Global regulators have introduced stringent rules for asset managers of open-ended investment funds, a sector valued at over USD40tr. The new regulations, formulated by the G20’s Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO), are designed to ensure that these funds can handle investor withdrawals during crises without relying on emergency central bank liquidity. The rules aim to eliminate the first mover advantage by aligning redemption terms with the actual time required to liquidate assets, thereby addressing liquidity mismatches. Specifically, the reforms mandate that asset managers employ liquidity management tools (LMTs) for funds invested in less liquid assets. Additionally, these rules include provisions for “fair and reasonable transaction costs” on redemptions. The effectiveness of these measures will be evaluated by 2028 to determine if they adequately mitigate financial stability risks.