On February 8, 2017, the FCA published a Discussion Paper on
open-ended investment funds investing in illiquid assets. The FCA
is seeking feedback on whether its rules and regulatory approach to
open-ended funds that hold illiquid assets are appropriate. The
paper considers some of the risks that may arise when investors use
open-ended investment funds to gain exposure to illiquid assets
such as land, buildings, infrastructure and unlisted securities.
The FCA is concerned that fund managers that manage funds that hold
illiquid assets may face challenges when investors want to withdraw
their funds quickly and at short notice. These include achieving
realistic valuations of the underlying assets, and whether the need
to accept increased redemption requests might lead a manager to
favor exiting investors over those that wish to keep their money in
the fund, particularly under stressed conditions. The results of
the UK's referendum on whether to leave the EU led to
uncertainty in the financial markets and open-ended funds had to
work out how to value their property portfolios accurately and how
to manage a significant increase in redemptions. The FCA paper
describes the liquidity management issues experienced by certain UK
property funds and how the FCA responded to those issues, describes
the current UK regulations that apply to funds investing in
illiquid funds and makes suggestions for possible approaches to the
regulation of liquidity.
The FCA has requested feedback on the points raised by May 8,
2017. Once it has assessed the responses, the FCA will decide
whether it needs to amend its rules or policy approach. If changes
are required, the FCA will publish a consultation paper setting out
The implementation of the mandatory exchange of initial and
variation margin for non-cleared OTC derivative trades in the EU
commenced on 4 February for financial counterparties with the
largest derivatives portfolios.
On February 9, 2017, HM Treasury published a paper summarizing responses to its consultation on the transposition of the revised MiFID and three draft statutory instruments to facilitate transposition.
We consider below the circumstances in which a person may hold an "unpaid vendor lien", the effect of such a lien following the Supreme Court case of Menelaou v Bank of Cyprus UK Ltd  EWHC 2656...
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