January started off the new year with several important regulatory developments in the investment funds and asset management industry. The most notable developments include: The proposed amendments to Form PF ESMA launching a Common Supervisory Action on the valuation of UCITS and AIFs across the EU The EU lowering of the reporting threshold for net…
ESMA has published the results of the 2020 Common Supervisory Action (CSA) on UCITS liquidity risk management (LRM). UCITS are characterised by the offer to investors of on-demand liquidity. Article 84(1) states that UCITS shall repurchase or redeem its units at the request of any unit-holder. If the assets held within the fund cannot be sold quickly to meet redemption requests, there could be severe issues in paying redeeming investors. This can be exacerbated in times of stress when investors may look to redeem en masse whilst the market for the assets is drying up.
The past month brought important developments on topics such as fund liquidity, costs and fees charged by fund managers, AIFMD, UCITS and Money Market Funds. Most notably, in the UK, HM Treasury published the responses to the consultation on the Overseas Funds Regime, and the Financial Services Bill…
Throughout the year regulators have focused on liquidity, and as this year draws to a close, that focus shows no signs of diminishing. “Asset managers need to step up their efforts to ensure the liquidity of their funds is adequately managed and that they are prepared for future shocks” – that was the closing remarks from Steven Maijoor’s Keynote Address at EFAMA’s Investment Management Forum which heavily focused on liquidity risk.
Despite the continuing focus on the rapidly rising COVID-19 infections rates in the US & Europe, the looming Lockdown 2.0, and the impending, potentially contentious race for the White House, October saw regulators press ahead with the launch of several significant fund regulatory developments.
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
