FCA Expects Hedge Fund Managers to Focus on Liquidity Risk

(Hedge Fund Law Report) Investment managers must ensure that they appropriately manage liquidity risks in their funds and disclose those risks to investors, according to the U.K. Financial Conduct Authority (FCA). Working with the Bank of England to assess risks posed by open-ended investment funds investing in the fixed income sector, the FCA reviewed a number of large investment management firms to understand their liquidity management practices. The FCA has compiled its findings in an update recommending good practices for hedge fund and other investment managers to manage liquidity in their funds. The FCA expressly stated that, even though they originated in the open-ended fund context, its conclusions apply across the entire investment fund industry.

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