- I have placed an instruction to sell my holdings in the fund before the bank fails. When can redemption proceeds be released?
The SFC requires redemption proceeds to be paid to investors within one calendar month. Where it is not possible to effect payment due to the inability to withdraw money from the affected bank, the fund manager may need to consider temporary borrowing from another bank to repay investors.
An alternative is for the fund manager to consider further liquidating the underlying assets of the fund to meet the redemption payment and arrange to settle all the transactions with another bank. If the circumstances warrant, the fund manager should consider suspend dealings of the fund to protect the interests of investors since the continuous selling of assets may depress prices further and this would not be in the interests of remaining investors.
- Can I withdraw my instruction to buy units in the fund, as it is likely to suspend dealing until the problem gets resolved?
If the buy instruction has not been executed, you can normally withdraw your buy instruction, provided that proper procedures for the withdrawal of buy instructions are being followed.
If the buy instruction has been executed, you may choose to redeem your holdings. Should suspension occur, the fund manager has to accept your redemption request, which should be accumulated during the suspension period and processed immediately upon resumption of dealing.
IEC - Market contingencies