FCA: We are concerned over funds' ability to meet liquidity promises

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The Financial Conduct Authority (FCA) has expressed concerns over UCITS funds and exchange traded funds' (ETFs) ability to deliver on promises of daily liquidity for end-investors.

Speaking at the regulator's asset management conference in London, FCA wholesale firms manager Tony Hanlon said fund houses must recognise the burden of managing liquidity has shifted from investment banks to asset managers. With investment banks having significantly scaled back their market-making functions since the financial crisis, the FCA is now looking more closely at how fund groups reconcile investing in relatively illiquid assets with the commitments demanded by open-ended UCITS and ETFs. "We have become concerned at the number of funds promising daily liquidity that are unab...

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