Global regulatory bodies recommend open-ended fund managers charge exit fees

To address structural vulnerabilities

The Financial Stability Board (FSB) and International Organisation of Securities Commissions (IOSCO) are recommending open-ended fund managers charge fleeing investors a redemption fee.

In two separate consultation reports published today (5 July), the regulatory bodies proposed a set of policy recommendations to address the structural vulnerabilities from liquidity mismatch in open-ended funds and enhance the resilience of non-bank financial intermediation. The FSB's consultation and IOSCO's guidance on anti-dilution liquidity management tools (LMTs) aim to mitigate the potential first-mover advantage arising from structural liquidity mismatch in open-ended funds by passing on costs of liquidity associated with redemptions and subscriptions to investors. IOSCO's gui...