COLL 7.2 Suspension and restart of dealings

1. (1)

   7This rule applies to the authorised fund manager of a non-UCITS retail scheme if at any time:

   1. (a)

      a standing independent valuer has expressed material uncertainty in accordance with VPS 3 paragraph 2.2(o) and the guidance at VPGA10, RICS Valuation Global Standards 2017 (The Red Book) (effective from 1 July 2017), about the value of one or more immovables under management and that material uncertainty applies to at least 20% of the value of the scheme property; or

   2. (b)

      the authorised fund invests at least 20% of the value of the scheme property in units of one or more other authorised funds for which dealings in units have been temporarily suspended under (2).

2. (2)

   As soon as possible and in any event by the end of the second business day after the day on which this rule starts to apply under (1), the authorised fund manager must temporarily suspend dealings in units in the authorised fund unless (3) applies.

3. (3)

   Dealings in units in the authorised fund may continue provided that:

   1. (a)

      as soon as possible and in any event by the end of the second business day after the day on which this rule starts to apply under (1), the authorised fund manager and the depositary agree that dealings in units in the authorised fund should continue;

   2. (b)

      the authorised fund manager and the depositary have a reasonable basis for determining that a temporary suspension of dealings in units would not be in the best interests of unitholders in the authorised fund; and

   3. (c)

      the authorised fund manager and the depositary do not rely solely on a fair value price adjustment when making their determination under (b).

1. (1)

   7This rule applies where the authorised fund manager of a non-UCITS retail scheme is required to temporarily suspend dealings in units in the authorised fund under COLL 7.2.-3R(2) or COLL 7.2.-1R(3).

2. (2)

   The authorised fund manager must notify the depositary before suspending dealings in units in the authorised fund.

3. (3)

   During the suspension, the authorised fund manager must follow the requirements set out in the following provisions, where applicable:

   1. (a)

      COLL 7.2.1R(2);

   2. (b)

      COLL 7.2.1R(2A);

   3. (c)

      COLL 7.2.1R(2B);

   4. (d)

      COLL 7.2.1R(2C);

   5. (e)

      COLL 7.2.1R(3);

   6. (f)

      COLL 7.2.1R(4A);

   7. (g)

      COLL 7.2.1R(5); and

   8. (h)

      COLL 7.2.1R(6).

4. (4)

   Dealings in units must restart as soon as reasonably practicable after:

   1. (a)

      the standing independent valuer’s material uncertainty assessment applies to less than 20% of the value of the scheme property; and

   2. (b)

      the scheme’s depositary gives its approval for the temporary suspension to be removed.

5. (5)

   If a non-UCITS retail scheme operates limited redemption arrangements and a suspension has prevented dealings in units at a valuation point, the authorised fund manager must declare an additional valuation point as soon as possible after the restart of dealings in units.

6. (6)

   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 the authorised fund manager considers that a suspension of dealings in units of some but not all classes of units is in the best interest of all the unitholders of that authorised fund or sub-fund.

1. (1)

   7This rule applies where the authorised fund manager and the depositary agree that dealings in units in the authorised fund should continue under COLL 7.2.-3R(3) and, if relevant, following a review under this rule.

2. (2)

   During the period of material uncertainty (see (8) below), the authorised fund manager and the depositary must review their agreement not to suspend dealings in units in the authorised fund at least every 14 days.

3. (3)

   Following such a review the authorised fund manager must temporarily suspend dealings in units in the authorised fund unless (4) applies.

4. (4)

   Dealings in units in the authorised fund may continue provided that:

   1. (a)

      the authorised fund manager and the depositary agree that dealings in units in the authorised fund should continue;

   2. (b)

      the authorised fund manager and the depositary have a reasonable basis for determining that a temporary suspension of dealings in units would not be in the best interests of unitholders in the authorised fund; and

   3. (c)

      the authorised fund manager and the depositary do not rely solely on a fair value price adjustment when making their determination under (b).

5. (6)

   The authorised fund manager must inform the FCA of the results of each review.

6. (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 the authorised fund manager considers a suspension of dealings in units of some but not all classes of units is in the best interest of all the unitholders of that authorised fund or sub-fund.

7. (8)

   In this rule, a “period of material uncertainty” is any period during which one or both of COLL 7.2.-3R(1)(a) and (b) applies.

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. Where an authorised fund is a regulated money market fund, the authorised fund manager must ensure that any such suspensions are consistent with the Money Market Funds Regulation.5

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 the FCA.6

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.6

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.

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