In the report on Assessing the resilience of market-based finance[1] published today, the Bank of England has set out the conclusion to the joint review by the Financial Conduct Authority (FCA) and the Bank of England on open-ended investment funds and the risks posed by their liquidity mismatch.
In concluding the review, the Bank and FCA have now put forward a suggested possible framework for how a liquidity classification framework for funds could be designed, as well as considerations around the calculation and use of swing pricing. Recognising the global nature of asset management and of key markets, the purpose of this framework is to guide FCA and Bank of England’s engagement with ongoing international work on open-ended funds.