EUROPEAN UNION: ICMA / EFAMA Publish Report on Liquidity Risk in Investment Funds

Monday April 18 2016

The International Capital Market Association’s (ICMA) Asset Management and Investors Council (AMIC) and the European Fund and Asset Management Association (EFAMA) have joined forces to publish a report on the legislative requirements and market based tools available to manage liquidity risk in investment funds in Europe, and to offer some recommendations for further improving the general liquidity management environment.

The paper is written in response to public concerns that liquidity has become more fragmented, whether as a result of the reduced role of banks as market makers and liquidity providers, or the prolonged accommodative monetary policy of the world’s most prominent central banks.

The broad recommendations of the report are to:

1. encourage the wider use of available non-legislative recognised market-based tools in all European jurisdictions;
2. strongly encourage the use of existing data already currently reported to national authorities in Europe for improving the analysis of liquidity risk by the European Securities Markets Authority (ESMA) and the European Systemic Risk Board (ESRB); and
3. support the continuing efforts by European and national trade associations to develop further guidelines for best practice in liquidity risk management.

Please click on the above link for further details