CP26/35: Fair redemption terms for authorised funds investing in illiquid assets
RegCanary analysis of a FCA publication
Why it matters
RegCanary's analysis of what this means for regulated firms.
The proposed rules aim to align redemption terms with the time typically required to sell such assets, reducing liquidity mismatches and protecting investors. For compliance teams, this signals a shift towards more realistic redemption structures, potentially requiring adjustments to fund documentation, liquidity risk management frameworks, and investor communications. Firms managing funds with illiquid assets—such as real estate, infrastructure, or private equity—should review their redemption policies and assess whether current terms remain fair and sustainable.
The consultation closes on 11 December 2026, so affected firms must engage and provide feedback. Key actions include evaluating the impact on fund liquidity profiles, preparing for potential changes to redemption notice periods or gates, and updating disclosure materials. While the changes may enhance investor protection and market stability, they could also affect fund attractiveness and operational flexibility.
Compliance teams should monitor developments, participate in the consultation, and plan for implementation timelines. This is a significant development for investment management firms with illiquid asset exposure, requiring proactive risk assessment and strategic planning.
Who this affects
Sectors and firm types identified in the analysis.
- General Regulation
Source
FCA
Original publication, 5 October 2026
Read the original publication fca.org.ukThis is RegCanary's analysis, not the regulator's text. It summarises and interprets the publication above; it is not the FCA's original wording, and it is not legal advice. Always rely on the original source.