The FSA rules determine the strict maximum and minimum prices for a unit trust, and hence the maximum spread, but trust managers usually price inside those limits. (They're not allowed to price outside them).
They can do this because they have discretion about how much (if any) of the notional dealing costs they pass on to investors when setting prices. If they don't pass on the notional dealing costs, the offer price is lower and the bid price is higher than the FSA limits, resulting in a narrower spread.
In circumstances where there is large imbalance between the number of units being bought and the number sold, the managers may decide to adjust prices towards the FSA limits.
Imagine that the number of investors selling is far greater than the number buying, such that the managers are net buyers of units in the trust.
Now imagine the opposite situation where the number of people buying units is much higher than the number selling. The managers are net sellers of units.
When the managers reduce the bid price all the way to the cancellation price the trust is said to be priced on the full bid basis. If they raise the offer price all the way to the creation price the trust is said to be priced on the full offer basis.
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