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EFAMA report on open-ended funds asks macro-prudential supervisors to rethink investment fund risk

Financial stability
05 July 2023 | Press Release
Financial stability

For the best part of this decade, macro-prudential supervisors have argued that investment funds contribute to the build-up of systemic risks. Today, EFAMA has published an ambitious report that provides a comprehensive overview of the contribution of the European investment fund sector to the diversity and resilience of capital markets.


The paper finds that:


  • The investment fund sector is not systemically important, although there may be pockets of risk that require further attention from macro-prudential supervisors
  • The Financial Stability Board’s Non-Bank Financial Intermediation (NBFI) methodology to identify “economic activities that may give rise to systemic risks”, also known as the NBFI Narrow Measure, is flawed
  • A successful Capital Markets Union (CMU) in Europe will require further growth in the investment fund sector
  • European policymakers have a good grasp of the realities of the fund market and are addressing liquidity management appropriately within the AIFMD/UCITS review, however the envisaged FSB recommendations on Open-End Fund (OEF) liquidity management are problematic on more than one count

While a lot of progress has been made in recent years, the report contains concrete policy recommendations that we hope will inform the upcoming FSB recommendations on OEF liquidity management and the IOSCO Liquidity Management Tools (LMTs) Guidance. For instance, investment funds need access to all liquidity management tools and management companies require a better view of who the end-investors are (which is not always the case currently). In addition, resilient capital markets will only come about through more comprehensive market reforms, including the introduction of a consolidated tape and the increased transparency and predictability of central counterparty margins.  


Tanguy van de Werve, Director General at EFAMA, commented: “Over the last 15 years, we have all felt the impact that financial crises can have on our daily lives, and systemic risks are not to be taken lightly. Through this publication, EFAMA shows today its commitment to contribute to the policy debate on systemic risks in the investment fund sector. A key take-away is that the current NBFI agenda clearly requires a rethink on the end of macro-prudential supervisors. We must remain vigilant for real systemic risks that could threaten our financial system, correct where necessary, and avoid fixing what is not broken.”


- ENDS -


Notes to Editors


Access the full report here


For further information, please contact:


Hayley McEwen

Head of communications and member development

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