The Russian invasion of Ukraine has affected financial markets in many ways. Sanctions have been imposed in response to Russia’s invasion, and the Russian government has applied trading restrictions. Some securities, including some Ukrainian assets, have become illiquid or untradeable. Normal mechanisms for determining accurate and reliable valuation for some securities have stopped operating. The FCA’s recent consultation paper CP22/8 (“CP22/8”) outlines the rules to allow Authorised Fund Managers (“AFMs”) to create separate unit classes (“side pockets”) for assets in retail investment funds affected by the invasion of Ukraine…


The FCA will consider all feedback and, depending on responses received, will aim to publish a final policy statement and final Handbook rules and guidance as soon as possible.

The FCA is not proposing to set any time limit on when AFMs may elect to create the side pocket under these rules, since it is too early to know how the situation in Ukraine might develop. The FCA intend to keep matters under review and consult further when it is appropriate to withdraw this emergency measure. Any future decision to end the power to create a new side pocket would not affect any arrangement already set up under the CP22/8 rules.

For more information, and any guidance or advice on the use of side pockets, Cleveland & Co external in-house counselTM, are here to help.

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