The new Japan foreign investment rules were fully implemented on 7th June after a 30-day transition period. The amendments to the Foreign Exchange and Foreign Trade Act (FEFTA) require some overseas investors to submit a prior notification of stock purchases to the government via the Bank of Japan (BoJ).
Liquidity risk was amplified by the COVID-19 pandemic with regulators introducing a number of initiatives to mitigate the corresponding risk. However, itâs not the only area which has seen increased attention as a result of COVID-19. As summarised below, despite the G20 commitment to âsupport global trade and investmentâ during the pandemic, foreign investment restrictions have been on the rise.
Fund liquidity problems witnessed in 2019 with Woodford and H2O Asset Management brought liquidity back into the spotlight. Since then, the focus hasnât really faded on the issue of liquidity, and if anything, has intensified with the COVID-19 pandemic causing market volatility resulting in several more fund suspensions.
Although 2020 has already seen a number of initiatives intended to address liquidity risk, there are still more to come, with September due to be a particular busy month for risk management professionals.
With the recent market volatility caused by the COVID-19 pandemic, regulators across the EU and in some jurisdictions further afield have been banning short selling for varying periods. Although there are many who are sceptical of the benefits of short selling bans, several EU states including France, Italy, Spain and Austria had bans in place since March with Italyâs CONSOB opting for a ban until 18th June. Germany, along with Britain which still operates under EU rules, held back in imposing market wide bans.
Under the FCAâs Asset Management Market Study, the final report of which was published in June 2017, the City watchdog determined that price competition is weak in a number of areas of the industry.
On 30th October 2018, following the opinion issued by the European Securities and Markets Authority (ESMA) on asset segregation and application of depositary delegation rules to CSDs, the European Commission published the following delegated regulations…
It seems that âliquidity riskâ is the prevalent term on everyoneâs lips these days. Following a turbulent 2019, with several high-profile fund suspensions, it is perhaps no surprise that liquidity is a 2020 priority for most regulators.
Firms must have appropriate systems, controls and governance to oversee and manage liquidity risk. With the New Year well and truly underway, regulators across the globe have started publishing their priorities for the year ahead. Unsurprisingly, liquidity risk appears to be high up on most of their agendas
A number of key regulators including ESMA, the CBI and the FCA have reviewed the market for potential hidden âcloset trackerâ funds and published their findings, with a number of funds providing inaccurate information in their investor disclosure documents as regards investment strategy.
While the FCAâs Assessment of Value (AoV) process is a new development in the UK market, a similar requirement on mutual funds has been in place in the United States for considerable time. The approach in the United States provides some useful comparisons to the new UK regime. The US fund governance model requires under Section 15c of the US Investment Companies Act 1940 for US fund boards to conduct an assessment on the fund managers using a number of factors commonly known as the Gartenberg Principles.
