Regulators Warn UK Fund Managers To Watch Liquidity Levels

Law360, London (March 26, 2021, 1:50 PM GMT) -- Britain's financial watchdogs have warned that managers of open-ended funds are overestimating the liquidity of their holdings, which could cause systemic risks to the market if investors pull out their cash quickly in times of stress.

The Financial Conduct Authority and the Bank of England said they found that most managers of open-ended funds displayed "liquidity optimism" about how fast they could sell assets to meet redemption requests.

Open-ended funds promise daily redemptions to investors, but some hold assets that can take longer to sell in an orderly way, the City regulator and central bank said. The watchdogs said they surveyed...

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