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FSA sought clarity after confusion on fund suspensions

The FSA called for clarity from UK investment firms last week as confusion reigned in the IFA community over which funds remained open for trading.

On Wednesday, the day after the terrorist attacks in the US, the majority of fund managers suspended all funds with significant exposure to closed markets – principally US, Far Eastern and emerging market funds.

However, several product providers, including Artemis and Scottish Widows, initially suspended trading across their entire fund ranges due to worries that price feeds would be inaccurate.

Several high-profile IFAs, including BestInvest&#39s Jason Hollands and Hargreaves Lansdown&#39s Mark Dampier, criticised blanket suspensions, warning that they were sending the wrong message to the market.

In a meeting with the Depository and Trustees Association on Wednesday afternoon, the FSA advised that fund managers should resume trading in any funds which were dealing in open markets. It is also believed to have asserted that clear evidence of unreliable price feeds would be needed to justify further suspension of funds dealing in open markets, according to Autif.

In a memo to its members last week, Autif summarised the main points to have come out of the meeting between the FSA and Data. It says: “It was concluded that Data members should deliver a consistent message to their clients regarding the scope for the suspension of dealing in their funds.”

By last Friday, most funds without significant exposure to the US were again trading while the remaining suspended funds finally reopened for business on Tuesday this week.

Autif issued a press statement refuting claims that some firms had suspended funds to stem a wave of selling. Director of communications Anne McMeehan says: “We have received no indication from any of our member companies that they are experiencing any panic among their unitholders and shareholders. On the contrary, investors and their advisers are remaining calm and resilient.”

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