Central banks had to inject liquidity into markets in March 2020 during COVID-19 lockdowns as money market funds struggled in the face of a "dash for cash" to meet promises of daily redemptions.
Property funds aimed at retail investors have also been offering daily redemptions and some have faced multiple suspensions in recent years due to market turbulence.
For funds that invest over 50% in liquid assets, daily dealing would remain appropriate.
Funds that invest mainly in less liquid assets could still offer daily redemptions if they can show regulators an ability to use specified "anti-dilution" liquidity management tools (LMTs), or else they must tighten redemption terms, the FSB said.
LMTs include being able to deduct a fee from redemptions to end "first-mover advantage", or investors who rush for the exits leaving those remaining worse off.
Persons:
IOSCO, Martin Moloney, Huw Jones, David Holmes, Christina Fincher
Organizations:
Industry, IMF, ICI, Thomson
Locations:
COVID, redemptions