Recent market volatility has revealed the fragility of liquidity in investment funds, bringing the purpose of redemption controls to the forefront.
In 2026, big industry players such as BlackRock, Apollo Global Management, Blue Owl and Blackstone have faced a surge in redemption requests, driving the use of gating measures as demand exceeds industry usual thresholds.
This post (1) aims to build an understanding of the prevailing market conditions and (2) outlines key regulatory considerations for fund management companies (FMCs) in Singapore, specifically examining Guidelines on Liquidity Risk Management Practices for Fund Management Companies [SFA 04-G08] issued by the Monetary Authority of Singapore (MAS) and revised on 1st August 2024.
1. Market Conditions – Focus on Private Credit Funds
Closed-end funds in the Private Credit sector, including Blackstone’s $82 billion Blackstone Private Credit Fund (BCRED) and BlackRock’s $26 billion HPS Corporate Lending Fund (HLEND), operate in the business of corporate lending.
Investor confidence in the technology sector had soared in the past decade, with the aforementioned funds increasingly extending loans to companies within the technology sector driven by their rapid growth potential. Remarkably, loans to Software as a Service (SaaS) firms had totalled to a whopping $500 billion in 2025, constituting nearly 20% of all private credit lending.
However, amidst rising investor uncertainty driven by concerns surrounding technological disruptions and whether such portfolios are “overvalued”, shares of SaaS firms are on the decline.
This is ever so pertinent following the collapse of high-profile corporates that had previously to have obtained financing from direct lenders, casting doubt over the quality of loans issued by major industry players. This further weakens their ability to service debt, heightens the chances of default, and erodes investor confidence, contributing to a wider market phenomenon – an “industry wide redemption wave”.
Investment funds’ client redemption requests have been increasing, particularly in non-traded Business Development Companies (BDCs) due to rising investor concerns over fund liquidity and exit constraints. Non-traded BDCs, such as HLEND and BCRED, are a type of investment vehicle in the United States that are registered under the Investment Company Act of 1940 (United States) to provide capital to private companies. Notably, unlike publicly traded funds, non-traded BDCs are not listed on the stock exchange. They primarily invest in relatively illiquid assets while typically offering investors periodic liquidity opportunities through redemptions, which are often subject to gating restrictions. This means that investors cannot exit the fund by selling their shares to another investor. They can only rely on the fund to buy back their shares. This structural design has amplified pressure on BDCs, as reflected in the case of Blue Owl’s decision to repurchase 15.4% of one of its tech-focused funds in January 2026, Blue Owl Technology Income Corp (OTIC). This is in contrast to the approach taken by HLEND and BCRED: while HLEND maintained its 5% quarterly redemption threshold as redemption requests received by HLEND amounted to $1.2 billion in value, Blackstone increased BCRED’s usual 5% redemption limit to 7% in order to accommodate demand.
When redemption requests increase, fund managers find themselves facing a difficult trade-off – if the fund engages in rapid fire sales in order to meet redemption requests and satisfy the investors who are looking to exit the fund, it may be forced to dispose off the fund’s illiquid assets – such as loans for private credit funds – at a discounted value, thereby resulting in its Net Asset Value (NAV) dropping. However, to do so would be to favour exiting investors to the detriment of the remaining investors. This is not a viable option, as decisions regarding the fund should be made reasonably and fairly in the interest of all investors. To do so otherwise would be to undermine the fundamental principle of fair treatment of all investors. Thus, in order to strike a balance between these competing interests, fund implement gating measures, permitting redemptions up to a set threshold, thereby promoting and preserving the interest of all investors. For example, as noted earlier, although redemption requests received by HLEND amounted to approximately 9.3% of its NAV, the fund restricted quarterly redemptions to its 5% threshold.
Unfortunately, the damage had already been done. Investor confidence fell following restrictions on withdrawals on a flagship fund by the “world’s largest asset manager”, leading to a sharp fall in the share price of BlackRock in March 2026. The fall was also exacerbated by external factors, such as heightened global tensions due to the ongoing war in the Middle East. In a volatile climate, liquidity risk becomes a major concern for both fund managers and investors.
2. Singapore Regulatory Framework
Singapore has been on par with international standards, with the MAS proposing the Guidelines on Liquidity Risk Management Practices for Fund Management Companies (Guidelines) in line with the IOSCO Final Report on Revised Recommendations for Liquidity Risk Management for Collective Investment Schemes (issued May 2025) and the Financial Stability Board’s Final Report on Liquidity Preparedness for Margin and Collateral Calls (published December 2024). These guidelines are applicable to companies that hold a capital markets services licence for fund management.
