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Illiquid Assets

The FCA released CP 18/27: Consultation on illiquid assets and open-ended funds and consulted on proposals to reduce the potential for harm to retail investors in funds that hold illiquid assets, particularly under stressed market conditions, and help address financial stability concerns.  

They were proposing a package of measures that would require:

  • mandatory suspension when the independent valuer expresses uncertainty about the value of 'immovables' above a certain threshold;

  • contingency plans to be established in case of a liquidity risks cryst​allising;

  • more information to be disclosed to investors about the liquidity risks in such funds and how these risks are managed.

For full details including links to the research which the FCA have undertaken so far, view the FCA website by clicking here

 

AREF held a roundtable event in December 2018 to gather member opinion.
A summary from the event can be found here
 

AREF's Response

AREF submitted their response to this consultation on 25 January 2019

 

Other Liquidity Management issues

  • In March 2019 AREF responded to DWP's consultation on the Consideration of Illiquid Assets and the Development of Scale in Occupational Defined Contribution schemes (link to AREF response)
  • In February 2019 AREF responded to the FCA CP18/40 (link to AREF response) on Proposed amendment of COBS 21.3 permitted links rules, and DP18/10 Patient Capital and Authorised Funds (link to AREF response).
  • In May 2017, AREF submitted a response to FCA DP 17/1: Illiquid assets and open-ended investment funds. Click here to view the response. 
  • April 2017 - Click here to view the independent report commisioned by AREF on real estate fund behaviour following the EU referendum.
  • February 2016 - Click here for update from the FCA on liquidity management for investment firms