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 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.
On 2nd September 2019, the European Securities and Markets Authority (ESMA) published its final guidance regarding liquidity stress tests of investment fund…
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.