Fund Manager of an Open-ended Domestic Fund must ensure that the Fund has sufficient liquidity to meet redemption requests as stated in the Fund's Constitution and its most recent Prospectus, as appropriate to the nature and risk profile of the relevant Fund.
(2) For the purposes of meeting the requirement in (1), the
Fund Manager's systems and controls must, at a minimum, contain well-documented and detailed policies and strategies, which:
(a) include appropriate liquidity buffers and limits on illiquid assets, and the availability of other resources, such as lines of credit;
(b) take into account:
(i) the underlying classes of assets of the
(ii) if such assets are traded on-exchange, the liquidity in those markets;
(iii) investors' redemption patterns and behaviour; and
(iv) any other factors that affect or potentially affect the liquidity of the relevant classes of assets;
(c) include appropriate mechanisms to measure, monitor, stress test and manage the controls referred to in (a) to assess whether they are adequate, and are operating as intended in both normal and stressed conditions and the procedures available to the
Fund Manager to address any gaps and failures identified; and
(d) include powers available to the
Fund Manager to address liquidity stresses which pose, or have the potential to pose, risks to its ability to effect redemptions (such as the power to impose anti-dilution levies, create side pockets to ring-fence illiquid assets and create redemption gates or suspend redemptions), and clear triggers and procedures for exercising such powers.
Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]