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CIS 13.1 Application

CIS 13.1.1R

This chapter applies to authorised funds and their authorised fund managers and depositaries, except for CIS 13.1.3 R (10) which applies only to ICVCs and their ACDs and depositaries.

Purpose

CIS 13.1.2G

This chapter helps in achieving the regulatory objective of protecting investors by ensuring they do not buy or redeem units at a price that cannot be calculated accurately. For instance, due to unforeseen circumstances, it may be impossible to value, or to dispose of and obtain payment for, all or some of the scheme property of an authorised fund. CIS 13.1.3 R(2) sets out the circumstances in which an authorised fund manager must or may suspend dealings in units and the manner in which a suspension is to be carried into effect.

Requirement

CIS 13.1.3R
  1. (1)

    Where (2) applies, the authorised fund manager may, with the prior agreement of the depositary, and must without delay, if the depositary so requires, suspend the issue, cancellation, sale and redemption of units (referred to in this chapter as "dealings in units").

  2. (2)

    This paragraph (2) applies if the authorised fund manager (or the depositary in the case of any requirement by the depositary) is of the opinion that due to exceptional circumstances there is good and sufficient reason in the interests of holders or potential holders.

  3. (3)

    For the purpose of (2), the authorised fund manager or the depositary (as the case may be) must have regard to the interests of all of the holders in the authorised fund and not just to the interests of the holders of units of the class or classes in which dealings are proposed to be suspended.

  4. (4)

    At the time of suspension under (1), the authorised fund manager, or the depositary if it has required the authorised fund manager to suspend dealings in authorised fundunits, must:

    1. (a)

      inform the FSA of the suspension, stating the reason for its action; and

    2. (b)

      immediately give written confirmation of the suspension and the reasons for it to:

      1. (i)

        the FSA; and

      2. (ii)

        the authorities who are responsible for the authorisation of collective investment schemes in each EEA State in which the authorised fund manager holds itself out as willing to sell or redeem units of the authorised fund concerned, stating the reason for its actions.

  5. (5)

    During the period of a suspension, none of the obligations in CIS 4 (Single-pricing and dealing) and CIS 15 (Dual-pricing and dealing) relating to the issue, cancellation, sale or redemption of units or to the valuation of scheme property apply.

  6. (6)

    The suspension of dealings in units must cease as soon as practicable after the authorised fund manager, or the depositary, in the case of a requirement by it, is no longer of the opinion referred to in (2), and, in any event, within 28 days of the commencement of the suspension.

  7. (7)

    Before the suspension of dealings in units ceases, the authorised fund manager must inform the FSA of the proposed resumption and immediately after the resumption must confirm the resumption by giving notice in writing to the FSA and the authorities mentioned in (4)(b)(ii).

  8. (8)

    Nothing in this chapter prevents the authorised fund manager from agreeing, during the period of the suspension, to sell or to redeem units or to arrange for the authorised fund to issue or cancel them at a price calculated by reference to the first valuation point after resumption of dealings in units.

  9. (9)

    This rule (CIS 13.1.3 R) applies to a sub-fund of an umbrella scheme as it applies to an authorised fund, but by reference to the units of the class or classes related to the sub-fund and to the scheme property attributable to the sub-fund.

  10. (10)

    This rule (CIS 13.1.3 R) may be applied to one or more classes of share of an ICVC without being applied to other classes, but this does not affect (3).

Suspension beyond 28 days

CIS 13.1.4G

The FSA will wish to consider the case for any suspension beyond 28 days. It will, if it considers it appropriate, use its powers to extend that period.