Are you complying with the updated guidelines on stress test scenarios under the MMF Regulation?

Are you complying with the updated guidelines on stress test scenarios under the MMF Regulation?

Throughout August you will have seen a number of regulators publishing updated circulars, opinions and notices in relation to the application of the ESMA Guidelines on stress test scenarios under the Money Market Fund Regulation (EU) 2017/1131 (MMFR). Including regulators such as the: MFSA, CMVM, Central Bank of Ireland, FSMA & CSSF.

Liquidity Mismatch – FCA & BoE put forward suggested possible liquidity framework

Liquidity Mismatch – FCA & BoE put forward suggested possible liquidity framework

In 2019, the Bank of England (BoE) and Financial Conduct Authority (FCA) launched a joint review into vulnerabilities associated with the liquidity mismatch. The review built on the FPC’s 2015 assessment; the FCA’s 2019 Policy Statement on funds investing in inherently illiquid assets; and the work by the FSB and the International Organization of Securities Commissions (IOSCO).

UCITS Liquidity Risk Management ESMAs 11 Areas for Improvement

UCITS Liquidity Risk Management: ESMA’s 11 Areas for Improvement

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.

Asset Managers Need to Step Up Their Liquidity Efforts – ESMAs Five Key Priorities

Asset Managers Need to Step Up Their Liquidity Efforts – ESMA’s Five Key Priorities

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.