UK tightens investment trust rules after Saba Capital activism

Key Facts

Weeks after activist investor Saba Capital's campaigns rocked the UK closed-end fund market, the Financial Conduct Authority (FCA) proposed new rules targeting investment trusts. The proposals may make it harder for activists to take control of listed closed-end companies, according to a report by the Financial Times. The move aims to close regulatory gaps exposed by Saba's recent boardroom battles.

The proposals are part of a broader governance review, following Saba Capital's use of voting rules to push for board seats without majority shareholder support. Observers say the changes could boost institutional investor confidence but may also limit the upside for activist-driven strategies. The FCA's consultation period will allow market participants to weigh in on the draft rules.

The FCA is expected to open a consultation in the coming weeks, giving the industry a chance to comment before final rules are drafted. No direct price impact has been observed yet, but sector analysts expect trading in UK closed-end funds to remain range-bound until regulatory clarity emerges. The final rules could take months to implement.