EFAMA welcomes the recent statement by Ashley Alder, IOSCO Board Chair, on liquidity risk management for investment funds.
This statement, which comes in response to concerns expressed by a number of regulators on the back of liquidity problems which have recently affected some investment funds, is a forceful reminder of the fact that the IOSCO Liquidity Risk Management Recommendations of February 2018 provide a comprehensive framework for regulators to deal with liquidity risks in investment funds.
EFAMA supports these recommendations as the appropriate measures for seeking regulatory convergence and for tackling regulators concerns in an efficient way. Their principle-based and pragmatic approach is justified by the need to take into consideration the multitude of investment strategies and varying degrees of liquidity among different asset classes, allowing risk management processes to match each funds investment strategy, investable asset classes and type of investors to the appropriate redemption periods.
It is of critical importance to ensure a consistent implementation of these 2018 LRM Recommendations and to avoid diverging or fragmented national regimes on liquidity risk management. EFAMA therefore strongly supports IOSCOs call on securities regulators to ensure an effective and consistent implementation of the 2018 LRM recommendations.