Liquidity Landscape – Singapore

Liquidity Landscape – Singapore

Regulatory Insights, Risk Monitoring

Last week we took a brief look at the liquidity risk management regime in Hong Kong. This week, moving slightly southwest, and staying in the same continent, we review the liquidity risk requirements in Singapore. In 2018, the same year Hong Kong made amendments to its Fund Manager Code of Conduct, the Monetary Authority of Singapore (MAS) issued new Guidelines on Liquidity Risk Management Practices for Fund Management Companies (Guidelines).

Liquidity Landscape – Hong Kong

Liquidity Landscape – Hong Kong

Regulatory Insights, Risk Monitoring

Although liquidity risk management practices vary in different jurisdictions, in most cases, asset managers are required to monitor the liquidity of the fund on a frequent basis. Whilst many aspects of the regulations are broadly similar, differences can be seen from what is considered “liquid”, and around methodology to liquidity buckets, stress testing and reporting requirements. In Europe for example, neither UCITS nor AIFMD specify a specific methodology for calculating liquidity. This is in contrast to the US SEC Liquidity Risk Management Framework requirements which set out a specific methodology to be followed, although that methodology is not without its shortcomings.

Liquidity Mismatch

The Liquidity Mismatch

Regulatory Insights, Risk Monitoring

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.

Enhanced Depositary Oversight for Funds Investing in Inherently Illiquid Assets

Enhanced Depositary Oversight for Funds Investing in Inherently Illiquid Assets

Regulatory Insights, Risk Monitoring

As discussed in previous blogs, later this year new FCA rules for open-ended funds investing in inherently illiquid assets enters into force. The new rules concern non-UCITS retail schemes (NURS) that invest in inherently illiquid assets. Although the new rules are relevant to anyone with an interest in open-ended investment funds that are likely to hold illiquid assets, here we will be focusing on the enhanced oversight of depositaries.

Breaking the Buck and the Introduction of Greater Liquidity Requirements

Breaking the Buck and the Introduction of Greater Liquidity Requirements

Regulatory Insights, Risk Monitoring

Money market funds (MMFs) are an important part of the European and global investment fund landscape and perform an essential role as a cash management and liquidity tool. They are a type of collective investment fund where households, corporate treasurers or insurance companies can obtain a relatively safe and short-term investment for surplus cash. They have preservation of capital and liquidity as their primary objectives.

The Liquidity Countdown

The Liquidity Countdown

Regulatory Insights, Risk Monitoring

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.