UK:
UK Regulator Publishes Good Practices For Liquidity Management For Investment Management Firms
15 March 2016
Shearman & Sterling LLP
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On February 29, 2016, the FCA published good practices for
liquidity management for investment management firms. The good
practices are an outcome of the FCA's work with the Bank of
England to assess the risks of open-ended investment funds
investing in the fixed income sector, culminating in a collation of
practices which the regulator has seen being used by investment
firms to manage liquidity. The FCA hopes that by publishing the
good practices, all investment management firms can improve their
liquidity management. The good practices cover four areas: (i) good
disclosure of liquidity risks to investors; (ii) good processes and
tools for liquidity risk management, including continuous
re-assessment and updating to keep track with market conditions;
(iii) good practices for managing redemptions and costs relating to
redemptions, including disclosing those practices to investors; and
(iv) thorough preparation for implementation of exceptional
liquidity tools and measures, such as maintaining a procedure
manual for implementation of each tool and testing implementation
of tools to ensure that the measures work in practice.
The good practices are available at: http://www.fca.org.uk/news/liquidity-management-for-investment-firms-good-practice
.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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