Regulatory Round-up: September 2020
The big month of liquidity finally arrived where we saw a number of liquidity developments come to fruition at the end of the month, including: ESMA’s new guidelines on liquidity…
Canada Guidance on Effective Liquidity Risk Management for Investment Funds
The Canadian Securities Administrators (CSA) has published guidance to help investment fund managers (IFMs) develop and maintain effective liquidity risk management (LRM) frameworks for investment funds.
September Liquidity Deadlines: Reminder on Funds Investing in Inherently Illiquid Assets
The 30 September compliance deadline is fast approaching for a number of liquidity developments. Including: ESMA’s new guidelines on liquidity stress testing in UCITS and AIFs. The FCA’s new rules for certain open-ended funds investing in inherently illiquid assets. FCA and Bank of England survey to review the liquidity mismatch in open ended funds Article 37 MMF Reporting for both Q1 and Q2.
The 16 ESMA Guidelines on Liquidity Stress Testing for UCITS and AIFs
On 2nd September 2019, the European Securities and Markets Authority (ESMA) published its final guidance regarding liquidity stress tests of investment fund…
The Liquidity Mismatch
This month marked one year since the collapse of Neil Woodford’s LF Woodford Equity Income fund. The Woodford fund was suspended in June, after it became overwhelmed by redemption requests from investors. One year on and investors are still awaiting their final pay-out. One year on and questions concerning the liquidity mismatches in open-ended funds still remain.
The Liquidity Countdown
Fund liquidity problems witnessed in 2019 with Woodford and H2O Asset Management brought liquidity back into the spotlight. Since then, the focus hasn’t 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.
The Challenges of Liquidity Stress Testing
It seems that ‘liquidity risk’ is the prevalent term on everyone’s 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.