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COLL 7.2 Suspension and restart of dealings

Requirement

COLL 7.2.1R
  1. (1)

    The authorised fund manager may, with the prior agreement of the depositary, and must without delay, if the depositary so requires, temporarily1 suspend the issue, cancellation, sale and redemption of units in an authorised fund (referred to in this chapter as "dealings in units"), where due to exceptional circumstances it is in the interest of all the Unitholders in the authorised fund.

  2. (1A)

    The authorised fund manager and the depositary must ensure that the suspension is only allowed to continue for as long as it is justified having regard to the interests of the Unitholders.1

  3. (2)

    On suspension, the authorised fund manager, or the depositary if it has required the authorised fund manager to suspend dealings in units, must:

    1. (a)

      immediately inform the FCA, stating the reason for its action; and

    2. (b)

      as soon as practicable give written confirmation of the suspension and the reasons for it to:

      1. (i)

        the FCA; and

      2. (ii)

        the Home State regulator 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.

  4. (2A)

    The authorised fund manager must ensure that a notification of the suspension is made to Unitholders of the authorised fund as soon as practicable after suspension commences.1

  5. (2B)

    In making the notification set out in (2A), the authorised fund manager must ensure that it:

    1. (a)

      draws Unitholders' particular attention to the exceptional circumstance which resulted in the suspension;

    2. (b)

      is clear, fair and not misleading; and

    3. (c)

      informs Unitholders how to obtain the information detailed in (2C).1

  6. (2C)

    The authorised fund manager must ensure that it publishes (on its website or by other general means) sufficient details to keep Unitholders appropriately informed about the suspension including, if known, its likely duration.1

  7. (3)

    During a suspension:

    1
    1. (a)

      none of the obligations in COLL 6.2 (Dealing) apply; and1

    2. (b)

      the authorised fund manager must comply with as much of COLL 6.3 (Valuation and pricing) as is practicable in the light of the suspension.1

  8. (4)

    The suspension of dealings in units must cease as soon as practicable after the exceptional circumstances referred to in (1) have ceased.

    1
  9. (4A)

    The authorised fund manager and the depositary must formally review the suspension at least every 28 days and inform the FCA of the results of this review and any change to the information provided in (2).1

  10. (5)

    The authorised fund manager must inform the FCA of the proposed restart of dealings in units and immediately after the restart must confirm this by giving notice to the FCA and the authorities mentioned in (2)(b)(ii).

  11. (6)

    The authorised fund manager may agree, during the suspension, to deal in units in which case all deals accepted during, and outstanding prior to, the suspension will be undertaken1 at a price calculated at the first valuation point after restart of dealing1 in units, subject to (8).

    11
  12. (7)

    This rule applies to a sub-fund as it applies to an authorised fund, and:

    1. (a)

      references to the units of the class or classes relate to that sub-fund and to the scheme property attributable to the sub-fund; and

    2. (b)

      this rule can only apply to one or more classes of units without being applied to other classes, if it is in the interest of all the Unitholders.

  13. (8)

    If an authorised fund operates limited redemption arrangements, and the event in (1) has affected a valuation point, the authorised fund manager must declare an additional valuation point as soon as possible after the restart of dealings in units.

[Note: article 45(2) of the UCITS Directive]2

Temporary suspension of units of a master UCITS or qualifying master scheme3

COLL 7.2.1AR

2Where:

  1. (1)

    an authorised fund manager of a UCITS scheme which is a master UCITS or a qualifying master scheme 3temporarily suspends the issue, cancellation, sale and redemption of its units, whether at its own initiative or at the request of the FCA; or

  2. (2)

    an operator of an EEA UCITS scheme which is a master UCITS or a qualifying master scheme 3temporarily suspends the issue, cancellation, sale or redemption of its units, whether at its own initiative or at the request of its Home State regulator; or3

  3. (3)

    3an authorised fund manager of a non-UCITS retail scheme which is a qualifying master scheme temporarily suspends the issue, cancellation, sale or redemption of its units, whether at its own initiative or at the request of the FCA; or

  4. (4)

    3the operator of a recognised scheme which is a qualifying master scheme temporarily suspends the issue, cancellation, sale or redemption of its units whether at its own initiative or at the request of its regulator;

the authorised fund manager of each of its feeder UCITS (which is a UCITS scheme) or feeder NURS 3is entitled to suspend the issue, cancellation, sale or redemption of its units for the same period of time as the master UCITS or qualifying master scheme.3

[Note: article 60(3) of the UCITS Directive]

Guidance

COLL 7.2.2G
  1. (1)

    1Suspension should be allowed only in exceptional cases where circumstances so require and suspension is justified having regard to the interests of the Unitholders. Difficulties in realising scheme assets or temporary shortfalls in liquidity may not on their own be sufficient justification for suspension. In such circumstances the authorised fund manager and depositary would need to be confident that suspension could be demonstrated genuinely to be in the best interests of the Unitholders. Before an authorised fund manager and depositary determines that it is the best interests of Unitholders to suspend dealing, it should ensure that any alternative courses of action have been discounted.

  2. (2)

    The authorised fund manager will need to ensure that any suspension, while maintaining Unitholders' interests, is temporary, of minimal duration and is consistent with the provisions of the prospectus and the instrument constituting the fund.4

    4
  3. (3)

    During a suspension, the authorised fund manager should inform any person who requests a sale or redemption of units that all dealings in units have been suspended and that that person has the option to withdraw the request during the period of suspension or have the request executed at the first opportunity after the suspension ends.