Redemption processing is the sequence of steps by which a fund's transfer agent or administrator deals with an investor's instruction to sell units back to the fund. The agent checks that the order is complete, properly authorised and received before the fund dealing cut-off, confirms that the units are held and not pledged or blocked, and prices the order at the next net asset value per unit, less any exit charge.
The units are then cancelled on the investor register, a contract note is issued, and proceeds are paid within the settlement period stated in the prospectus, only to a bank account in the investor's name that has passed anti-money laundering checks. Large outflows may trigger limits known as gates, deferral, or payment in securities. The mirror process is subscription processing, and both belong to transfer agency.