implications for both fund managers and investors. By mandating a notice period, the FCA aims to provide investors with more time to make informed decisions and mitigate the risks associated with sudden market shifts. Financial analysts suggest that this could lead to a more cautious approach among fund managers when dealing with illiquid assets.

The FCA is set to hold a series of consultations to gather feedback from industry stakeholders before finalizing the proposal. The outcome of these discussions will be crucial in shaping the future of investment fund regulations in the UK.