Summary
FUND 3.6 of the FCA Handbook outlines how liquidity considerations are expected to be integrated into the management of AIFs by a full-scope UK AIFM. It frames the section as setting out which managers and AIFs are in scope, how the investment strategy, liquidity profile and redemption policy are expected to relate to one another, how liquidity risk management systems and stress testing fit into that framework, and where to look for further technical detail in AIFMD Level 2 measures. Core sections include:
Application
indicates which full-scope UK AIFMs and AIFs the liquidity framework in FUND 3.6 is intended to apply to.
Alignment of investment strategy, liquidity profile and redemption policy
describes how the section positions the relationship between an AIF’s investment strategy, its liquidity characteristics and the way in which units or shares may be redeemed.
Liquidity systems and procedures
outlines the expectation that liquidity is managed through ongoing systems, procedures and testing, rather than as a one-off or standalone assessment.
Subordinate measures
signposts the relevant AIFMD Level 2 provisions and related technical standards that elaborate on the high-level liquidity concepts referenced in FUND 3.6.
