The Financial Conduct Authority (FCA) has authorised the first Long Term Asset Fund (LTAF).
The LTAF is a new category of open-ended authorised fund designed to invest efficiently in long-term assets. The FCA enabled the innovation by creating a new regulatory regime which came into force in 2021.
Sarah Pritchard, Executive Director of Supervision, Policy and Competition – Markets said:
'We made these rules to create an environment where investors that wish to invest in productive finance assets can more easily do so.
'It was for market participants to make this a reality and it is good to see this product innovation now taking place.'
The FCA has worked with the Bank of England, the Treasury and industry, through the Productive Finance Working Group to create an environment where investment in longer-term, less liquid assets, by investors who understand the risks, can flourish. The ability to invest in illiquid assets, through appropriately designed and managed investment vehicles is important for supporting economic growth and the transition to a low carbon economy.
The FCA is currently inviting views on ideas about how to further improve asset management regulation with a more modern and tailored regime, to make sure the regime takes account of developments in technology and supports innovation.
Notes to editors
- The FCA finalised the regulatory regime for LTAF in October 2021.
- The FCA consulted on broadening access to LTAF in August 2022. Final rules are expected in the first half of this year.
- The FCA’s discussion on improving the regime for UK asset management is open until 22 May 2023.
- Find out more information about the FCA.
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: Editorial amendment Text corrected.
As a seasoned financial expert with a comprehensive understanding of regulatory frameworks and innovative financial products, my background includes an in-depth analysis of the Financial Conduct Authority's (FCA) recent authorization of the first Long Term Asset Fund (LTAF). My expertise in financial markets, coupled with an analytical approach to regulatory changes, enables me to provide valuable insights into the intricacies of this groundbreaking development.
The FCA's authorization of the LTAF marks a significant milestone in the financial landscape, introducing a new category of open-ended authorized funds specifically tailored for efficient investment in long-term assets. The FCA played a pivotal role in fostering this innovation by establishing a new regulatory regime, which officially took effect in 2021. This regulatory framework was carefully designed to create an environment conducive to investors seeking to engage with productive finance assets.
Sarah Pritchard, the Executive Director of Supervision, Policy, and Competition – Markets at the FCA, emphasized the purpose of these rules. The intention was to facilitate an environment where investors interested in productive finance assets could more readily participate. The collaborative effort involved market participants, and the realization of this product innovation is now underway.
Notably, the FCA collaborated with key entities such as the Bank of England, the Treasury, and industry representatives through the Productive Finance Working Group. The objective was to establish an environment that encourages investment in longer-term, less liquid assets, assuming investors possess a clear understanding of the associated risks. This strategic move is crucial for supporting economic growth and the transition to a low-carbon economy.
The ability to invest in illiquid assets through appropriately designed and managed investment vehicles is highlighted as essential in the context of economic growth and the shift towards a low-carbon economy. The FCA is actively seeking input on how to further enhance asset management regulation. This ongoing effort includes considerations for a more modern and tailored regulatory regime that adapts to technological developments and fosters innovation.
In specific details, the regulatory regime for LTAF was finalized by the FCA in October 2021. Subsequently, the FCA initiated a consultation process in August 2022 to broaden access to LTAF, with the expectation of finalizing rules in the first half of the current year. Additionally, the FCA has opened discussions on improving the overall regime for UK asset management, and stakeholders have the opportunity to contribute their views until May 22, 2023.
For those seeking additional information about the FCA and its initiatives, including the LTAF and ongoing regulatory discussions, it is advisable to refer to the official channels and resources provided by the FCA.
As someone deeply entrenched in the financial domain, I encourage interested parties to stay informed about these developments, as they signify a paradigm shift in investment opportunities and regulatory approaches within the financial industry.
