Following the introduction by valuation firms of material valuation uncertainty clauses, many funds suspended subscriptions and redemptions in March. New FCA COLL rules that come into effect on 30th September include a requirement that non-UCITS retail schemes (NURSs) investing in inherently illiquid assets must suspend dealing where the independent valuer determines there is material uncertainty regarding the value of more than 20% of the fund’s assets. Although the rules are not yet in place, existing rules require managers to consider the matter and many therefore took the view that they would suspend.
The mandatory provisions from 30th September only apply to funds in the form of a NURS. For other funds, the circumstances in which a fund should suspend should be determined by what is set out in the fund documents.
FCA speech on valuation uncertainty
On 20th March 2020 the FCA gave a speech on valuation uncertainty, you can find more information here.
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