On 16 March 2022, the FCA issued a statement on its website stating that it has begun discussions with stakeholders about options to allow UK authorised retail funds to make exceptional use of ‘side pockets’ given the practical issues in disposing of Russian and Belarussian assets in the context of suspensions and extensive global sanctions. The side pockets would give authorised fund managers the option to separate Russian and Belarussian assets, that are difficult to see and/or hard to value, from the fund’s other core investments.

The FCA will consult on proposals with the aim of ensuring that any side pockets that are introduced, and the date on which the side pocket takes effect, treat existing, redeeming and subscribing investors fairly, and do not encourage speculative new investment at the expense of existing investors.

The rule changes will be subject to formal consultation. The FCA is welcoming early engagement with stakeholders who can contact the FCA at: amfpolicy@fca.org.uk.