The MAS Guidelines provide a framework for managers of open-ended collective investment schemes (CIS) to implement effective liquidity risk management frameworks and practices. This is generally irrelevant to closed-end funds as they do not offer regular redemption rights. This may be confusing as earlier we had discussed HLEND and BCRED being closed-end funds. However, they are not closed-end funds in the traditional sense, and may be called ‘semi-liquid funds’, offering periodic liquidity through quarterly redemption opportunities. This demonstrates industry developments following the aftermath of the 2008 Global Financial Crisis, where liquidity risk in open-ended investment funds emerged as a key concern due to a potential mismatch between investor redemption rights and the liquidity of the fund’s underlying assets.
According to the MAS Guidelines, the applied frameworks and practices ought to be proportional to the size, scale, and complexity of the business run by FMCs and the profile of the funds they manage. MAS introduced the Guidelines in line with international standards with the objective of ensuring that the CIS remains capable of fulfilling redemption requests in a timely manner, even during periods of significant redemption requests. Should FMCs determine that certain sections of the Guidelines are inapplicable in their circumstances, there is an expectation to document their rationale behind their decisions under the liquidity risk management program.
Governance
From a governance perspective, regulation 13B(1)(a) of the Securities and Futures (Licensing and Conduct of Business) Regulations (SF(LCB)R) imposes an obligation on FMCs to establish a risk management framework to identity, monitor and address the risks relating to the customer assets that it manages, including the liquidity risks associated with the CIS portfolios. As sound governance is key in maintaining a good liquidity risk management program, the program effectively should be subject to oversight of the Board and Senior Management of FMCs.
Product Design
At the product design phase, FMCs are required to evaluate whether dealing arrangements, such as subscription and redemption terms, are aligned with the expectations of investors, the investment strategy of the fund, as well as the liquidity profile of its underlying assets. FMCs are also expected to consider the use of liquidity management tools and ensure adequate disclosure to investors regarding the terms, circumstances and implications of such tools.
Ongoing management
Ongoing liquidity risk management should include routine assessment of investor profiles and liquidity needs of investors as part of its regular review processes, factoring in investors’ historical redemptions patterns and expected future liquidity demands under different market conditions throughout varying stages of its life cycle.
In addition, FMCs are also expected to regularly evaluate the liquidity of the underlying assets to achieve alignment with the fund’s redemption terms.
Stress Testing
Stress testing is a key element of the liquidity risk management framework. FMCs are required to ascertain whether a CIS can withstand liquidity stresses during extended periods of market stress or idiosyncratic events, and should utilise regular stress testing to complement its liquidity risk management tools. Should FMCs decide not to conduct stress testing exercises, it is required to document the rationale behind its decision and to reassess it on a periodic basis. Such decisions should be subject to approval by the senior management and/or the Board.
Gating and Suspension of Redemptions
In exceptional circumstances, FMCs may decide to suspend redemptions if it is in the best interest of investors. During periods of suspension, FMCs ought not to accept new subscriptions. Such a decision to suspend redemptions is subject to approval by the senior management and/or the Board, and must be substantiated by clear documentation of the reason(s) for the suspension.
Alternatively, FMCs may impose gating measures, which restricts the timing of redemptions and/or quantum of redemptions, typically to a percentage of the NAV of the fund or of the redeeming investor’s investment. This contrasts with suspension measures, which constitute a more draconian intervention, involving a temporary halt to redemptions.
Such measures are generally reserved for extraordinary circumstances including market dislocation, portfolio company distress or liquidity crisis.
FMCs have an obligation to notify MAS of significant redemptions activity that meets the relevant thresholds set out in the Compliance Toolkits via the MAS-Tx portal under the Incident & Breach Reporting transaction. Concurrently, any suspension of redemptions or activation of gating measures must also be notified to MAS immediately via the same reporting channel. Investors and other relevant parties (such as intermediaries and distributors) must likewise be informed in writing of the measures imposed immediately.
How can we help?
Exocap assists with FMC setup in Singapore, including licence application and compliance manual and policies drafting or review.
We also act as outsource regulatory compliance adviser for our clients on an ongoing basis.
Against the backdrop of an increasingly complex regulatory landscape surrounding liquidity risk management, redemption mechanisms, and protection of investors’ interests, Exocap is well-positioned to guide FMCs in navigating these matters. By offering practical guidance on regulatory compliance tailored to the specific needs of the firm, Exocap can assist FMCs in enhancing their internal risk management frameworks and ensuring compliance with prevailing regulatory conditions.