Thursday August 27 2020

News Source: Fund Regulation

Focus: Liquidity Risk Management

Type: General

Country: UK




On 26th August 2020, the Financial Conduct Authority (FCA) launched a survey for the joint Bank of England and FCA review of liquidity mismatch in open-ended funds.

In Q4 2019, the Financial Policy Committee (FPC) judged that the mismatch between redemption terms and the liquidity of some funds’ assets could become a systemic risk. It said there should be greater consistency between these, with specific focus on 3 principles: measures of liquidity, pricing, and redemption notice period.

The review will carefully consider how a framework around these principles could be designed.

As part of FCA ongoing joint review with the Bank, the FPC supported an initial data collection survey in Q1 2020. This survey was postponed in March due to the coronavirus (Covid-19) pandemic, however, the FPC recently supported resuming this work.

This is a voluntary exercise and the data will provide an important element for the joint review. Asset managers included in this survey are being asked to respond to the questions on a best-effort basis by 30 September 2020.

Click on the link for further information.