IRELAND: Central Bank of Ireland Issues Letter to Fund Management Companies on Liquidity Management

Tuesday September 10 2019

On 9^th September 2019, the Central Bank of Ireland (CBI) announced that in August 2019, the Central Bank of Ireland issued a letter to Fund Management Companies reminding them of the importance of ongoing, effective liquidity management and ensuring compliance with relevant legislative and regulatory obligations for UCITS and AIFs linked to Brexit preparedness.

In the letter, the CBI states that when managing fund liquidity it is important that the execution of the liquidity risk management framework for each fund under managements, I appropriately calibrated to consider dealing frequency, investment strategy, portfolio composition and investor profile, on an ongoing basis. This may involve, in many cases, daily and intra-day monitoring.

Furthermore, the CBI state that Investment Firms should be deploying Liquidity Management tools such as duties and charges, gates and suspensions and that these should be done in a transparent and proportionate manner, considering the best interest of the investors.

The Central Bank of Ireland expects the board, relevant Directors and designated persons should, on a ongoing basis, access the liquidity position of each funds under management to ensure that the investment portfolio remains in line with the respective fund’s redemption policy, considering investors redemption demands. The fund documentation should be clear, accurate and in line with legislative and regulatory requirements.

These activities will increase the frequency of data collection, analysis of factors influencing redemptions and seeking insights into management redemption policies.

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