A new era for open-ended funds with illiquid assets?

New NURS rules come into effect on 30 September

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The FCA is working jointly with the BoE to determine whether the new rules should apply to UCITS
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The FCA is working jointly with the BoE to determine whether the new rules should apply to UCITS

The closing of redemption gates in several open-ended property funds after the Brexit referendum, followed by the 2019 Woodford saga, has shone a spotlight on the risk to investors of funds holding illiquid assets in stressed markets.

The Financial Conduct Authority (FCA) recognised the need for more transparency and has introduced new rules, applicable from 30 September 2020, for open-ended funds falling within the non-UCITS retail scheme (NURS) - imposing a mandatory redemption suspension and more stringent liquidity risk management obligations on fund managers. Furthermore, the FCA and the Bank of England (BoE) are currently considering wider reforms to all open-ended funds (both NURS and UCITS) to ensure redemption terms are better aligned with liquidity of assets. FCA hits NURS funds with new liquidity rules a...

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